CMS: Tighter price transparency enforcement, standardized requirements for hospitals are on the horizon
By Dave Muoio / February 21, 2023
Centers for Medicare & Medicaid Services (CMS) leaders say the agency has handed out nearly 500 warnings to hospitals falling short on price transparency as of January and plans to streamline enforcement and standardize hospital reporting requirements.
Enforcement of the transparency requirements has also included more than 230 requests for corrective action plans, CMS’ Deputy Administrator and Director Meena Seshamani, M.D., and Center for Medicare Chief Transformation Officer Douglas Jacobs, M.D., wrote last week in an article for Health Affairs.
Almost 300 of the hospitals have addressed the issues spotted by CMS and are now compliant with the price transparency requirements, the CMS heads wrote. Noncompliance penalties have still only been handed out to two hospitals, Northside Hospital Atlanta and Northside Hospital Cherokee, both in Georgia.
The federal price transparency requirements went into effect Jan. 1, 2021. They require hospitals to post a comprehensive machine-readable list of their services and prices as well as a patient-friendly tool to help shop for 300 common services.
Seshamani and Jacobs said compliance with these requirements has increased substantially during the two years since enforcement began. An assessment conducted by the agency from January to February of 2021 found that among 235 randomly sampled hospitals, 66% met consumer-friendly display criteria, 30% appropriately posted machine-readable files and 27% did both.
A follow-up analysis conducted in late 2022 among 600 randomly sampled hospitals found 82% consumer-friendly display compliance, 82% machine-readable file compliance and 70% compliance in both areas. The agency heads noted that this review came after CMS’ rulemaking that increased the penalty for noncompliance from over $100,000 annually per hospital to more than $2 million annually per hospital.
“We believe the multifaceted effort that CMS has undertaken since initially implementing the regulation—including efforts to educate, monitor and enforce the regulations with increased applicable potential penalty amounts, along with heightened public interest and scrutiny—have driven this improvement,” they wrote.
CMS’ estimate is substantially more generous than other recent analyses that use different cutoffs for full compliance.
On Feb. 6, patientrightsadvocate.org released its latest semiannual review that deemed just 24.5% of 2,000 sampled hospitals to be fully compliant—up from a 5.6% rate back in July 2021. The watchdog group wrote in its latest analysis that many hospitals that had posted information were still found to be noncompliant “due to most hospitals’ files being incomplete, illegible or not having prices clearly associated with both payer and plan.”
Hospitals and other stakeholders have blamed CMS for the inconsistencies, noting that the rule provides vague guidance that can be difficult to interpret.
Seshamani and Jacobs said the issue is on CMS’ radar, writing that the agency engaged the public and stakeholders on how to improve both the consumer-facing data and machine-readable file component of the requirements.
In particular, the heads said that CMS convened last summer “a technical expert panel comprised of industry experts” for recommendations on how they could better standardize machine-readable file formats and released a template version in November that hospitals are welcome to adopt.
“The current regulations permit some flexibility related to form and format, so long as the hospital makes public its standard charges in a machine-readable file format and includes certain minimum data elements,” they wrote. “Increased standardization could help deliver on the promise of hospital price transparency to better enable third parties to develop products to make prices available to consumers. It could also help hospitals comply with the regulations and aid CMS enforcement.”
Seshamani and Jacobs added that CMS will also be looking into ways to streamline its current enforcement practices, “including expediting the timeframes by which it requires hospitals to come into full compliance upon submitting a corrective action plan.” The agency will also be taking “aggressive additional steps to identify and prioritize action” against hospitals that have yet to post any files whatsoever, they said.
“We believe that, together with members of the public, we can further unlock the collective potential of hospital price transparency and achieve greater competition in the healthcare system,” they wrote.
Hospitals’ price transparency issues have been a frequent presence in the headlines since 2021, but payers got their turn last year with their own mandate to release pricing data. That process has also been bumpy, with a Georgetown University report from last month calling for reforms to whittle down and organize the massive data troves payers have shared to date.