Seven Steps to Price Transparency for Hospitals

By Brenda Turner

While healthcare consumers have been calling for more price transparency around medical costs, healthcare providers have been more reserved when making this change. The barriers for providers in responding to the demands of increased consumerism are significant, including a lack of accurate cost estimation tools, limited bill pay options, new demands on staff to resolve pricing and billing issues, and of course, complex contracting and network arrangements. 

The Centers for Medicare & Medicaid Services (CMS) in 2018 hastened the transformation process when it issued a rule requiring hospitals to publish their chargemasters online. (A chargemaster, for the uninitiated, is a comprehensive list of billable items in a hospital.)

After working with clients to comply with the CMS rule and more recent Executive Order, I’ve found the process of publishing chargemaster details is extremely complex. Before we get into the intricacies of publishing treatment costs, let’s explore some background.

The CMS Rule and Executive Order

Although the CMS rule did not penalize providers for noncompliance, Administrator Seema Verma publicly commended several health systems for their voluntary compliance and encouraged consumers to contact her directly with names of hospitals that did not comply.

A year later on June 24, 2019, President Donald Trump signed the Executive Order “Improving Price and Quality Transparency in American Healthcare to Put Patients First.” As a result, on November 15, 2019, CMS finalized a rule that follows those directives. The intent was to make prices for items and services provided by hospitals more transparent for patients. Patients could then have a better understanding as to what they might pay for these items and services.

Unlike the initial rule in 2018, whose compliance was encouraged but voluntary, the new ruling is not. If CMS concludes a hospital is noncompliant with one or more of the requirements and fails to respond to a request to submit a corrective action plan or comply with the requirements of a corrective action plan, CMS may impose a civil monetary penalty of $300 per day and publicize the penalty online.

Healthcare Organizations Challenge Order

Several days after the finalized rule, the American Hospital Association (AHA), the Association of American Medical Colleges (AAMC), the Children’s Hospital Association (CHA) and the Federation of American Hospitals (FAH), along with three individual hospitals filed a lawsuit to challenge the rule.

Now known as Hospital Assoc. v. Azar, the lawsuit alleged that the Price Transparency Rule would “introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery.” The plaintiffs argued that the obligation to publish prices negotiated with insurers did not fall within the scope of the statutory obligation to publish a list of “standard charges” imposed by provisions added to the Public Health Service Act and the Social Security Act by the Affordable Care Act.

Additionally, they stated that the rule violated the First Amendment and argued that “it mandates speech in a manner that fails to directly advance a substantial government interest, let alone in a narrowly tailored way.”

Immediately following the decision, the AMA filed an appeal seeking expedited review. Additionally, citing the COVID-19 crisis, the AMA requested the Department of Health and Human Services (HHS) to delay the effective date of the rule until the matter is settled by the courts.

Preparing for What’s Next

While hospitals might wish to wait out the legal challenges to the Price Transparency Rule, the administration has made it clear that it is unwilling to back down. (To date, HHS hasn’t responded. With only a few months until the January 1, 2021 deadline, it is doubtful a date will be scheduled to hear the appeal before the rule goes into effect.)

Despite the challenges and extreme burden, hospitals should begin to take the necessary steps to comply with the requirements. CMS, in its final rule, estimated that compliance with the rule for the first year will require approximately $11,000 and 150 person-hours, but these costs likely will vary widely based on the size of the organization and available resources both technical and human.

I began working with clients back in June as soon as the appeal was lost and can tell you firsthand that it has been extremely challenging. In doing this work, I’ve developed seven key steps to help make the process run more smoothly.

  1. Executive leadership must determine which shoppable services to include in the published list and how to describe those services in a “consumer-friendly” manner.
  2. Larger organizations will have to create a separate and unique price list for each of its hospitals.
  3. Finance and Contract Management will need to provide the negotiated rates for all insurance carriers on each of these unique lists.
  4. Services to include may vary by hospital, even within the same system. Make sure to review individually to lessen patient confusion.
  5. Hospital IT departments must determine how they will handle the technical aspects of publishing the required information online in the appropriate format.
  6. Customer service systems will need to be put in place to field calls from patients to answer questions.
  7. Data analytics solutions can do the “heavy lifting” by sifting through chargemaster reports to help determine the information to include in the published list.

Although these challenges are significant, I’ve found that having access to data and using analytics to identify high volume/high dollar items and services has greatly assisted in the process. For hospitals without analytics software, the task will be manual and difficult, to say the least.

With fewer than four months until the deadline, it remains unknown how many hospitals will have the resources to comply with the rule given how strained they are as a result of the coronavirus pandemic, which likely will remain a significant part of the healthcare landscape for the foreseeable future.

Working together, we can bring together the right staff, departments and data analytics resources to help lessen the burden on hospitals as they work to meet the new guidelines. Behind the scenes, making the transition possible will be data analytics.


Brenda Turner

Brenda Turner brings more than 15 years of experience in the healthcare compliance industry as Senior Director of Product Consulting at MedeAnalytics. In her previous role as a compliance officer, she developed effective compliance programs comprising of written policy and procedures, training and education, audit work plans focused on proactive risk assessment, and timely governmental audit responses.

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