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:
- In a display of shoppable services (for 300 common services) in a consumer-friendly format.
- 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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