Revised federal price transparency rules have made hospital price data clearer, but several issues still complicate price comparisons, according to an Oct. 7 analysis from the Peterson-KFF Health System Tracker.
The revisions to the 2021 hospital price transparency rule took effect in January, and CMS began enforcing them in April. Hospitals must now post a negotiated rate as a dollar amount whenever the final payment can be known before care is delivered. When a rate is a percentage or a formula, hospitals must also report “allowed amount” data: the median, the 10th and 90th percentile payment amounts, and the number of payments.
The researchers reviewed machine-readable files compiled by Turquoise Health and downloaded between July 17 and Aug. 2. They examined two common inpatient admission codes, MS-DRGs 280 and 807, in several local markets and reviewed national patterns across 6,445 hospitals.
“These complications reflect the complexity of payment arrangements between hospitals and payers,” the report stated.
Six things to know:
1. Most percentage- and algorithm-based entries report zero payments. In 92% of commercial MS-DRG rates that used a negotiated algorithm, hospitals reported a payment count of zero. The share was 95% for rates expressed as a percentage. For MS-DRGs 280 and 807 combined, the shares were 72% for algorithm-based rates and 91% for percentage-based rates. Many of the posted rates may never have been paid.
2. Dollar amounts aren’t always final prices. The dollar field can hold either a base rate or a final rate. Users often have to check the algorithm, percentage and notes fields to tell which one it is, and that’s hard to do at scale.
3. One plan can carry multiple rates. Some hospitals list more than one rate for the same payer and plan, such as a case rate alongside a per diem rate. The researchers couldn’t tell from the data whether these were separate arrangements.
4. Payment terms are recorded in different places. Some hospitals put adjustment logic in the algorithm field, while others put it in the notes. Logic placed in the notes generally doesn’t trigger the allowed amount reporting, which the researchers said, “negates an important aspect of the revised rule and meaningfully limits how the rates might be understood.”
5. Outlier terms remain inconsistent. Hospitals record stop-loss and outlier arrangements in different ways. New CMS guidance addresses only some of these problems.
6. Rates are shared across locations and services. Hospitals that operate under one license often post identical rates and payment data. In one example, the shared rates included a behavioral health hospital that doesn’t appear to offer the service. Hospitals also list rates for services they rarely or never provide, similar to the “ghost rates” found in payer-reported data.
The researchers added that CMS guidance or enforcement could resolve some of these issues. Others are harder to fix, including how to record outlier terms and whether rates that have never been paid should be reported. Analysts who compare only dollar amounts across many hospitals risk drawing limited or biased conclusions. Market participants looking at a smaller set of contracts can rely more on the free-text fields and their own knowledge of local markets.
