Some hospitals will choose to pay a fine for not publishing prices, lawyers say

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While most providers say they agree with the intent of the price transparency law, small hospitals struggle to collate the data and present it in a useful format.

As of Jan. 1, hospitals have been required to publish machine-readable files of the rates they negotiate with payers, gross fees, and reduced spot prices, which the Centers for Medicare and Medicaid Services hope will lower prices. higher than average.

CMS recently sent out a second round of warning letters to hospitals that failed to disclose the rates for 300 “purchasable services” in a user-friendly form, threatening a maximum annual fine of over $ 2 million for large corporations. hospitals and nearly $ 110,000 for those with less than 30 beds.

The first CMS to issue fines would be in late November or early December, hospital officials expect. Most of these hospitals are still in the corrective action stage and have 45 days to respond.

Regulators and health policy experts believe that once the data is analyzed across all U.S. hospitals, consumers will be able to compare parameters of cost and quality, forcing high-priced providers to adapt. But hospital executives are generally skeptical of “shopping” for health care. They’re also worried about paperwork, their rivals driving down prices, and the legal ramifications if an invoice doesn’t match the data.

Large systems have the luxury of working with companies like Epic Systems and Cerner to organize claims and prices. It is more difficult to process data with the small providers of electronic health records used by the Bibb Medical Center, said Joseph Marchant, CEO of the 35-bed community hospital in Centerville, Alabama. The COVID-19 pandemic further complicates matters, he said.

“We’re making changes with them instead of just doing it to say we’ve done it so that we can make it beneficial and get to the root of what CMS wants to do,” Marchant said. “It’s not only a big burden with limited infrastructure, but the disruption in healthcare has also overwhelmed many things we would have liked to have focused on. We would have loved to focus on [electronic health record] price efficiency and transparency instead of determining how to set up curbside testing, infection control protocol and isolation wings. “

Sanctions could cripple rural hospitals and further exacerbate service gaps in underserved communities, said Brock Slabach, director of operations at the National Rural Health Association.

The law is well-intentioned but not always practical, said Don Lilly, network and affiliate manager at the University of Alabama-Birmingham Medicine.

Some healthcare systems will likely prefer to pay the fines, said Timothy Gary, CEO of consulting firm Crux Strategies and lawyer at Dickinson Wright. The transparency mandate is a “gross oversimplification of a complex issue,” he said.

“There is a lot of room for confusion and misunderstanding,” Gary said. Hospitals can face breach of contract lawsuits if the data does not match a patient’s final bill, he said. “Hospitals try to comply but ultimately price transparency is hard to achieve in this medium. Some operators say, ‘It’s much cheaper for me to write a check for $ 2 million. “”

While the correlation between price transparency and falling health care costs is not definitive, the release of price data is generally seen as a step in the right direction. Transparency has a modest downward pressure on prices, although price estimators are not yet widely used, policy experts said.

President Joe Biden has doubled down on the previous administration’s price transparency rule and that won’t go away, said Robert Ramsey, lawyer at Buchanan Ingersoll & Rooney.

“The time to sit on the sidelines is over. It’s a serious problem,” said Ramsey. “I suspect that CMS’s patience is rapidly weakening regarding the apparent persistent non-compliance. The fine of up to $ 2 million and the publication of the hospital’s name for non-compliance should attract attention. of the board of directors, if not the CEO and all senior management.

The United States Chamber of Commerce sued the HHS to block transparency regulations that apply to health insurers, but withdrew the lawsuit after the Biden administration delayed enforcement. The provision, which applies to almost all health insurers and self-insured plans, will be phased in after July 1, 2022. The law applicable to providers survived a similar lawsuit filed in a district court and an appeals court. .

Less than 6% of hospitals were fully compliant, according to a Patient Rights Advocate analysis conducted from May to July. The overwhelming majority of hospitals did not post all negotiated rates specific to payers and plans, according to the report.

By the end of September, CMS had sent 256 warnings to the offending hospitals, a spokesperson said. The agency issued 32 corrective action plans to facilities that received a warning notice but did not comply; six adjusted accordingly.

“Hospitals that have taken a ‘slow’ approach to complying with the price transparency rule risk facing significant financial penalties when they go into effect next year,” said Christopher Kenny, partner at the firm of King & Spalding healthcare.


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