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Compliance Update on Hospital Price Transparency
10 Largest Iowa Hospitals

January 11, 2022 By

For the past year, I have written about the Hospital Price Transparency rule that requires hospitals to make clear, accessible pricing information available online. The rule went into effect on January 1, 2021.  Under this rule, each hospital operating in the U.S. is required to provide online pricing information about the items and services they provide in two ways:

  1. In a display of shoppable services (for 300 common services) in a consumer-friendly format.
  2. As a comprehensive machine-readable file with prices for all items and services for each separate health insurance company.

Providing this information is presumed to make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.

When this law was implemented on January 1, 2021, the financial penalty for hospitals not complying, regardless of hospital size, was up to $300 a day ($109,500 annually). Many U.S. hospitals, however, have not complied with this federal rule, and instead have opted to keep their secret pricing arrangements to themselves. As of late December 2021, no hospitals have been penalized by the Centers for Medicare & Medicaid Services (CMS), which enforces the rules. The CMS has issued about 335 warnings for violations, in addition to providing hospitals information and technical assistance to increase compliance.

New Penalties Apply January 1, 2022

According to a December 30 Wall Street Journal article, over 1,000 hospitals have fully complied with this rule – which represents only about 17 percent of all U.S. hospitals.

Because of this poor compliance record, the CMS issued new rules last fall that increases the penalty for larger hospitals that have 30+ beds. Beginning January 1, 2022, the rule requires these hospitals to pay a $10 per bed per day penalty, not to exceed a maximum daily dollar amount of $5,500. The maximum annual total penalty amount would be $2,007,500 per large hospital. Smaller hospitals (with a bed count of 30 or fewer) will remain at $300 penalty per day.

What About the 10 Largest Iowa Hospitals?

For each medical procedure or service, hospitals are required to post five prices: the gross charges; the discounted prices for cash payment; the prices negotiated by hospitals with each insurer; and the minimum and maximum negotiated prices they have agreed to charge patients.

Looking at the 10 largest Iowa hospitals (by total inpatient discharges), it appears that most all provide consumer shoppable services on their websites, but only four of these hospitals also provide acceptable machine-readable information. The ten hospitals are listed below.

Hospitals in Des Moines

When assessing three Des Moines hospitals (Broadlawns, MercyOne and UnityPoint), as written in my January 2021 blog, only Broadlawns Medical Center appeared to be compliant with BOTH consumer shoppable services and machine-readable information during 2021. MercyOne and UnityPoint Health, however, were non-compliant with one or both requirements when the rule became effective last January 1, 2021.

As of the release of this blog (January 11, 2022), it appears that both MercyOne (Des Moines) and UnityPoint Health (Des Moines) appear to be compliant with regards to displaying ‘shoppable services.’ MercyOne has also attempted to comply with the machine-readable requirement, but there are a limited number of insurers found in their Excel file. For example, Wellmark offers a number of various plans in the Iowa marketplace (HMO, PPO, etc) that may have different negotiated rates, but MercyOne has clumped all of these under the broad heading, ‘Commercial/Wellmark.’ A consumer has no way to determine which Wellmark plan has been quoted on the MercyOne website. Because of this vagueness, I regard MercyOne Des Moines as only ‘partially’ compliant with the machine-readable requirement. By comparison, Broadlawns at least broke out the price differentials between Wellmark’s ‘PPO’ versus ‘HMO.’

UnityPoint is not yet compliant with displaying the comprehensive machine-readable file. UnityPoint does provide Excel and PDF files that only provide the ‘Charges’ for each medical procedure, but no other information and no mention of insurance companies. In fact, UnityPoint references the ‘Machine-readable Excel file’ for “charges in effect December 31, 2020 – which is outdated information.

Enforcement of Rules

It is unknown at this time when the CMS will enforce and apply the new 2022 penalties. Thus far, the only guidance from the CMS website states the following:

Beginning January 1, 2021, we’ll monitor and enforce these price transparency requirements. For hospitals that do not comply, we may issue a warning notice, request a corrective action plan, and impose a civil monetary penalty and publicize the penalty on a CMS website.

