Beginning in 2015, there have been several attempts by CMS to advance Healthcare Price Transparency. As a bipartisan issue stretching across multiple presidential administrations, CMS has attempted to address this sore and complicated topic. Consequently, in addition to CMS and consumers, price transparency is also being driven by private insurance companies and employers to provide better information around the cost and value of services. It seems this is a mandate whose time has finally come.
First (real) attempt: In 2015, CMS mandated that hospitals post their Charge Masters online. (With the expectation that it would be updated annually.) CMS’s Section 2718(e) of the Public Health Service Act, entitled “Bringing Down the Cost of Health Care Coverage” was enacted as part of the Affordable Care Act) with “each hospital operating within the United States shall for each year establish (and update) and make public … a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis related groups (DRGs)”
The anticipation was that this would be helpful, but it wasn’t. Many of the charge masters were in an illegible format and most patients had no clue what a “Charge Master” was, much less where to find it or how to use it. This policy change brought little value to the patient experience, and didn’t do much to help consumers better understand future healthcare cost projections or improve their ability to comparatively price shop. (The way they do in nearly all other industries.) As a result, true price transparency was not achieved.
Second attempt: Updates to CMS FY 2019 IPPS Final Rule guidelines Section 2718(e) “required all hospitals to list their standard charges on a publicly available domain, effective January 1, 2019”. In other words, lists of standard charges for all items & services provided by the hospital as well as annual updates made available via the internet in a “machine-readable format”. Better, more inclusive, and potentially informative, right? But again, little changed and true price transparency was not achieved.
Third attempt:June 2019, President Trump issued an executive order for price transparency expansion efforts. It required HHS to develop rules requiring hospitals to publish prices “that reflect what people actually pay for services in a way that’s clear, straightforward and accessible to all” to promote competition for health services and lower health care costs. In response, CMS published a price transparency rule supplement to the CY 2020 OPPS final rule in November 2019. The idea being again to make prices for items and services provided by hospitals more transparent for patients. Thereby, “increasing market competition and ultimately drive down the cost of health care services.” Yet again, little changed in the goal towards achieving price transparency.
Fourth attempt: This last year CMS got more serious about taking it to the next level with the additional Price Transparency requirements and prescriptive consequences for non-compliance. I.E. Final rule CMS-1717-F2 (Effective January 1, 2021): all Hospitals are now required to make public their “Standard charges” available in two ways:
- Displaying online “discounted cash prices, payer-specific negotiated charges, and deidentified minimum and maximum negotiated charges for at least 300 ‘shoppable’ services”
- There is an accepted alternative I.E. Produce an inclusive Price/Cost Estimator on the hospital’s website. (Likely the closest to meeting CMS’s intent.)
- And…annually produce and post a machine-readable file, in a specified format that is easily located on the hospital website with “standard charges (including gross charges, discounted cash prices, payer-specific negotiated charges, and deidentified minimum and maximum negotiated charges) for all hospital items and services.”
After reviewing many hospital websites for transparency, it seems many do not fully understand the requirements, and some are simply choosing to ignore them. In the past, price transparency seemed to be more of a suggestion. This time, CMS added more teeth with potential various punitive actions for non-compliance with hints of potential expansion. Things like:
- Audits and warning notices
- Levies of civil monetary penalties: $300 per day or $109,500 per facility annually
- If a health system has 10 qualified hospitals, that would be $1,090,000 annually
- “Mosquito bite” to some, but potentially increasing in the future
- Requests for corrective-action plans
- Publicizing of penalties
- This will happen if corrective action plans are not submitted or followed
- This likely has the largest long-term impact as public loss of trust and respect maybe the costliest in competitive scenarios
- “Shot across the bow”?
- Medicare reserves the right to reduce or completely suspend “hospitals payments for care which could easily and quickly put hospital operations in the red for non-compliance
If the above potential actions were not enough to prompt compliance, a Becker’s CFO Report (“CMS has started price transparency compliance audits: 6 things to know”) Alia Paavola accurately reports that CMS is already auditing hospitals. Regarding audits, CMS has created devoted websites, links, and forms for enlisting and encouraging reporting of non-compliant facilities by the public. “Patients are encouraged to submit complaints if they can’t find a hospital’s standard charges online.”
