The Opacity of Price Transparency

If you work for a hospital, please read this article closely. If you’re at any other type of healthcare entity, the price transparency rules don’t apply to you, and you can skip this article. 

I’ve been working with hospitals that are trying to comply with a state law requiring them to charge uninsured patients the lowest rate the hospital receives from any contracted insurer. I’m hearing a steady stream of complaints from hospitals that they don’t have access to this data.

I can’t comment on the logistics, but I know this: the federal Price Transparency regulations include provisions that seem to require hospitals to PUBLISH that data. These regulations were published in 2019, appearing in 45 CFR, Part 180. The regulation requires hospitals to put on a publicly available website that doesn’t require registration a machine-readable file that includes their “standard charge” for items and services available to the public. That makes the definition of “standard charge” absolutely essential.

Alas, that definition is incredibly confusing, if not affirmatively misleading. Because it uses standard charge, singular, rather than “charges,” plural, one might assume we are talking about a single price that must be listed. That assumption would be absolutely understandable, and yet it is completely wrong. 45 CFR Section 180.20 defines a standard charge as “the regular rate established by the hospital for an item or service provided to a specific group of pain patients.” Once again, the use of the singular suggests a sole price. But the text continues with a list of five different categories of information, all of which are purportedly part of the “standard charge.” This includes all of the following, as defined under this section:

1. Gross charge.
   
2. Payer-specific negotiated charge.
   
3. De-identified minimum negotiated charge.
   
4. De-identified maximum negotiated charge.
   
5. Discounted cash price.

Now, there’s a lot going on here, and it’s incredibly confusing. It means that each hospital must have, for each item or service it offers, a file that lists the highest and lowest reimbursement received for the corresponding code. In a completely incomprehensible twist, the highest and lowest reimbursements can be de-identified (that is, omit the payer name).

The reason that is so confusing is that you must ALSO list every single payment that’s been negotiated with a third-party payer, including the name of the third-party payer. That’s because the list also includes your “payer-specific negotiated charge.” This machine file is supposed to include what you get from Blue Cross, Aetna, United HealthCare, and every other payer.

The fact that so many hospitals said they don’t know the lowest reimbursements they receive as part of the negotiated contract suggests to me that they are out of compliance with the Price Transparency rule. That rule has some teeth.

Hospitals with 550 beds can now be fined up to $5,500 a day for non-compliance. So, if you are in a hospital, check with your CFO to make sure that you’re making available a machine-readable file on your website that includes the items listed above. The rule is confusing, and the data required is controversial, but ignoring the government’s position risks that you will become one of the next hospitals it chooses to penalize to make a point.