After Months Of Warnings, CMS Hands Out Its First Fines To Hospitals Failing On Price Transparency

CMS issues first price transparency fines to 2 Georgia hospitalsSource: Fierce Healthcare, by Dave Muoio

Eighteen months after its final rule on price transparency went into effect, the Centers for Medicare and Medicaid Services issued its first penalties to a pair of Georgia hospitals that did not update their websites or reply to the agency’s warning letters.

 

Northside Hospital Atlanta and Northside Hospital Cherokee have been issued civil monetary penalties of roughly $880,000 and $214,000, respectively, according to letters published on CMS’ Hospital Price Transparency website. Both hospitals are part of the same health system.

The agency calculated the penalties based on the hospitals’ size and how long their websites were non-compliant (up to $300 per day). The hospitals may submit a request for a hearing to have their penalties appealed.

“CMS expects hospitals to comply with the Hospital Price Transparency regulations that require providing clear, accessible pricing information online about the items and services they provide,” Director of Medicare Meena Seshamani, M.D., said in an email statement provided to Fierce Healthcare. “This enforcement action affirms the Biden-Harris Administration’s commitment to making health care pricing information accessible to people across the country and we are committed to ensuring that consumers have the information they need to make fully informed decisions regarding their healthcare.”

Since Jan. 1, 2021, CMS has required hospitals to post a comprehensive machine-readable list of their services and prices as well as a patient-friendly tool to help shop for 300 common services.

Hospitals that are not compliant with the requirements receive warning letters from CMS requesting they submit a corrective action plan to amend their websites.

 

The agency began delivering those letters in April, saying at the time it was hesitant to issue civil monetary penalties due to the harm that publicly naming noncompliant hospitals could bring to those organizations.

In the warning letters, CMS said it had conducted reviews of their websites, requested corrective action plans and delivered warning notices to both hospitals last fall. CMS issued warning to the hospitals in April and May, according to the letters, which neither hospital responded to.

CMS has issued a total 352 warning letters to hospitals as of this month, according to a CMS spokesperson. Among these, 171 received case closure notices after addressing the agency’s citations while 157 remain non-compliant, the spokesperson said.

Industry-wide compliance with the federal transparency requirements has been spotty to date. Only 14.3% of hospitals were compliant with both major components of the mandate one year after it went into effect, according to a review by PatientRightsAdvocate.org.

 

A study published in JAMA earlier this week corroborated low compliance as of the six to nine months after the rule went into effect, noting that hospitals in low-concentration healthcare markets, urban hospitals and those with lower per patient-day revenue were more likely to be in compliance.

Hospitals and health systems say their adherence struggles are the result of the high cost and complexity of implementation. They’ve also pointed to the final rule’s language, which they say is vague and difficult to interpret.

“Many organizations are not investing beyond the bare minimum requirements, and they don’t plan to do more until there is further clarity around the regulations and the expectations going forward,” KLAS Research wrote in an April report polling 66 hospital revenue cycle leaders on price transparency compliance.

American Hospital Association Urges CMS To Extend Enforcement Discretion For No Surprises Act

3.2% payment increase is not enough, American Hospital Association says |  Healthcare Finance NewsSource: Healthcare Finance, by Jeff Lagasse

The American Hospital Association has urged the Centers for Medicare and Medicaid Services to extend enforcement discretion for the No Surprises Act regulatory requirement that healthcare providers exchange certain information to create a good faith estimate for uninsured and self-pay patients – until the agency identifies, and providers can implement, a standard, automated way to exchange the information.

“In the interim final rule implementing this policy, CMS notes that it is exercising enforcement discretion until Jan. 1, 2023, as it may take time for providers and facilities to ‘develop systems and processes for receiving and providing the required information,’” AHA wrote. “We agree that developing and implementing the solution will take time and cannot be achieved efficiently without additional guidance from CMS that identifies a standard technical solution that can be implemented by all providers.”

One of the main concerns from the AHA is that there are currently no methods for unaffiliated providers to share or receive good faith estimates with a convening provider or facility in an automated manner. To share this information, billing systems would need to be able to request and transmit billing rates, discounts and other necessary information for the good faith estimates between providers/facilities.

This is not something that practice management systems can generally do, said the AHA, since billing information is traditionally sent to health insurers and clearinghouses, not other providers.

“Due to the lack of currently available automated solutions, this process would require a significant manual effort by providers, which would undoubtedly result in the convening provider being unable to meet the short statutory timeframes for delivering good faith estimates to the patients and could also lead to inadvertent errors,” the AHA wrote.

AHA requested an extension in enforcement discretion until a technical solution has been found and implemented.

