Not-so-Transparent Price Transparency in Healthcare
The Centers for Medicare and Medicaid (“CMS”) has now imposed its first set of Civil Monetary Penalties on two hospitals in the Atlanta, Georgia, area totaling nearly $1,000,000 combined. These two hospitals—Northside Hospital Atlanta and Northside Hospital Cherokee—were both non-compliant as they failed to respond sufficiently or at all to CMS requests. While these are the first fines issued by CMS, the agency has issued over 350 warnings for noncompliance and over 150 requests for corrective action plans. Northside Hospital Atlanta was penalized $883,180, and Northside Hospital Cherokee was penalized $214,320 after both received warnings and requests for corrective action plans and failed to respond.
45 C.F.R. § 180.60 requires hospitals to publicize, for each service, its gross charge, each payer-specific negotiated charge, the minimum negotiated charge across all payers, the maximum negotiated charge across all payers, and the discounted cash price if applicable. The law further requires that hospitals provide access to the information using a publicly available internet location—typically the hospital’s website. The statutes outline additional requirements here.
Why is there such low compliance with the law?
I believe because many of us in healthcare realize that the supposed transparency of hospital charges and negotiated rates are not transparent to the typical healthcare consumer. Charges are the list price of care and are generally not related to the actual amounts paid by public or private insurers.
Negotiated prices represent the actual price of care paid by the insurer to the hospital. The average consumer of healthcare services does not understand these terms and is interested in the out-of-pocket price that they are going to pay. Price transparency attempts to bring clarity to actual out-of-pocket expenses but is currently failing because of barriers like these and the fact that many Americans do not even know about this rule.
Polls reveal that only 10% of adults know that hospitals must disclose the prices of treatments and procedures on their websites. Nearly 1 ½ years since the rule became effective, consumers remain unaware that hospitals are required to post prices online, nor are the majority shopping for healthcare services.
However, hospitals should not ignore warnings or recklessly choose not to comply with the rule at the risk of becoming subject to Civil Monetary Penalties. CMS has now demonstrated its intent to enforce the law.
Health plans are next on the list for price transparency after a rule requiring them to disclose their pricing to the world became effective on July 1, 2022. Again, the questions arise:
How transparent or understandable will this information be to the healthcare industry and the public?
With less than 15% of hospitals in compliance and 90% of the public unaware that access to the information exists, are the laws
effective?
Who is price transparency helping?
At this time, and without meaningful enforcement, the data appears inconclusive.
Written By: David Caston, MSHA, MBA
LinkedIn: David Caston