Hospitals have resisted publishing their negotiated prices for many reasons. One primary reason is they believe the price information is too complicated and that these disclosures would not be useful to patients. Clearly, the federal rules disagree with this assumption.

Conclusion

On the surface, it appears more work is needed by many Iowa hospitals, specifically as it relates to providing the machine-readable file. Will implementing a higher penalty in 2022 change the behaviors and practices of the larger hospitals in 2022? Time will tell – stay tuned.

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Filed Under: David P. Lind Tagged With: , , , , , ,

Almost One-Third of Hospitals Not Compliant
with Price Transparency Requirements

February 23, 2021 By

According to Guidehouse, a consulting services firm, 30 percent of hospitals analyzed across 27 states are not compliant with either of the two price transparency rules required by the Centers for Medicare & Medicaid Services (CMS).

The price transparency rules became effective January 1, and U.S. hospitals are required to disclose their pricing with payers two different ways:

  1. Comprehensive machine-readable file – This consists of a single file that contains five types of standard charges for all the items and services provided by the hospital. Acceptable formats include .XML, .JSON, and .CSV formats. The five standard charges include:
    1. Gross charges
    2. Payer-specific negotiated charges
    3. Discounted cash price
    4. De-identified minimum negotiated rates
    5. De-identified maximum negotiated rates
  1. Consumer-friendly shoppable services file – This consists of a set of at least 300 shoppable services, which includes 70 CMS-specified services and 230 hospital-selected services. Hospitals can opt to use a patient price estimator tool to fulfill this requirement.

What Guidehouse Found

More than 1,000 hospitals were recently analyzed across 27 states by Guidehouse. Overall, about 70 percent of the hospitals were compliant with at least one of the two files, while the other 30 percent of providers were not compliant with either. According to Guidehouse, non-compliant hospitals have expressed “they either have significant resource constraints to meet these requirements (COVID-19 or otherwise) or have a lack of understanding of the ruling.”

Guidehouse analysis also found that:

  • 60 percent of hospitals that were analyzed were compliant with the consumer-friendly shoppable services file, while 40 percent were not.
  • 48 percent of hospitals were compliant with the machine-readable file, while 52 percent were not.
  • Larger hospitals and health systems were most likely to be compliant and were often using existing tools to comply with the shoppable services portion of the law.
  • The machine-readable files that do exist are inconsistent in terms of format and content, which often requires significant data transformation and enhancements necessary to make the data usable to consumers and researchers.

By the way, non-compliant hospitals would be penalized $300 per day and face withholding of Medicare payments if they are not in compliance with the CMS.

Des Moines Hospitals – MercyOne and UnityPoint Health

As mentioned in my January blog, two Des Moines hospitals – MercyOne and UnityPoint Health – did not comply with the machine-readable file requirements, and, according to a more recent review, non-compliance continues. However, both hospitals do offer a personalized cost-estimator online tool. To what extent these tools comply with the CMS requirements is unknown at this writing.

I did attempt to perform a personalized cost-estimation on the MercyOne website, but when I was prompted to select a Blue Cross plan in a drop-down box, I could not find an option similar to my plan – Wellmark (BC/BS) PPO – the largest health plan offered within Iowa. Other BC/BS plans were offered as alternatives, but none would fit my requirements – a confusing process.

As for UnityPoint Health, I provided my Wellmark identification and group number, but was booted out of the cost-estimator page and suggested that I call a phone number for further assistance. Both Mercy One and UnityPoint, in my estimation, are successfuly making it difficult for the public to gain access to their coveted negotiated prices with commerical payers. But this is no different than what is happening around the country.

Why Does this Matter?

Most Iowans are covered by employer-based health coverage, and 150 million Americans have coverage through employers. Because of this, employers are forced to find new ways to ensure they are receiving the best prices for their employees’ health coverage. Currently, the gold standard of hospital prices is what Medicare pays hospitals. It is extremely difficult, however, for employers to learn how much they (or their selected insurance companies) are paying hospitals when compared to Medicare reimbursement prices.

