Hospital Price Transparency: Lessons Learned, Best Practices

Federal price transparency requirements for hospitals from the Centers for Medicare & Medicaid Services (CMS) provide patients with an unprecedented amount of insight into the costs for medical services.¹  

In theory, more pricing information should help individuals make informed choices about their care and contribute to a positive patient experience. However, the current reality is that many hospitals are not fully compliant with these requirements, and even for compliant hospitals, consumers may still not understand their likely out-of-pocket costs. This is because, unlike shopping for goods such as computer monitors, there are myriad factors that complicate what healthcare consumers may ultimately pay — specifically, uncertainties with future insurance adjudication such as progress towards deductible, copays, coinsurance, and out-of-pocket maximums. Additionally, navigating publicly available resources including machine-readable files of medical services as well as “shoppable services” can be cumbersome for consumers.

Best Practices for Hospitals in Light of Recent Government Enforcement

In 2022, the federal government ramped up enforcement actions against noncompliant hospitals, levying significant monetary penalties on two hospitals for failing to meet hospital price transparency requirements. Despite the difficulties of complying with price transparency, hospitals can take the following concrete steps to improve compliance, boost patient satisfaction, and mitigate the risk of potential CMS audits:

• Due to hospitals being required to make public a machine-readable file of their charges as well as information on shoppable services, anyone with a sufficient understanding of price transparency rules and an internet connection can effectively “audit” hospitals for compliance. For example, a savvy patient may double-check whether a particular healthcare service’s price is the same in the shoppable services list as the comprehensive machine-readable file. Because CMS permits individuals to submit consumer complaints on hospital noncompliance,² hospitals should ensure that their public-facing information is accurate and complete.
  
  
• Additionally, consumers who receive other information on their costs, including an uninsured Good Faith Estimate under the No Surprises Act, may cross-reference their estimate with the information on a hospital’s comprehensive machine-readable file. For example, a consumer that receives a $2,000 self-pay estimate for an MRI, yet found on the hospital’s website that the self-pay amount was $1,000 for the MRI could complain to the hospital and/or CMS. Given the relative ease of determining compliance, hospitals should be extra vigilant that the information they are making public is complete and accurate.

2. Meet the letter of the law, supplementing with additional pricing information whenever possible. 

• While hospitals may certainly go above and beyond the minimum CMS requirements by including phone numbers to customer service or price estimation hotlines, these resources themselves do not necessarily meet all of CMS’s requirements. CMS reiterated in its enforcement actions that even well-intentioned price estimates, hotlines, and other patient-centric tools do not alleviate hospitals’ obligations under established requirements.

3. Promptly respond to CMS outreach to mitigate escalation and penalties.

• CMS often permits hospitals to remediate noncompliance prior to imposing penalties. Under the regulations, CMS is not required to fine hospitals immediately for noncompliance – it may instead issue warning letters and corrective action plans.³  To reduce the likelihood that CMS issues fines, hospitals should respond to all CMS outreach promptly and document efforts to remediate any issues.

4. Prepare for further action on price transparency in other domains.

• Currently, there is a patchwork of laws and regulations that govern price transparency at the state and federal level, many of which operate in parallel to one another. In addition to hospital requirements, CMS’s Transparency in Coverage regulations require that health insurers post their rates for services with hospitals on their own respective websites (and eventually operate a self-service tool for patients). Despite other avenues for patients to obtain pricing information, hospitals should remain compliant with stated requirements. 
  
  

Key Takeaways

Despite the difficulties and nuances with hospital price transparency, hospitals that champion price transparency can differentiate themselves from their competitors with tools that genuinely benefit the patient. With R1’s technology-enabled suite of revenue cycle management tools, as well as a team of dedicated regulatory compliance attorneys, R1 can be a strategic partner in enhancing the patient experience and promoting best practices.

One of those technologies, R1 Entri™ VisitPay, helps simplify and personalize the patient billing experience. As part of this solution, patients have one place to go to manage payments for themselves and their household, including a consolidated view of hospital and physician charges and explanation of benefits statements. In addition to complying with hospital price transparency, hospitals can empower patients to make informed decisions on their care using tools such as Entri™ VisitPay, which can result in greater patient satisfaction.

R1 has a wealth of price transparency articles. 

 

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Download our infographic that addresses the price transparency law that took effect in January 2021.

 

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¹ This article focuses on the Centers for Medicare & Medicaid Services’ (CMS) federal price transparency requirements (referred to as “hospital price transparency”) located at 45 C.F.R. § 180.50 & 45 C.F.R. § 180.60
² 45 C.F.R. § 180.70(a)(2)(i)
³ See 45 C.F.R. § 180.70