What employers should know about the Hospital Price Transparency update

Are Americans getting any closer to price transparency in their healthcare experience? The latest update from the Centers for Medicare and Medicaid Services (CMS) may have inched us toward that reality. 

It's been over three years since the Hospital Price Transparency Rule went into effect, requiring all hospitals to reveal what they charge for their services and insurer-negotiated rates. Whether hospitals were truly doing their best to comply has remained a point of doubt in the healthcare space — but now that compliance has become a lot easier to check and enforce. 

Starting July 1, CMS is requiring hospitals to use a standard, machine-readable file format that reveals not only prices and rates, but also the reasoning behind negotiations and an accuracy and completeness statement. This standardization will make the data far more accessible to the public, including self-funded employers who are trying to get care for the best price. For CMS, it's now more clear which hospitals are failing to meet the rule's requirements. 

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"When we step back and absorb all these measures from the 10,000-foot view of compliance and enforcement, we see a clear picture of how the 2024 requirements allow for more consistent and automated file review, assessment, and where needed, corrective actions by CMS," says Carol Skenes, principal strategist at Turquoise Health, a healthcare pricing platform.  "Due to the nature of these new requirements — they are largely a binary "yes" [complied] or "no" — enforcement is drastically easier than in requirements past."

Skenes predicts there will be fewer gaps in data now that hospitals cannot mistakenly (or intentionally) leave necessary information out. If hospitals fail to comply, CMS can issue warning notices, post deadlines for corrections and exact monetary penalties if the hospital or hospital system falls short. 

As for employers, Skenes encourages them to begin utilizing price transparency data alongside their claims data to determine if they're getting the best rate. If employers want to know whether they're being overcharged, they can compare their claims data and transparency data to Medicare rates, which are available to the public. Since Medicare rates cover the cost of the service and ensure the hospital sees a profit, employers can use this as a baseline of comparison. 

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"Healthcare pricing has often been referred to as a black box in the benefits world. Employers specifically have had a difficult time seeing through opaque prices," she says. "The new schema further enables employers to get better, more accurate pricing that is more dynamic."

Skenes also notes that this data may lead to possible improvements to how hospitals charge patients: If employers and consumers favor hospitals that make their pricing consistent and easy to access, then more hospitals might strive for transparency. 

"What could it look like to inform a patient that their stay is already included at a flat rate and they don't need to sweat every last charge?" asks Skenes. "What could it look like to empower patients at the bedside to make basic cost-benefit decisions when they can save money with little to no risk on outcomes?"

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While the jury is still out on what impact the price transparency rule has had on Americans' healthcare experience, this latest update will hopefully help employers and employees alike save money. 

"This is a landmark date in price transparency," says Skenes. "This data enables employers and their advisors to better serve their members. Now is the time to try out price transparency and see what potential savings or opportunities are available."