On January 1, 2021, new rules for hospital and health plan price transparency went into effect. Hospitals may be familiar with the regulations, which require them to publish standard patient service charges, but many are still not in full compliance. What’s more, the Centers for Medicare and Medicaid Services (CMS) began conducting random audits in January, with fines for daily noncompliance. The time to achieve price transparency is now.
Price Transparency Benefits for Hospitals
Price transparency creates more informed consumers and puts patients more in control of their healthcare – but the rule also has several benefits for hospitals (beyond simply complying for the sake of compliance).
- It’s better for patient-provider relationships and fosters honest discussions about healthcare.
- It’s thought to improve collections when patients know up-front what they’re going to pay.
- Non-compliance negatively affects a hospital’s reputation, while …
- Compliance enhances a hospital’s competitive positioning.
- It’s an opportunity to see if any standard charges are significantly below contract, especially for smaller hospitals.
- It can create less waste in healthcare spending.
That’s not to say that listing standard prices is a simple task; far from it. The right tools and team can make the process more bearable and even predictable, over time.
Price Transparency Rules
Our experience has been that many hospitals at least partially complied with the proposed rule, but most failed to meet the spirit of the regulation. It’s been common for hospitals to publish complicated lists outlining the costs of individual fees, services, and procedures; while this was a step in the right direction, it falls short of the intended rule and is still considered to be non-compliant by the standards that were effective January 1, 2021.
The actual price, or standard charge, the patient pays is the one that needs to be published, not what the hospital charges. Under the new rules, hospitals must publish readily accessible charge information in two ways:
- Complete machine-readable file listing the standard charges for all items and services, and
- Consumer-friendly display of all or at least 300 shoppable items and services
- Must include a description, any code the hospital uses for billing the item or service
Note that CMS defines standard charge as “the regular rate established by the hospital for an item or service provided to a specific group of paying patients. This includes all of the following as defined under this section:
- Gross charge.
- Payer-specific negotiated charge.
- De-identified minimum negotiated charge.
- De-identified maximum negotiated charge.
- Discounted cash price.”
CMS further stipulates that full compliance means that consumers can easily access and search the file without establishing any type of account or submit personal identifying information. The file is required to be updated at least once annually.
In previous conversations with some hospitals, they indicated they would rather pay a fine than achieve full compliance. Now, they will need to more carefully assess the risk and cost of that approach against proactive regulatory monitoring and enforcement activities.
New Sample Audits
On December 18, 2020, CMS announced that it would conduct random audits of hospitals for compliance with price transparency rules. If a hospital is found to be non-compliant, it could face civil monetary fines daily until compliance is achieved.
CMS’s enforcement plan is to include, but is not limited to:
- Reviewing independent complaints
- Assessing the complaints’ “analysis of non-compliance”
- Auditing hospital websites
If a hospital is found to be non-compliant, they will receive a written warning, be required to submit a corrective action plan for material violations and could be subject to a $300 daily fine if they either do not submit a corrective action plan and/or fail to fully comply with the price transparency initiative.
Price Transparency Toolkit
Price transparency can be a time-intensive undertaking. Data analytics is one tool that can help administrators look at historical procedures, ancillary services and fees, and even granular data of physician practice patterns. The result is a comprehensive, big-picture view of a patient’s out-of-pocket costs – and full compliance with CMS regulations.
Consider the price transparency toolkit Windham Brannon created for your use as you continue to move forward:
Forming Your Price Transparency Committee
Download the Checklist to Kickstart Your Initiative
Considering Data Analytics in Your Move Forward
Price transparency is just one of the ways that consumer-friendly pricing is affecting hospitals. In 2020, Georgia became one of several states to enact surprise medical bill legislation. And on December 27, 2020, the No Surprises Act was included in Congress’s omnibus spending bill. While compliance with CMS rules may not check all the boxes of a hospital’s requirements under the No Surprises Act, the process of clearly identifying and displaying standard consumer charges achieves dual goals.
Questions?
Windham Brannon’s Healthcare Consulting team is dedicated to hospitals becoming fully compliant with all current price transparency regulations.
Reach out to Windham Brannon’s Healthcare Consulting Leader Denise Gaulin for a consultation to discuss your hospital’s price transparency needs.
