Top 10 ways hospitals are not compliant with new CMS price transparency rules

February 25, 2021
Jonathan Kaplan, MD, MPH

The new rules went into effect this year.

It used to be a dream. But now, it's reality! The new CMS price transparency rules went into effect on January 1st. And while these new rules were initiated by former President Trump, the Centers for Medicare and Medicaid Services are still charged with enforcing these new rules, even under a new Administration.

If you're a hospital breathing a sigh of relief that you're compliant because you have downloadable machine-readable files and a price estimator tool on your site, think again. You may be following the two big picture requirements from CMS, but glossing over the fine print.

Hospitals still non-compliant with new CMS price transparency rules

It's interesting in that, I believe, for once, CMS is explicitly clear in what they want. In short, hospitals are required to make the following two items easy to find on a hospital's website:

  1. A machine-readable file with all of their pricing - chargemaster rates, insurance specific negotiated rates, cash prices and the average maximum and minimum negotiated charges for each procedure and
  2. 300 shoppable services of the same rates as above, except for the chargemaster rates. And of those 300 shoppable services, CMS specifies 70 of those procedures, while the hospital can choose the other 230.

In regards to number one, the downloadable files must contain all of the necessary information described. Hospitals don't get to pick and choose what types of charges to include. As a sort of distraction, some hospitals are only listing DRGs (diagnosis related groups) and not the more useful-to-a-consumer procedure codes (CPTs). CMS requires the inclusion of supply costs as part of the procedure. But some hospitals are only listing supply costs without the procedure costs. So, this turns out to be incomplete, in-actionable information.

As for the second requirement, shoppable services have to be displayed in a consumer-friendly price estimator tool. Aside from showing the cash price and negotiated rates from all payors, including the maximum and minimum negotiated rate, CMS also clarifies that the tool cannot require any personally identifying information (PII) required to create an account, such as a username or password. Asking for PII in the form of an insurance plan or policy number is allowed so as to provide the consumer with a more specific out-of-pocket estimate. 

The Biggest Offender

In an extensive review of hospital websites, many are using a MyChart price estimator tool (like here and here) created by Epic. This tool requires the consumer to enter personally identifying information like name, date of birth and group/member number to get their estimate. While requesting insurance information may give the consumer more accurate information, and is allowed, some tools will not allow the user to see an estimated cost without this information. In other words, requesting insurance policy information is allowed but it also can’t be a barrier to determining the payor’s negotiated rate.

It’s possible the consumer’s out-of-pocket estimate won’t be as accurate without their insurance information, but the hospital can still list the negotiated rate they have with the payor. Stated another way, specific group and member policy numbers are not required to determine the negotiated rate between hospital and payor.

Consider how many hospitals and health systems use Epic. Then consider how many are using these MyChart price estimators. These hospitals think they're in the clear but are actually still potentially exposed to the $300 per day CMS penalty ($109,500 annually).

How are you non-compliant, let me count the ways!

While many hospital representatives are willing to be quoted online because they genuinely believe they are compliant, it doesn't change the fact that their institutions are not. Non-compliance comes in all shapes and sizes:

  1. downloadable spreadsheets and price estimator tools are non-existent or impossible to find
  2. only list chargemaster rates, not the cash rate or negotiated rates from all payors
  3. only list cash rates or better yet, only list chargemaster rates and tell the consumer to calculate the cash rate based on a percentage discount themselves
  4. only list the de-identified maximum and minimum negotiated rates but don't identify the insurance companies or their individual negotiated rates
  5. only list DRGs and not CPTs
  6. don't include ancillary fees that would typically be part of a particular procedure or DRG
  7. do not allow the consumer to see a negotiated rate without entering their policy number
  8. list only supply costs
  9. use only internal codes and not searchable CPT codes
  10. downloadable files but no user-friendly format or price estimator tool for shoppable services 

Conclusion

The fight for price transparency isn't over. Consider this statement from the Christus Health website:

“We understand the cost of health care can be complex. New guidelines established by the United States Department of Health and Human Services require us to publish our negotiated rates with payers for services provided. We haven’t invested our resources into this because it provides something that will only be useful for our competitors. We aren’t in it for them. We are in it for you and believe you deserve to know what’s important to your personal situation. That’s why we remain dedicated to keeping prices low for you.” *Bold added by author

The reason given above for not providing pricing isn't new. As a plastic surgeon that has provided pricing on his own website for years, I've heard similar excuses from other doctors: "It's too complicated to provide pricing ahead of time." "I don't want competitors to see my pricing." "What if the consumer doesn't understand it's an estimate?"

While all of these concerns are legitimate, the truth is, physicians, surgery centers and hospitals all have spreadsheets to keep track of their cash rates, bundled rates and negotiated rates. There are so many solutions out there to organize this data into user-friendly price estimator tools. And now that it's the law, the trend will start with hospitals and trickle down to the rest of healthcare. So maybe it's time to stop fighting the inevitable and embrace the potential customer service benefits of price transparency.

Dr. Jonathan Kaplan is a board-certified plastic surgeon based in San Francisco, CA and founder/CEO of BuildMyBod Health, a price transparency-lead generation platform. You can watch him operate and educate @realdrbae on Instagram, Snapchat and TikTok.