In the past, employers were assured by insurers that hospital prices were ‘discounted’ by a handsome amount. But this approach can be rather disingenuous. Negotiated ‘discounts’ off grossly-elevated chargemaster prices do not help employers keep costs affordable. Instead, employers now see the need to negotiate prices UP from the publicly-known Medicare prices, rather than DOWN from the irrelevant chargemaster prices that nobody pays.

Summary

In short, the compliance with price transparency requirements appear to be comparable to a ‘cat and mouse’ game between some hospitals and the enforcement efforts of CMS. Yes, healthcare pricing is both complicated and secretive, but this is by design. It is quite apparent that hospitals have little desire to reveal their negotiated prices with the public. This subject matter will continue to evolve over time and will be included in future blogs as more information becomes available.

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Filed Under: David P. Lind Tagged With: , , , , ,

Healthcare Price Transparency? Its Time Has Finally Come

December 2, 2019 By

NOTE: Given the latest hospital price transparency developments, this blog enhances the one I published last March,  A Potential Game Changer – Making ‘Secretly-Negotiated’ Medical Prices Public.

The insurance card that you carry represents lost wages and financial bonuses that have been unnecessarily diverted to pay exorbitant healthcare fees to others.

From our 2019 research, the average annual Iowa employer premiums were $7,017 for single and $19,335 for family. Since 1999, these premiums have increased by 240 percent and 251 percent, respectively. Additionally, largely under the push for ‘healthcare consumerism,’ Iowa employees have been asked to pay much higher deductibles – now at $2,200 for single and $4,000 for family coverages.

The escalating prices we pay for healthcare services operate in a black box. Whether for hospitals, doctors, pharmacy or other healthcare providers, we have no idea what the negotiated prices actually are between insurers and health providers, at least until sometime AFTER the services have been rendered. Such opaqueness is intentional. To paraphrase noted economist Uwe Reinhardt, where there’s mysteries in pricing, there’s larger-than-normal margin to be had. In healthcare, obscene money is made when it is allowed to operate in a dark room of denial and obfuscation.

On November 15, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that requires hospitals to disclose the rates they negotiate with insurers. This hospital price transparency rule, set to begin in 2021, requires hospitals to disclose the standard charges for all items and services, including supplies, facility fees and professional charges for employed physicians and other practitioners.

Additionally, the final rule requires hospitals to post payer-specific negotiated rates online in a searchable and consumer-friendly manner for 300 of the most popular services shopped by patients.

Under a separate CMS proposal, health insurers will be required to disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Health insurers will need to offer a transparency tool to provide covered members with personalized out-of-pocket cost information to all covered services in advance. The language for this proposed rule can be found here.

Negotiated prices are largely bound by confidentiality agreements between healthcare providers and insurance companies, and are so closely guarded that even mega-sized employers are not allowed to penetrate this veil of secrecy.

It is revealing that the American Hospital Association (AHA) and the Federation of American Hospitals are exploring legal options to argue that transparent pricing will constrain private contract negotiations.

Two influential insurance organizations have revealed their opposition to price transparency – America’s Health Insurance Plans and the Blue Cross and Blue Shield Association. A spokesperson from the BC/BS Association indicated these rules “will not help consumers better understand what health services will cost them and may not advance the broader goal of lowering healthcare costs.” The argument made is that price transparency can actually increase prices because clinicians and medical facilities will bid up prices, rather than lower rates.

Despite these self-serving arguments, the status quo only works for hospitals and insurers, but not for those who actually pay for healthcare. This must change.

By itself, real prices made public will not solve the inherent problems that persist throughout the healthcare system, but price transparency is a good first-step to have. Clearly, it is not the sole remedy to a ‘system’ that requires massive incremental fixes.

Admittedly, the push for healthcare ‘consumerism’ has been relatively slow. However, it is likely that consumerism will find new legs due to third-party entrepreneurs and technology companies who will find disruptive ways to make pricing a relevant decision-making tool for many patients. All purchasers want the best value in the healthcare being purchased.

Regardless of political party affiliation, price transparency in healthcare should be widely accepted by Iowans and all Americans.

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Filed Under: David P. Lind, Lindex Tagged With: , , , , ,