WHAT’S THE IMPACT

Without an automated standard, the AHA said, providers would need to determine individually how to transmit the information. That in turn could lead to variance throughout the industry, especially considering differences in size and technical sophistication among co-providers and facilities. Navigating a non-standardized process, the AHA contended, would increase administrative burden on providers.

To help work toward a standard solution, The AHA said it’s partnering with the American Medical Association, the Medical Group Management Association and HL7 to create a workgroup to discuss potential technical solutions for sharing and receiving critical information among providers. The group will consist of providers and vendors with knowledge of provider systems.

THE LARGER TREND

In December 2021, the American Hospital Association, American Medical Association and other provider organizations sued the Department of Health and Human Services and other federal agencies over implementation of the No Surprise Act. The groups are not against the legislation, they said in the lawsuit filed in federal court but take issue with how HHS implemented a dispute resolution process in the bill.

The No Surprises Act prevented 2 million surprise bills for the commercially insured, according to a survey by AHIP and the Blue Cross Blue Shield Association released in May. The analysis further showed that, if the trend continues, more than 12 million surprise bills would be avoided in 2022.

Employers Pay Hospitals Billions More Than Medicare

How Much More Than Medicare Do Private Insurers Pay? A Review of the  Literature | KFF

Source: Axios, by Adriel Bettelheim and Caitlin Owens

Employers and private insurance plans in 2020 paid hospitals 224% of what Medicare paid for the same services, with rates for inpatient and outpatient care varying widely from site to site, a new report from RAND finds.

The intrigue: The report found that hospital prices had no significant correlation with hospitals’ share of Medicare and Medicaid patients, which hospitals say factor into private rates. Price did positively correlate with hospital market share.

Why it matters: Hospitals account for about 37% of health spending for the privately insured — and even people who don’t use hospital services foot some of the bill through their premiums.

The big picture: Annual per-person spending growth for workplace health coverage has exceeded spending growth for government programs in nine of the past 13 years, largely because enrollment and demand for services among the commercially insured has barely changed.

  • * The divergence in pricing has been linked to mergers and acquisitions, affiliation agreements and other consolidation that increases hospitals’ leverage.
  • * In 2021, the average premium cost of an employer-sponsored family plan was more than $22,000, an increase of 47% from 2011, according to the Kaiser Family Foundation.

What they found: The report draws on medical claims data from employers and state databases from 2018 to 2020 covering 4,102 hospitals and 4,091 ambulatory surgical centers that account for $78.8 billion of spending.

  • * States like Hawaii, Arkansas and Washington had relative prices below 175% of Medicare prices, while others including Florida, West Virginia and South Carolina had prices at or above 310% of Medicare levels.
  • * In 2020, COVID-19 inpatient hospitalizations averaged 241% of Medicare, which is similar to the relative price for all inpatient procedures.
  • * Prices for common outpatient services performed in ambulatory surgical centers such as imaging and colonoscopies averaged 162% of Medicare payments. However, Medicare pays the centers less than it pays hospital outpatient departments for the same services, the study notes, and the ratio would be lower if centers were paid the same way.
  • * Medicare per-procedure payments to hospital outpatient departments were 2.1 times higher than payments to ambulatory surgical centers and commercial payments were 2.6 times larger, the study found.
  • * If the same providers were paid Medicare rates for the same services, employers and private plans would have saved $49.9 billion, researchers said.

The other side: Hospitals say Medicare reimbursement rates are too low, so they have to charge privately insured patients more to make ends meet. The pandemic has also disrupted many hospital business models — for example, by forcing the cancellation of elective procedures.

The bottom line: Health costs are likely to keep rising for those with private insurance as employers use higher deductibles, copays and coinsurance to offset some of the rising costs.

  • * While employers back reforming how workplace health care is paid for, they don’t agree on many of the details or how significant changes would be.
  • * The more information about pricing disparities that becomes public, the more likely it is that pressure on hospitals to justify their prices will build.

KLAS: Hospitals Say Price Transparency Remains Too Confusing And Pricey To Implement

Hospitals say price transparency pricey to implement

Source: Fierce Healthcare, by Robert King

Hospitals and health systems believe a price transparency rule, while well-intentioned, is far too expensive to implement and is confusing, a new report found.

 

The report released Thursday from the health IT firm KLAS Research underscores major compliance issues surrounding a landmark rule that requires hospitals to post payer-negotiated rates for certain services in an easy-to-understand format. Compliance with the rule has been scattershot since it went into effect last year.

“There are concerns about cost, data accuracy and patient options of pricing tools; some respondents worry about patients’ ability to understand the displayed pricing data, and today, most patients are unaware online pricing information exists,” the report said.

Hospitals must offer clear pricing estimates for at least 300 shoppable hospital services and could face fines for each day of noncompliance.