Additionally, while some had sought a reprieve or a even delaying of implementation, Paavola notes that “hospitals can’t apply for hardship waivers or exemptions” citing that CMS had “already delayed the effective date by one year”.
Many may check off the bare-minimum requirements for 2021, but if we think this is CMS’s final step or intended endpoint regarding Price Transparency, my guess is that we will be mistaken. I’m betting CMS will accelerate these efforts in 2021 and 2022.
My intent here is not to help swing CMS’s Big Stick in anyone’s general direction. It is to review a partial timeline of Price Transparency’s history as well as create awareness of impacts of non-compliance as well as discuss intent, impacts and maybe lightly discuss solution criteria.
On the latter, I wanted to note there are less laborious, more effective, and less costly alternative solutions out there than many realize. We often make Price Transparency far harder than we need to. There are relatively low impact solutions for hospitals that can have high positive impact on their client patient base and their relationship with them. As Paavola mentioned: “CMS said it will deem a hospital as having met the requirement of posting a consumer-friendly list of standard charges if the hospital has an online cost estimator tool that provides out-of-pocket cost estimates in real time.”
This patient experience-oriented type of tool (cost estimator) is what I believe is the longer-term solution that goes beyond just checking the mandatory-minimum compliance box. The Patient Experience is king these days, and pays rich dividends to those that embrace all aspects of it, especially in regards to Price Transparency. Getting out in front of the curve will certainly help in this situation, and a small investment now will pay dividends and a rich ROI to you and those you serve. (Obviously, I think we have a great solution at Wixcorp with our Estimator solution.)
On that note, in the past several years we have all become accustomed and even demand more efficient and intuitive experiences making purchases from retailers. Companies like Amazon, Costco, Sam’s Club/Walmart, theaters, car dealerships and countless other retail and service options. As one who travels extensively for work each year, I book and pay for for various travel services by simply using my mobile devices; it has become second nature. This has helped make time-consuming day-to-day tasks more efficient and intuitive and far less painful. This is not only becoming the norm but the minimum standard if you want consumers to engage. This has also lead to greater expectation and outcome regarding pricing transparency.
Conversely in healthcare, we have been severely lagging behind the consumer market. Consider if any of the above-mentioned businesses posted a maximum of 300 specific products of their choice along with an abstract and non-user-friendly Excel spreadsheet with somewhat vague pricing. What would you do? I would likely and immediately move on to the next option, even if it meant driving further to pick up or postpone my purchase altogether. I believe patients are and will continue to expect the same great experience and outcomes in healthcare as they do from their regular consumer experiences…and they should. However, when similar tools and experiences do not exist or are not as similarly engaging, intuitive, convenient, and efficient, patients can get discouraged, frustrated and move on to something or someone else.
Lastly, think back on the last 12 months. Out of necessity, our industry and our patients have embraced the deployment of many digital tools and abilities in healthcare. Overall this has been a good thing and innovations that we were hesitant to accept previously, we are now embracing and adapting to quickly. I.E. Telehealth and other online options have been adopted like never before. CMS has overcome many of their previous objections and obstacles thus paving the way for accelerated adoption and further innovation. Patients are definitely looking for the best user/patient experience they can find and much of it resides outside of the actual patient-provider interaction. Bottom-line, if you don’t provide digital convenience for your patients, rest assured that the Walmart’s, Amazon, CVS and many others will.
In closing, the government mandates and requirements are not the most pressing factors. As noted, ALL leading consumer brands have set a high bar for patient expectations. This is in large part, how they became “leading brands”. It is also the way for healthcare providers to lead. We must not squander the opportunity to improve by adopting minimum mandatory requirements and deploying unsatisfactory tools, options and experiences. We have an opportunity to do better and the time to do so is now, well in advance of additional government mandates or requirements.
To learn more about how Wixcorp is approaching this, you can tap one of the buttons below to visit our website or start a conversation.