The Impact of Federal Price Transparency Rule on U.S. Hospitals' Compliance: A Deep Dive

Understanding the Federal Price Transparency Rule

As of January 1, 2021, the Centers for Medicare & Medicaid Services (CMS) enforced the federal price transparency rule requiring most U.S. hospitals to disclose pricing information on their website. This move aimed at aiding consumers in making informed decisions regarding medical services and transforming the dynamics of negotiation with health insurers.

Changes in Hospital Compliance

A study evaluating the changes in hospitals' compliance with the federal price transparency rule after its first year of enactment reported significant improvement. By early 2022, 46% of hospitals had posted both machine-readable and consumer-shoppable data, marking a 24% increase from the previous year. Interestingly, larger hospitals and public hospitals showed lower probabilities of baseline compliance with these requirements. However, public hospitals were significantly more likely to become compliant with the consumer-shoppable requirement by 2022. These compliance changes varied systematically across different types of hospitals and market structures.

The CMS Toughens Up on Non-compliance

In response to the varying levels of compliance, the CMS has toughened up on non-compliance by issuing warnings and imposing civil monetary penalties. They have also mandated the standardization of charge information to conform to a CMS template, data specifications, and data dictionary. This ensures that the quality of Machine-Readable Files (MRFs) submitted by hospitals and payers increases, with over half of hospitals receiving a five-star rating for publishing complete MRFs with cash, list, and negotiated rates.

Progress in Compliance and Future Changes

By 2023, more than 90% of hospitals had posted machine-readable files of price information as required by the CMS. Turquoise Health logged over 1.1 billion negotiated rates, further enhancing transparency. The CMS has also included new required fields and accountability parameters for hospital MRFs. The U.S. House of Representatives passed the Lower Costs, More Transparency Act to codify price transparency reporting into law, indicating the commitment to this cause.

The Importance of Price Transparency in Healthcare

Price transparency in healthcare has been emphasized by industry experts like Greg Kay, Senior Vice President at PMMC. He stressed the need for compliance, educating consumers on healthcare costs, and leveraging data for hospitals to enhance negotiating positions with payers. Kay also highlighted the transformative impact of transparency on the healthcare industry and the need for hospitals to adapt to changing regulations and consumer expectations.

The Role of the Hospital Chargemaster in Revenue Cycle Management

The hospital chargemaster, a comprehensive list of all services and items provided to patients, plays a crucial role in the healthcare revenue cycle. Hospitals use chargemaster prices to negotiate reimbursement rates with private payers. However, most insured patients pay the negotiated rate, while uninsured patients may pay the chargemaster rate or negotiate a price directly with the hospital. The chargemaster team is responsible for maintaining the chargemaster, ensuring accurate coding, and compliance with government pricing regulations. The three C's for maintaining the chargemaster are correct, complete, and compliant codes.