Higher penalties for undisclosed prices won't sway all hospitals to comply, consultant says

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While CMS' move to increase the penalty for hospitals that don't publish their prices will make some facilities more likely to comply with that requirement, it may not sway the country's largest health systems, Caroline Znaniec, a managing director at advisory firm CohnReznick, told Becker's Hospital Review.

The CMS final price transparency rule, which took effect Jan. 1, aims to make hospital pricing information readily available to patients to compare costs and make more informed healthcare decisions. To aid with this, hospitals in the U.S. are required to post both a machine-readable file with the negotiated rates for all items and services and display the prices of 300 shoppable services in a consumer-friendly format.

A recent analysis of 500 hospitals conducted by nonprofit Patient Rights Advocate found that 94.4 percent of hospitals haven't met at least one of the requirements since the rule took effect.

To boost compliance, CMS in November released a final rule modifying the hospital price transparency noncompliance penalty, which takes effect Jan. 1. Hospitals with 30 beds or fewer would continue to pay up to $300 per day of noncompliance, but hospitals with more than 30 beds will pay $10 per bed each day. The maximum penalty will be capped at $5,500 per day. A full year of noncompliance with the regulation would result in a maximum penalty of $2 million per hospital. 

According to Ms. Znaniec, the new noncompliance fee of up to $2 million per year will likely persuade  mid-sized hospitals and health systems to comply with the regulation, but not the larger facilities and health systems. 

"For the extremely large health systems, that amount is not really that large of a fine," Ms. Znaniec said. "I'm hearing from some systems that $2 million is nothing to them. They may be weighing the risks."

However, for mid-sized facilities with 100 to 250 beds, the boosted noncompliance fee has their attention as it's going to be a bigger hit to their bottom line, Ms. Znaniec said. 

The main reason larger hospitals and systems are not complying with the regulation is that they don't want to disclose their negotiated rates, Ms. Znaniec explained. 

"They have the resources to comply," Ms. Znaniec said. "They don't want to lose market share."

There's also the perspective that providers are worried because payers want to see what their health system has negotiated with rival insurers to determine whether they are paying more for certain services and if they can drive reimbursement down. 

Overall, the higher noncompliance fee from CMS will make more mid-sized hospitals comply, but it may not sway the larger facilities that may think keeping their rates private will improve their market share, Ms. Znaniec said.

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