KLAS spoke with 66 revenue cycle leaders to get a sense of how hospitals feel about the shift towards price transparency and the nuts and bolts of implementing the rule more than a year after its compliance deadline.

“Many hospitals comply only because they are required to by law and because they want to avoid monetary penalties,” the analysis said. “Additionally, organizations struggle to find resources to help with compliance because of the financial burden of investing in a regulation that doesn’t provide a return on investment.”

Throughout 2023, respondents say they are going to have to continually invest in new employees and technology to meet the mandate.

Among those surveyed, 52% said that the rule requires a significant number of resources to comply while 40% put resource requirements at a moderate level and 8% at a small number.

Many of the respondents lashed out at two parts of the rule: the requirement that facilities use machine-readable files for the pricing information and that they put online a master list of rates.

Respondents cited problems with “software used to publish the pricing information. Some say the published rates mainly benefit payer and provider organizations instead of patients.”

 

KLAS also explored how hospitals are looking to comply with the rule.

Third-party vendors were the most popular option, employed by 36% of respondents, while 28% who relied on their electronic medical record vendor. Only 18% relied on internal services and 18% were unsure.

The vendor that respondents most used for help was Epic, used by 16 of the revenue cycle leaders, followed by Experian Health with eight.

“Some who currently use a third party say they will consider moving to their EMR vendor’s platform in the future to further consolidate systems,” KLAS’ report said. “For example, some Epic EMR customers who use a third party for price transparency intend to move to Epic’s offering once it becomes more robust.”

report released back in February showed that one year after the rule’s implementation only 14.5% of hospitals are fully compliant with the rule. CMS has warned more than 300 hospitals about non-compliance.

And more than a year after it went into effect, KLAS’ survey shows that confusion around the rule still reigns.

“Many organizations are not investing beyond the bare minimum requirements, and they don’t plan to do more until there is further clarity around the regulations and the expectations going forward,” KLAS wrote.

Respondents say they don’t know what types of resources are going to be required in the future as “price transparency rules evolve or are interpreted differently.”

Hospitals Are Seeing Fewer Acute Patients

Rural hospitals that have higher volumes of less-acute patients, saw a 3.7% drop in year-over-year admissions (and 0.7% growth in admissions adjusted for outpatient activity), according to a report by Fitch. Payors are exerting pressure to reduce short-stay admissions and re-admissions; high-deductible health plans encourage patients to seek care in less expensive settings outside of the acute-care hospital; and technological advances allow more complex cases to be handled in outpatient settings.

Covered California Announces Contract Changes with Carriers


ContractCovered California adopted significant changes to its contracts with health insurers. The contract provisions were developed over the past year with consumer advocates, health plans, clinicians, other stakeholders, and subject matter experts. Plans must do the following for years 2017 to 2019:

• Ensure that all consumers select or are provisionally assigned a primary care clinician within 30 days of when their plan goes into effect.
• Exchange data with providers. This will enable physicians to be notified if their patients are hospitalized and track trends and improve performance on chronic conditions, such as hypertension or diabetes.
• Identify hospitals and providers that deliver poor-quality care or unwarranted high-cost care. Health plans will be expected to work with them to improve their care or lower their costs. Hospitals that don’t improve and don’t provide justification will be excluded from Covered California networks as early as 2019. Covered California will adopt a payment system for hospitals, such as the one employed by the Centers for Medicare and Medicaid Services (CMS). Over time, it will put at least 6% of reimbursement at risk or subject to a bonus payment based on quality performance.
• Manage high-cost pharmaceuticals and help consumers understand the effectiveness and costs of their drug treatments as well as any alternatives.
• Track health disparities, identify trends in disparities, and reduce disparities, beginning with four major conditions: diabetes, hypertension, asthma, and depression.
• Develop programs to identify and manage at-risk enrollees with requirements to improve in targeted areas.
• Provide tools to help consumers understand their diagnosis and treatment options and understand their share of costs based on the contracted costs of their plan.

Covered California will encourage plans to promote advanced models of primary care including patient-centered medical homes and integrated health care models, such as accountable care organizations. Also, Covered California is improving its patient-centered benefit design for 2017 plans. Outpatient care in Silver, Gold, and Platinum plans will not be subject to a deductible. Bronze plan consumers would get three outpatient visits that are not subject to the deductible, in addition to the free preventive visits. For 2017, Covered California is proposing to lower out-of-pocket costs for primary care and urgent care.

 

How Major Players Are Driving Regional Networks

healthcare copyFollowing implementation of the Affordable Care Act, large players are consolidating the control of hospitals and physician organizations in the San Francisco Bay area, according to a recent report by the California HealthCare Foundation (CHCF).

