From the Biden Administration and from the Centers for Medicare and Medicaid Services (CMS), the message has been consistent – price transparency is here to stay and non-compliance will not be tolerated. “As President Biden made clear in his executive order promoting competition, a key to price fairness is price transparency. No medical entity should be able to throttle competition at the expense of patients,” Xavier Becerra, secretary of the Department of Health and Human Services (HHS), said in a press release. The Administration has provided direction for the Department of Health and Human Services (HHS) to continue its efforts in requiring hospital price transparency and to take actions as outlined in prior final rule making, including auditing hospital compliance and assessing monetary penalties. This was further supported in the latest Outpatient Prospective Payment System (OPPS) Proposed Rule for CY2022, released July 19, 2021, where fines and scrutiny are both addressed with much greater weight. For example, increasing daily monetary penalties from $300 per day to up to $5,500 per day.

The current price transparency requirements, effective January 1st of this calendar year 2021, require hospitals to expand their efforts in publishing their charges and payer-negotiated rates. Soon after the implementation date in January, it was made obvious through media, outward messages from hospitals, and their professional associations and patient advocacy groups that many hospitals either simply did not comply, complied at varying levels, or complied but designed mechanisms to hide their pricing. What drove the varied levels of compliance, or complete non-compliance, was a combination of causes.

In the beginning of the calendar year, hospital management and associations communicated back to the media backlash arguing that the CMS hospital price transparency rule requirements were untimely during a pandemic, the request was overbearing and costly to meet the requirements, and the requirements themselves were confusing. 

During a recent webinar with a large audience of healthcare management professionals, CohnReznick Healthcare Industry Leader, Caroline Znaniec, shared insights pertaining to hospital price transparency compliance and outlook. Throughout the webinar presentation, Znaniec asked participants to answer polling questions to better understand the struggles towards compliance and where hospitals stand in late July on their efforts, whether new or ongoing. The 430-member audience included representatives from critical access hospitals to largely renowned academic medical centers and large health systems.

From Znaniec’s webinar, the audience indicated their own struggles with meeting the transparency rule in both timing and content.

Znaniec shared with the webinar attendees that much of what has been voiced in the mainstream media and social media channels on issues of non-compliance is consistent with CohnReznick’s own independent auditing of hospitals and what CMS had directly pointed-out or eluded to in the OPPS proposed rule. From the second polling question, that also seemed to resonate with the audience too.

Common issues of non-compliance:

• The hospital did not include all items and services, including room and board, pharmaceuticals, supplies/implants and physician services.
• The hospital did not include all required data elements, including all payer-negotiated rates and service packages – such as DRGs.
• The hospital did not meet technical specifications, including having a single downloadable data file for all items and services.
• The hospital did not provide accessibility to pricing information, including gated material requiring a user to provide personally identifiable information.

Knowing that efforts to meet the price transparency requirements varied, Znaniec polled the audience to understand what efforts have been made by organizations; whether they had not yet begun, addressed price transparency internally, or leveraged external assistance (e.g. pricing tool vendor). 

During her webinar presentation, Znaniec provided three de-identified hospital examples of independent audits performed. Each example varied not only in size, type and geography, but also in compliance efforts. Znaniec also chose focused issues to review across all the hospital examples. The issues noted in the audit of the hospitals aligned, again, with media sources, critics and with the CMS’ comments in the OPPS Proposed Rule.

Znaniec also provided webinar participants with a quick quiz to help them understand where their organization may be at risk for non-compliance. The quiz was designed to identify real-life examples of non-compliance from hospital organization files, consistent with feedback from CMS.

After the quiz, the attendees were polled again on their overall takeaways and, not surprisingly, many of the participants that had indicated no issues or concerns in the earlier polling questions, noted that, based on what they learned from the webinar presentation, they have more work to do.

In our experience in working with hospital organizations, even the most prestigious of hospital organizations remain non-compliant; although they often believe they are following the requirements. 

Znaniec also recommended that hospital organizations continue to stay up-to-date with communications from CMS to understand more behind the intent and expectations from the CMS Program Integrity Group. Past stakeholder calls can be found here.

In closing, compliance creates an opportunity to improve charge capture and revenue performance. Pricing should not only be transparent (How was the price determined?), but also defensible (Is the price consistent with cost, the market, and any unique offerings?) and strategic (Is our pricing aligned with our market and outlook on growth?). A rational pricing methodology leverages guiding principles that consider a hospital’s net revenue expectations, inter-relationship of services and charging methodologies, market position and outlook, and overall consumer and stakeholder satisfaction. The steps needed to sustain compliance with price transparency requirements most often will also uncover opportunity to improve charge capture and reduce revenue leakage.

How CohnReznick can help

CohnReznick supports hospitals as they not only work towards, and sustain, pricing transparency compliance, but also align pricing and charging strategy for improved charge capture. 

As a leading advisory, assurance, and tax firm, CohnReznick’s Healthcare practice boasts a national team of highly experienced professionals with extensive industry credentials.

We can show you how this pricing transparency mandate is more than an exercise in compiling and publishing data, it’s an opportunity to re-evaluate your pricing methodologies and identify potential improvements. Our team can: 

• Implement immediate pricing and charging methodology changes to meet the guiding principles of a rational pricing methodology.
• Help build a means for providers to extract the data needed to meet CMS’s reporting requirements.
• Provide guidance on how to better align pricing, charging, and reporting as the industry moves to value-based reimbursement models. 
• Identify inefficiencies and opportunities to improve quality in revenue cycle processes. 
• Enhance payer contract compliance to avoid underpayments.