The journey to achieving pricing transparency in healthcare is riddled with challenges, but with the right partner, organizations can navigate the complexities successfully.
Many industry leaders and organizations use the first month of the year to reflect on the past and set strategic goals for the future. Among these, operational efficiency, strategic positioning, and organizational transformation sit high on priority lists. But there’s one crucial focus area that not all companies are considering: price transparency.
Two years after becoming law, the Centers for Medicare & Medicaid Services (CMS) regulations are narrowing in on healthcare price transparency requirements with heftier fines and tighter timelines for action. Healthcare organizations need to be compliant with these regulations in order to position themselves for success and avoid financial and reputational hits. As your organization kicks off the new year, here’s how you can align with CMS legislation without falling into confusion or getting caught up in complexity.
What Is the Hospital Price Transparency Rule?
Established in 2020, the Hospital Price Transparency Rule mandates that all hospitals and health systems publicly display available services on a user-friendly platform and their associated costs in a machine-readable file format as of January 1, 2021. This includes not only standard charges but also the rates negotiated with different payors, offering a comprehensive view of potential financial obligations. Additionally, hospitals are required to provide patients with a tool that calculates potential out-of-pocket costs. This can be done either through direct estimation tools or by disclosing payer-specific negotiated rates for a minimum of 300 available services. The objective is to empower consumers and payors alike with transparent and accessible cost-related information, thereby fostering an environment of informed decision-making.
In recent years, enforcement of this rule has become stricter, with CMS increasing the frequency of audits and setting a firm deadline of 90 days for the submission of corrective action plans. This enhanced scrutiny also extends to the payor side, ensuring that payor-specific negotiated rates are accurately and promptly reported. Additionally, with the impending publication of over 200 new Current Procedural Terminology (CPT®) codes, healthcare organizations are prompted to revisit and potentially revise their compliance efforts and pricing strategies this year. The introduction of these codes is anticipated to further refine the pricing and billing process, making it more crucial for hospitals to maintain up-to-date and accurate pricing information for both consumers and payors.
While these regulations will bring healthcare closer to a future of transparency and improved patient experience, the road to implementation is riddled with obstacles. Even hospitals and health systems with the best intentions have struggled when it comes to implementing price transparency initiatives.
According to a 2022 report by PatientRightsAdvocate.org, just 36% of 2,000 hospitals reviewed were compliant with CMS price transparency regulations, and only 17% had incorporated a consumer-friendly display of services on their websites. Another study found that estimates between prices listed online and those quotes over the phone vary by 50% or more.
The data component of price transparency legislation can be particularly complex to navigate. Given the constantly moving parts that make up expenses for services, careful attention must be paid to maintenance, coordination, and quality assurance processes to avoid inaccuracy.
A specific requirement many organizations have found daunting is the mandatory machine-readable format of financial data, which can create files so large they take more than 5 minutes for each page to load. A host of small firms have emerged to help health systems with less robust IT infrastructure ensure they achieve compliance, although that comes with the additional work of collaborating with a new third-party vendor.
The cross-functional nature of price transparency work can also leave institutions vulnerable to the age-old scenario in which “everyone’s an owner, so no one is.” The Hospital Price Transparency Rule demands input and support from teams from finance, administration, IT, and even sometimes patient advocacy groups. It’s not possible for just one team to operationalize this responsibility on their own. However, without appropriate accountability, healthcare organizations risk significant financial penalties.In fact, the mean penalty amount reached $511,000 in 2022 — up from $110,000 in 2021. With CMS cracking down on noncompliance in 2024, these numbers could continue to skyrocket.
Embrace Transparent Healthcare Pricing with SEI
Many of the challenges healthcare institutions faced in 2023 (resource deployment, optimization, administrative efficiency) will continue to be present in 2024. But few will move at the pace of price transparency, a space which continues to evolve as more organizations raise the bar and patients, in response, raise their expectations.
Don’t get left behind. If your organization needs help navigating this change, SEI can give you a leg up in the right direction. With a proven history of success in compliance, data governance, and data strategy, we help healthcare organizations pinpoint the greatest opportunity for improvement.
We’ve landed hundreds of complex programs on time in dozens of highly-regulated industries through our superior program management and execution. Whether it’s pharmaceuticals, biotechnology, medical devices, or insurance plans, we understand the significance of regulatory compliance and have helped numerous organizations align with complex legislation for better quality control and greater consumer satisfaction. In this new year, let SEI help you hit your compliance goals.