In a region with many segmented submarkets, major providers are expanding to manage care efficiently, serve more patients, and compete with Kaiser Permanente. The number of independent hospitals is shrinking as financial problems mount. Independent practice associations are seeking to diversify, raise capital, and keep private practice viable, especially for primary care physicians. Though none of the region’s remaining private safety-net hospitals appear threatened by imminent closure, several face an uncertain future. The safety net is strong, but faces capacity and access challenges resulting from Medi-Cal expansion. Safety net providers are particularly hampered by their limited ability to recruit and retain clinicians. For more information, visit www.chcf.org/almanac.

Hospitals Well Positioned for Insurer Consolidation

The for-profit hospital industry is well positioned to weather the wave of mergers and acquisitions (M&A) among the largest for-profit health insurers, but consolidation could have some important longer-term ramifications, according to Fitch Ratings.

M&A activity among health insurers is not likely to result in immediate price pressure for hospitals. In many markets, health insurers are already fairly consolidated. Recent actions by hospitals to build market presence will shore up negotiating power. However, it could hurt the competitiveness of smaller insurers in some markets. It could also accelerate the shift towards value-based payments for hospitals and other healthcare providers.

The merger of Aetna and Humana would create the second largest national for-profit health insurer by revenue. The announcement of the merger comes after some favorable developments for the hospital industry. Most importantly, the Supreme Court recently ruled that public health insurance exchange plans could keep the financial subsidies that make these plans more affordable. In part because of the ACA-related expansion of health insurance coverage, hospitals have recently had more patients. M&A activity among acute care hospitals has given them more negotiating clout. Hospitals have been expanding their presence in key geographies through acquisitions and financial partnerships

Sports Injuries Land Many Californians In the ER

Over 300,000 Californian athletes visit the ER annually, which is a rising financial risk for families as high deductible health insurance grows and health coverage shrinks, according to a Sun Life Financial report. More Californians participate in each of five sports – baseball, basketball, softball, soccer, and volleyball – than do residents in any other state. The report reveals the following sobering statistics:
• A household has a 50% chance of having an emergency room injury within five years when a family member participates in football, ice hockey, or soccer.
• Injuries from seven popular sports lead to average ER medical costs of $3,000 to $4,000.
• Football, which has the highest sports injury rate at 8.5%, leads to over 60,000 California ER visits this year, second only to basketball. Soccer is expected to generate over 40,000 California ER visits this year.
• Increasingly popular high deductible health insurance plans have average deductibles of $4,000 for a family deductible and $2,000 for an individual.
• Accident insurance can fill widening gaps in medical insurance coverage. Beginning in 2018, a 40% excise tax will be imposed on the value of health insurance benefits exceeding a certain threshold. The estimated thresholds are $10,200 for individual coverage and $27,500 for family coverage. Employers are starting to phase out medical coverage that would be subject to the tax.

One doctor, who was interviewed for the survey, reports a disturbing number of people who refuse essential emergency care because of medical costs. He says that agility training can prevent injury by increasing the ability to anticipate an accident. For more information, visit http://bit.ly/ZleIGi.

Federal Drug Discount Program Faces Challenges

A federal program that provides billions in drug discounts to safety net hospitals and other health care providers is expanding under health care reform. The 340B program faces a number of critical issues, such as whether to better define eligibility, strengthen compliance efforts, and provide greater transparency about the discounts provided, according to new analysis by the RAND Corporation. The federal Health Resources and Services Administration is developing new regulations to address these and other issues. “Policymakers need a clear, objective description of the 340B program and the challenges it faces on the road ahead. There are increasingly divergent views on the program’s purpose and the role it should play in supporting safety net providers,” said Andrew Mulcahy of RAND.

The federal 340B program began in 1992 to help health care providers extend services to the indigent and uninsured. The program allows some hospitals, clinics, and health centers to buy outpatient prescription drugs at discounted prices. The program covers more than 7,800 entities as a result of expanding eligibility rules. Hospitals that participate in the program account for more than one-third of all U.S. outpatient hospital visits.

Federal officials estimate that the 340B program accounts for $6 billion in outpatient drug spending, about 2% of all U.S. prescription drug spending in 2011. This translates into savings of $1.6 billion for eligible safety net providers. RAND researchers say that these savings are small compared to the disproportionate share hospital payments and primary health care grants that play a large role in financing care in the safety net. However, some estimates suggest that the size of the program could double under provisions in the federal Affordable Care Act. Formulas used to calculate drug prices are based partly on proprietary information, which can make it difficult for health care providers to know whether they can negotiate a lower price for drugs through another source. For more information, visit www.rand.org.

Last Updated 06/29/2022

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