As we mentioned in our previous post, CMS has implemented additional hospital price transparency requirements for 2024.
With these new requirements, CMS is demonstrating its seriousness about price transparency by calling for disclosure of additional information, standardizing data formats to facilitate aggregation by third parties, and stepping up its oversight and enforcement efforts.
For hospitals already struggling with resource constraints, these new requirements may come as an unwelcome burden, and it would be tempting to do the very least amount of work possible to comply with them. However, hospitals would do well to embrace these requirements and take advantage of the information that price transparency makes available.
Overview of the New Rules
The CY 2024 rule contains quite a few changes, which pertain primarily to the machine-readable, comprehensive file of all standard prices (as opposed to the separate list of 300 “shoppable services”). Changes include the following:
- Reporting features to facilitate data aggregation across hospitals
CMS clearly intends to facilitate the aggregation of hospital data by third parties who will package that information for release to the public. Effective January 1, hospitals are now required to include content on their websites that helps users navigate to the comprehensive machine-readable files. Beginning in July, those files will also have to include information identifying the hospital whose data they contain, presumably so that data aggregators do not have to provide this data themselves. Additionally, CMS has become much more prescriptive in the format of these data files, again with the apparent intent of creating standardization that will facilitate aggregation.
- Descriptions of payment methodologies
Beginning in July, hospitals will need to express this information as a percentage of charges or other algorithm as applicable, along with the historical amount paid for those services. In effect, this allows third parties to reconstruct a payer’s payment methodology.
- Attestations from hospital executives
A hospital’s designated representative will need to provide an attestation that all the information contained in the machine-readable file is complete and accurate to the best of their knowledge. CMS believes this will better enable them to enforce accountability and resolve any outstanding questions regarding the data being submitted.
- Increased enforcement
CMS now reserves the right to conduct comprehensive compliance reviews of a hospital’s standard charge information and to publish the results of that review, along with any compliance actions taken against the hospital and any notifications sent to health system leadership. These steps are in addition to the audits that CMS currently performs, which have increased significantly in number since the program was first implemented.
What Hospitals Should Do
Given that price transparency requirements have only gotten more rigorous since they were introduced three years ago, it seems unlikely that they will be relaxed within the foreseeable future. As such, hospitals should think seriously about how to take advantage of the information being made available to the public. We offer some suggestions below.
- Make sure your hospital is compliant.
First and foremost, don’t get caught in CMS’s crosshairs for failing to meet these requirements. The industry has generally been slow to embrace price transparency, which likely explains why CMS is enhancing its monitoring and imposing stiffer penalties for those that don’t take the necessary corrective actions. Additionally, by posting letters of noncompliance on its website, CMS is exposing hospital executives to public scrutiny and shaming.
- Prepare to spend time reviewing contract language.
Because CMS is mandating that machine-readable files include the methodology for calculating payment, hospitals will need to compile this information and include it in their comprehensive price files. In some cases, hospitals may have to create links to external descriptions of a payer’s methodology. Performing this function requires expertise in payer contracting, which may be outside the scope of the in-house staff and external vendors who have previously been responsible for publishing a hospital’s price transparency information.
- Use price transparency as an opportunity to assess your payer strategy.
Hospitals are required to refresh their pricing information annually, which presents an opportunity to assess their payer strategies. By conducting the refresh, hospitals must compile their own pricing information at a detailed level; having accomplished this, they can then readily compare their information to that of competitors and peers using an ever-expanding number of market data sources.
Conducting this review will assist hospitals in thinking about how they price their services strategically. It may no longer make sense to seek across-the-board rate increases; instead, hospitals will need to determine which services are commodities to be priced competitively and which ones are differentiated, allowing the hospital to command a premium price.
- Take advantage of market data in payer negotiations.
The availability of market pricing data can have a dramatic impact on a hospital’s ability to negotiate rates with payers. We are already using this data to great effect when we assist clients in payer contracting, as it removes much of the information disparity that payers have historically used to their advantage. As the data becomes more robust and its reliability increases, it will prove to be an indispensable component of a hospital’s negotiation strategy.
It's interesting to note that our price transparency regulations are the product of work performed under the current and prior presidential administrations. The concept has broad appeal because for decades, patients have been largely in the dark when trying to understand the cost of their healthcare. Similarly, hospitals and other providers have traditionally had little visibility of how their prices stack up against those of their peers. That is changing rapidly, and providers who are thoughtful about how they respond to this increased visibility will be best positioned for success. Click here to learn more>>