Hospital Price Transparency Talking Points

The Issue:

• CMS has issued regulations requiring hospitals to post price transparency information in an easily understandable format, with the requirements being effective January 1, 2021.
• Under the CMS regulation, hospitals are required to publicly disclose standard charges (including gross charges, payer-specific negotiated charges, charges for cash-paying patients and the minimum and maximum negotiated charges) for all items and services. This information must be available on the internet in a single data file that can be read by other computer systems. The file must include the hospital’s billing or accounting codes, such as Healthcare Common Procedure Coding System codes and a description of each item or service. The goal is to enable consumers and purchasers to compare standard charges between insurers and across hospitals.
• To date, fewer than half of hospitals are fully compliant with the requirement. While the administration has issued notices to non-compliant hospitals, the penalty for non-compliance is just $300 per day – far too low to be of any concern for most hospitals.
• Even fully compliant health systems report negotiated charges in different ways, making cross-hospital comparison difficult – limiting the benefit of the regulation for health care purchasers.

Why It’s Important:

• As found in recent RAND studies, employers are often stuck paying significantly higher prices for hospital services than public programs, like Medicare. Having this information is a great stride forward, and will hopefully have measurable impacts on employer plan hospital costs. These regulations will help continue the momentum on getting more cost information into the hands of those purchasing the health care services.
• As we know, simply directing enrollees into high-deductible (“consumer-driven”) health insurance plans is too blunt an instrument to actually encourage consumerism and “shopping” for health care services. As a trusted source of information, employers play a very critical role in helping to direct patients toward making well-informed decisions about where and how to seek health care. This is essential to achieving lower overall health care costs.

What We Want:

• We are urging the administration to strengthen the hospital price transparency rule in three ways:
  1. Aggressively pursue full compliance by all hospitals and health systems.
  2. Increase the penalty for non-compliance from $300 per hospital per day to $300 per hospital licensed bed per day.
  3. Update guidance to mandate standardized reporting to enable straightforward comparison between hospitals.