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

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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Hospital Price Transparency Took Effect New Year’s Day
But, Where is it?

Happy 2021!!!

In this brand-new year, imagine that you have found your most desired showroom vehicle at a local dealership. After haggling with the salesperson (and the backroom manager), a process that is similar to playing ‘Let’s Make a Deal,’ you are handed the following purchase agreement that reads (in short):

This negotiated price is an estimate only and is not a quote or a guarantee of the amount that you will eventually owe…

Now wouldn’t that be a twist on the old way of doing things! But in healthcare, this is precisely the norm.

Recent Ruling on Hospital Transparency Pricing

On Tuesday, December 29, the U.S. Court of Appeals for the District of Columbia circuit rebuked the hospital industry’s legal attempt to banish new rules on price transparency from taking effect on New Year’s Day. I have written about the new rules frequently in the past. The price transparency rule, published in November 2019, was pushed by President Trump and HHS Secretary Alex Azar.

As it now stands, barring a President Biden ‘stay of execution’ order to relax these rules, hospitals must post their negotiated rates online beginning January 1, 2021. The online rates must be conveyed in a machine-readable format and also list their negotiated rates for at least 300 shoppable services in a consumer-friendly format – including 70 services picked by the Centers for Medicare and Medicaid Services (CMS).

Starting Jan. 1, 2022, health plans and insurance companies will have to provide a publicly available, updated data file on costs. By January 1, 2023, payers, such as commercial insurance companies and large, self-funded employer health plans will also need to comply with similar price transparency rules demanded of hospitals. This was discussed in my November blog, “Finalized Price Transparency Rules for Insurers.”

Not surprisingly, the American Hospital Association is disappointed by this latest decision and, according to their General Counsel, Melinda Hatton, “…are reviewing the decision carefully to determine (our) next steps.”

It’s Now 2021 – Have These Rates Been Posted?

On January 2, I’m sitting at my computer attempting to discern what actions a few Central Iowa hospitals have taken to comply with this new requirement to inform Iowan’s about specific ‘negotiated’ health prices, not just merely ‘estimated’ prices. Estimations, I might add, are simply playing a game of horseshoes and hand grenades, providing just enough information to check boxes to ‘inform’ an already confused public.

Below is a rather quick assessment of three Des Moines-area hospitals – in addition to the Iowa Hospital Association – and what they have listed on their websites as of January 2, 2021. Since that date, any changes made by the following organizations have not been reflected in my comments found below.

MercyOne – Des Moines

As I understand the requirements, MercyOne’s ‘Estimate Your Costs’ webpage does not conform with the new regulations on hospital price transparency. This webpage allows one to download a list of their ‘standard charges’ (in Excel format), but does not provide the ‘negotiated’ rates by payer. MercyOne cautions that this information is only a ‘partial estimate,’ as it does not include other fees beyond hospitals charges, such as “physician fees, charges for your emergency room physician, radiologist or anesthesiologist”.

Before an interested patient can gain access to “generate the most accurate estimate for your health care procedure,” one must click “Estimate Your Costs” and agree to the ‘Disclaimer’ before providing your name, DOB, type of desired medical procedure and your insurance vendor. I attempted to complete this exercise but was met with ‘an error’ both times.

Just as troubling to me is this disclaimer: “Benefits and eligibility are subject to change at any time. This estimate may contain private information that is protected by law. If you are not the patient, patient representative or guarantor, sharing, copying or using this information in any way is against the law.

Frankly, I thought this regulation was all about ‘transparency’ of negotiated medical prices. If I want to publish what MercyOne has negotiated with any particular payer, I should be able to do so. I will assume this site has not been adequately updated and, consequently, this language requires a revision.

UnityPoint Health – Des Moines

The Patient Charges and Costs webpage for UnityPoint Health appears to be helpful, but when looking more closely, it has not changed to reflect the new regulation. The UnityPoint site refers to the January 1, 2019 requirement that hospitals list their ‘standard charges’ of Diagnostic-Related Group (DRG) charges. This information should be deleted from the website as it no longer is compliant with the new regulations. UnityPoint Health cautions the patient to ‘first contact your insurance provider’ who may provide their own ‘estimates’ for out-of-pocket costs based on the insurance plan of the patient. But doing so will likely invite the patient to enter a new labyrinth of confusion that is full of disclaimers, etc.

UnityPoint’s ‘Financial Estimate‘ webpage requires completion and submission before releasing prices. I did so, but when it was submitted, I received the following message: “Thank you for your request.  We’re striving to provide an easier and more personal way for you to plan your health care. A UnityPoint Health financial representative will reach out to you within 2 business days to provide your estimate information.

This website is both confusing and non-compliant – based on my review date (January 2).

Iowa Hospital Association (IHA)

After a cursory review of the IHA website, there are no specific updates that provide revised information about this latest regulation.

Broadlawns Medical Center – Des Moines

With Broadlawns, we actually have a BINGO!

Two days before the required posting of negotiated rates, Broadlawns posted their ‘Pricing Directory’. Broadlawns provides this information in two formats: PDF file and CVS file. The 450-page PDF has the following disclaimer at the top of the first page:

This is an estimate only and is not a quote or a guarantee of the amount that you will owe or what the charges for services will be. The actual charges may be lower or higher than the estimates depending upon many factors – including actual services rendered, complications, your particular health care needs, and your actual insurance policy coverage.

The 450-page PDF includes 15 health insurance products offered by eight insurance companies: Aetna, CIGNA, Coventry, Health Partners, Medica, United Healthcare and Wellmark. Many shoppable services are broken down by professional (physician) and hospital services. You will find the procedure code, gross amount of the service, cash discount offered, negotiated rate with that particular insurer, and the minimum and maximum charge.

Out of sheer curiosity, I did a quick price comparison between Wellmark PPO and United Healthcare PPO for a few random procedures at Broadlawns (found below). Please note, this comparison does not suggest that these negotiated prices are the same at other hospitals. This information is only specific to Broadlawns Medical Center.In lieu of searching for the correct procedure code and shoppable services at Broadlawns, the patient can request a ‘Personalized Price Estimate’ from Broadlawns using the web-based Cost Estimator Request Form (or by calling a Broadlawns financial representative).

Conclusion

Because each patient encounter is so unique and may require various procedures, caveats by hospitals are certainly understandable when quoting specific procedure code prices. There are MANY hurdles to full-blown price transparency that cannot be categorically described in this particular blog. One obvious hiccup is – just how much the patient has remaining on his/her deductible and out-of-pocket maximum to determine their personal liability for the procedure(s). The patient will need to toggle between the health provider for specific prices and with their insurance vendor on whether the service is covered by their plan and, if so, how much the patient will be liable to pay. Transparency in medical prices help, but clarity on how to use this transparency will be problematic until a new world of simplicity evolves.

Many experts agree that price transparency in healthcare will eventually be a valuable thing to have, but this particular requirement is merely a first step toward a ‘Marie Kondo’ approach that will hopefully clean up a very messy industry when it comes to pricing. Kaiser Health News just published an article about the implications of having transparent medical pricing for consumers.

I envision that enterprising third parties will take this newly-released public data and morph it into usable consumer-centric information that can be easily accessed through a smart phone app for the patient. In addition, innovative clinician tools can help health providers perform real-time cost/value trade-offs with the patient while ordering procedures and diagnostic tests that impact the cost.

Simplifying a complex system will take patience, time and a general willingness to invoke needed change.

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