Harvard Study Finds Most Hospitals are Noncompliant

F.J. Thomas

Sarasota, FL (WorkersCompensation.com) –In May, according to a report from Becker’s, the Centers for Medicare & Medicaid Services (CMS) began sending out warning letters to hospital facilities that were not in compliance with the Hospital Price Transparency requirements that went into effect in January of this year. The new rule requires hospitals to post their negotiated rates for 300 services in a machine-readable format so that patients can easily compare pricing when shopping for healthcare services. In an effort to monitor compliance, CMS began reviewing complaints, as well as auditing hospital websites. Noncompliance of the new transparency rule could result in a penalty as high as $300 a day, in addition to publication of hospitals that fail to respond to their notifications.

In a new analysis published this week in JAMA Internal Medicine, Harvard researchers in conjunction with researchers from Yale and Bringham, found that most hospitals are not in compliance with the CMS transparency rule, thus choosing to pay the penalty in lieu of publishing their rates.

From March 1 through 10, 2021, researchers took a random sample of 100 out of 6171 hospitals, and the top 100 hospitals with the highest gross revenue in 2017. Researchers specifically wanted to the review the top revenue hospitals, speculating that the costs of compliance would be negligible overall, but the consequences of disclosure would be much greater.

The average number of beds per hospital in the random sampling totaled 147, with 7077 annual discharges, and a gross revenue of $808 million. Of those hospitals, 44 percent were rural, 22 were critical access, and 64 percent were teaching hospitals. The average number of beds in the high revenue category was 837, with 42,170 annual discharges, and a gross revenue of $7,006 million. Of the high revenue hospitals, only 8 percent were rural and 96 percent were teaching hospitals. None was a critical access facility.

The researchers reviewed whether the hospitals offered a machine-readable file with their pricing for their services, and whether the file included contract negotiated rates and cash discount rates. The researchers also reviewed whether individual patient information was required to look up hospital rates for specific payers.

Of the random hospital group, 83 percent were noncompliant for at least one major requirement. A total of 33 hospitals published negotiated payer rates, and 30 provided cash discount pricing available in a readable file. A price estimator tool was available for 52 hospitals, of which 23 offered the information in a downloadable file. In order for the estimator tools to be utilized, as they were reliant on specific payers, individual patient information was required to obtain an estimate. Discounted pricing was available however without patient information.

In the high revenue category, 75 percent were non-compliant for at least one major requirement. A total of 35 high revenue hospitals published negotiated rates, and 40 made cash discount pricing in a readable file. A total of 86 high revenue hospitals offered a price estimator tool, and 34 offered negotiated rates in a downloadable file.

One long-standing challenge that many healthcare providers have had even prior to the focus on price transparency, is the availability of an accurate contract rate in a timely manner. While CMS may update rates at the first of the year for many procedure codes, payers may lag behind loading those rates anywhere from a month to a quarter behind on any given day of the month. In years past, most providers obtained that information from an individual provider representative. In recent years however, the payer trend has been to make the information available online. The problem with that approach however, is that the information is often only accurate for the date of the search, and past or future rates are not available.

In cases where a rate may change with Medicare on a quarterly basis, as in the case of drugs and durable medical equipment, obtaining an accurate rate is even more difficult.

While CMS is holding the hospital to task in publishing rates however, the same effort so far has not been extended in payer requirements to provide that information, leaving the burden once again on the healthcare industry.

While some experts speculate the pricing transparency required for hospitals may not have a direct large impact on the worker’s compensation industry due to state fee schedules that are published and direct negotiations, it will be interesting to see how this plays out as it is yet another administrative burden placed on a healthcare system that is already struggling.

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