Six tips for improving hospital price transparency compliance

by Caroline Znaniec, MBA, MS-HCA

New hospital pricing transparency requirements were implemented beginning January 1, 2021. CMS has maintained its position that hospitals should not have delayed in meeting compliance and that it will soon begin to audit hospitals. In the first months of 2021, it has been found that hospitals have assorted levels of compliance, ranging from those hospitals that have openly refused to publish their prices to those that have exceeded requirements with sophisticated patient estimation tools. Various studies of hospital compliance have been consistent in reporting high levels of non-compliance rates across the nation. Some studies have reported non-compliance as high as 67%. A review of these studies reveals a consistent pattern of compliance shortfalls for certain requirements. The following are the top six items most common across non-compliant hospitals:

1. The published charge data provided by the hospital has not been updated to the requirements of the January 1, 2021, implementation date.

Many hospitals have maintained their basic standard charge file from years 2019 or 2020, without addressing the additional requirements CMS’ final rule, including the basics of renaming the downloadable file to CMS’ naming convention.

Further requirements included that each hospital operating in the U.S. provide clear, accessible pricing information online about the items and services it provides in the following two separate files:

• A single comprehensive machine-readable file with all items and services
• A display of shoppable services in a consumer-friendly format

2. The published comprehensive machine-readable digital file does not include all items and services for which the hospital has established a standard charge.

CMS defined in the final rule that the comprehensive file must include items, services, and service packages that could be provided to a patient regardless of status (e.g., outpatient, emergency, inpatient). CMS specified that this must include supplies, procedures, room and board, technical fees, and hospital-based services of employed professional providers. It was clarified in the final rule that standard charges could be established through many methodologies. Example methodologies provided by CMS included time-based, unit-based, and service packages.

While the hospital charge description master (CDM) file may not discreetly address each potential standard charge by a unique billing identifier, many payer contracts do. For example, for a large majority of U.S. hospitals, inpatient care is reimbursed based on a service package indicated by the Diagnosis Related Group (DRG) assigned at patient discharge. The itemized charges captured during the patient stay can vary; however, the reimbursement at the package level for a particular payer remains constant. The variation of captured charges to reimbursement for the service package does not preclude the hospital from including the service package reimbursement in the comprehensive file.

See CMS’ document “8 Steps to a Machine-Readable File” for additional information.

3. The published comprehensive machine-readable digital file does not include all standard charges.

Per CMS, the single machine-readable digital file must contain the following standard charges for all items and services provided by the hospital: gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.

4. The published shoppable services display does not include the required data elements.

Per CMS, the following must be provided for each of the identified 300 shoppable services:

• Primary billing identifier
• Standard charges
• Discounted cash price
• Payer-specific negotiated charge
• De-identified minimum and maximum negotiated charge
• Plain language description
• Related ancillary services
• Service location
• CMS shoppable service indicator

For more information, refer to CMS’ document “10 Steps to Making Public Standard Charges for Shoppable Services.”

5. The published data provided is not calculated appropriately. Averages were used to determine gross charges and/or payer negotiated rates.

Per CMS, “average charges based on prior years would not be acceptable as an average charge is not one of the types of standard charges we are finalizing in this rule.”

Regarding the use of average reimbursement as a means of calculated payer-negotiated rates, CMS stated, “the payer-specific negotiated charge is defined as the charge that a hospital has negotiated with a third-party payer for an item or service. For each third-party payer with whom your hospital has negotiated charges, you should consult your contract and rate sheets to identify and collect the data elements that are required (as applicable) for display [not your claims paid].”

6. The shoppable services detail includes, within the 300 shoppable services, those that do not meet the intent or definition by CMS of shoppable (e.g., emergency room visits, open fracture care, inpatient treatment for myocardial infarction).

Shoppable services are services that are routinely provided in non-urgent situations that do not require immediate action or attention to the patient, allowing patients to price shop and schedule a service at a time that is convenient for them, according to CMS. Examples of common shoppable services include imaging and laboratory services, medical and surgical procedures, and outpatient clinic visits.

About the author

Znaniec is a managing director in CohnReznick LLP’s Healthcare Advisory Practice in Baltimore, Maryland. She is an experienced healthcare advisor with almost 25 years of combined industry and professional experience, focusing on development of strategic methods in the improvement of healthcare revenue operations to reduce costs, optimize revenue and maintain compliance. Znaniec is NAHRI Advisory Board member is also a Chapter Leader of the NAHRI Mid-Atlantic Regional Chapter.