Last month, PatientRightsAdvocate.org (PRA) released its 4^th Semi-Annual Hospital Price Transparency Compliance Report. While the report shows an increase in the percentage of compliant hospitals it reviewed (24.5% – up from 16% in its 3^rd report), the criteria and conclusions are not consistent with those determined by the CMS in another recent report. In that report, released last month in HealthAffairs, CMS shared that it has found that 70% of US hospitals are fully complying with the federal requirements. So, how did PRA come to such a different conclusion than CMS? Below we evaluate each group of hospitals they find non-compliant in their report with corresponding insights.

PRA Findings

Overall, PRA found that 75.3% of the hospitals (1,506/2,000) evaluated did not post a complete machine-readable file of standard charges. The following observations drove the “incomplete” nature of the files:

▪ PRA Finding: 48.8% of the hospitals (975/2,000) did not publish all payer-specific negotiated charges “clearly associated with the names of each third-party payer and plan,” as required.

While CMS requires payers and plans to be identified, some hospitals may not have multiple products by payer. While this is common it certainly can’t be assumed to exist for ALL payers. The rule requires NEGOTIATED rates to be disclosed. So, if only one Aetna plan has been negotiated, then the hospital would only need to list Aetna once. PRA seems to be assuming non-compliance based on not finding multiple plan entries for each payer, which would lead to an overstated value of non-compliance.

▪ PRA Finding: 46.2% of the hospitals (923/2,000) did not publish a sufficient amount of negotiated rates.

This is the most subjective criteria for PRA, as the definition of “sufficient” isn’t disclosed in the report. PRA references that it deemed hospitals non-compliant where a “majority of blanks or zeros in the data fields” existed, but this broad statement is never clarified. Subsequently, while looking for data completeness is interesting and useful – there are no guidelines for it in the CMS rule to determine if a hospital is non-compliant. And the absence of a “completeness” standard in the CMS rule is appropriate as there are countless examples where values will not exist for the different definitions of standard charge in application to all items, services, and service packages within the hospital’s billing environment. For example, standard gross charges are always stored in the hospital’s CDM and are presented at an individual line level with thousands of different lines and prices. Negotiated charges, however, are built on different combinations of these CDM lines to create payment amounts uniquely for each patient claim. These “service packages,” as the rule appropriately describes, cannot be shown on a CDM line-level basis because they do not exist. To conclude that both gross charge and negotiated payment amounts will always coincide on a CDM line level is flawed logic. The converse is also true where payers create payment rates at packaged levels, but the hospital does not store a gross charge.

Further, PRA also notes that they “observed an increased usage of ‘N/A’s in pricing files” and are seemingly concerned by this finding. However, the increase in N/A values observed by PRA in 2022 likely resulted from guidance presented during an August 2021 CMS MLN call on Pricing Transparency. During that call, CMS encouraged using N/A, as opposed to using null or zero values, to help demonstrate that the hospital presented the field purposefully – not negligently – this way. Perhaps PRA missed this technical guidance discussion; however, the timing and their observations certainly align and reflect the industry working with the government to best position the data for consumption.

In the end, assessments of data completeness are not specified in the rule for good reason, and purposeful omissions likely result from areas where no value exists in the thousands of different combinations of gross charge, negotiated charge, discounted cash prices, and items/services/service packages.  PRA’s inclusion of their own “completeness” standard to look for “N/A”, zero, or null values is a significant factor in the sizable overstatement of non-compliance and doesn’t align with a full understanding of a hospital’s billing environment and the transparency rule’s requirements.       

▪ PRA Finding: 16.4% of the hospitals (327/2,000) did not publish any discounted cash prices.

While CMS requires this to be posted if the hospital has developed cash pricing, PRA should not assume that excluding this information means the hospital has determined not to post it. If this data is not present in CMS hospital audits, CMS has asked for validation. We believe best practice would be to disclose if this pricing has not been developed to avoid confusion. Still, an assumption of guilt is not fair and contributes to the lower overall compliance rate found by PRA.

Separately, PRA also says that it deemed a hospital non-compliant if “the hospital’s price estimator tool did not show both the negotiated rates and discounted cash prices to provide pricing for all healthcare consumers, including the uninsured and those desiring to pay cash directly.” CMS does not require this feature for compliance and, again, does not reflect the fundamental understanding that not all hospitals will have discounted cash prices.

▪ PRA Finding: 5.8% of the hospitals (116/2,000) did not post any usable standard charges pricing file.

Clearly, this is the one area where there is no disagreement between CMS and PRA viewpoints on non-compliance. Still, it is interesting to note the small number of hospitals this represents in PRA’s report.

Conclusion

Unfortunately, not all of the criteria used by Patient Rights Advocate are based on the CMS Price Transparency rule which has led to a grossly overstated value of hospital non-compliance when compared with the value recently released by CMS. It’s possible PRA has done this to continue to maintain pressure for increased transparency in four areas highlighted in their report (listed below with additional comment):

1. Stronger, Timely, Transparent Enforcement of Non-compliant Hospitals
   1. PRA and CMS noted increased fines and enforcement activities as positively affecting the number of compliant hospitals, and we would expect these activities to continue.
2. Actual Prices vs. Estimates
   1. Here, PRA advocates for “binding” prices by the hospitals for services. While we understand why this could be useful, the reality is that patient care for some services can be highly variable for specific patient needs (some that may develop during the course of the treatment/procedure). To convey patient care variability, our firm has created a tool that provides ancillary procedures that are commonly done in conjunction with the selected service and how that would impact the patient’s financial obligation. We believe this approach covers the needs of the hospital and the patient.
3. Clear Pricing Data Standards
   1. CMS released a voluntary sample format for the machine-readable file in November 2022. We anticipate that some version of this will become a requirement at some point and should assist in the ability for the data to be aggregated into common databases. However, it is interesting to note that PRA believes that the payer’s schema has resulted in efficiency and quality gains over current hospital files. Unfortunately, this is not the case, as payer file sizes are many multiples of even the largest hospital’s file and have been a source of consternation among hospital administrators looking for similar transparency information from payers.
4. Attestation of Quality and Completeness of Data
   1. We would not be surprised to see a requirement for a hospital administrator to formally attest to the accuracy and completeness of the disclosures in the future.

In sum, we find that Patient Rights Advocate has come to a substantially higher value of hospital non-compliance in its latest report because of the use of criteria that is not in the CMS Price Transparency final rules. We hope that the inaccuracies in research logic and conclusions are simply the result of incomplete knowledge of the CMS rule and industry practices and not anything more nefarious. We believe the organization’s aim to help patients more fully understand anticipated prices for care is a worthy and critical objective and believe more could be done to collaborate to achieve these important goals. As always, we are committed to these same objectives and welcome additional conversation to further the cause.