Research examines whether financial penalties are a useful policy enforcement mechanism to get hospitals to comply with price transparency regulations.
The answer to the question of what it will take to get more hospitals compliant with the price transparency rule is as simple as increased financial penalties, according to a study published in JAMA Network Open.
Researchers from Georgetown University and Harvard University looked at the responses of 4,377 acute care hospitals operating in 2021 and 2022 to changes in financial penalties by CMS for hospital price transparency regulations.
Financial penalties for noncompliance increased from $300 per day for all hospitals in 2021 to $10 per bed per day, with a minimum of $300 per day for hospitals with no more than 30 beds and a maximum of $5,500 for hospitals with 550 or more beds in 2022.
For the study, hospitals were deemed compliant if they posted a machine-readable file with private, payer-specific negotiated prices at the service-code level.
The analysis uncovered that between 2021 and 2022, compliance rates for the 4,377 hospitals increased by 17.3%, from 70.4% to 87.7%, respectively. Noncompliance rates decreased by more than half, from 29.6% to 12.3%.
According to the researchers, the findings suggest that increasing penalties by another $1.4 million per hospital would increase compliance rates above 95%.
To date, CMS has only hit four hospitals with fines for not adhering to the rule:
- Northside Hospital Atlanta in Georgia, fined $883,180
- Northside Hospital Cherokee in Georgia, fined $214,320
- Frisbie Memorial Hospital in New Hampshire, fined $102,660
- Kell West Regional Hospital in Texas, fined $117,260
In a recent Health Affairs article by CMS leaders, the agency said it "plans to take aggressive additional steps to identify and prioritize action against hospitals that have failed entirely to post files."
The article also highlighted that hospital compliance had significantly improved since the agency's first assessment. Between January and February 2021, 66% of hospitals met consumer-friendly display criteria, 30% posted a machine-readable file, and 27% did both. Between September and November 2022, 82% of hospitals posted a consumer-friendly display, 82% posted a machine-readable file, and 70% did both.
For hospitals to be in full compliance, they must have both a machine-readable file with all items and services, as well as a display of shoppable services in a consumer-friendly format.
The Georgetown and Harvard researchers didn't account for the consumer shoppable service tool in their study, which likely led to higher estimations of compliance. However, hospitals have incentive to "quasi-comply" by posting prices that can be difficult to locate, the study noted.
"Quasi-compliance allows hospitals to minimize the costs of disclosing sensitive information while reducing their regulatory risk," the researchers wrote. "Characterizing this quasi-compliance phenomenon is an important direction for future work."
Ultimately, CMS can do its part to boost compliance by enforcing the rule and not letting hospitals skirt regulations.
"Overall, the results of this cohort study suggest that financial penalties may be a valuable tool for ensuring compliance with CMS policy when fines are sufficiently large, noncompliance is readily observable and well defined, and enforcement is credible," the researchers concluded.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
A study published in JAMA Network Open observed the responses of 4,377 hospitals operating in 2021 and 2022 to changes in financial penalties for hospital price noncompliance.
Researchers found that compliance rates increased by 17.3% from 70.4% in 2021 to 87.7% in 2022, correlating with CMS upping their fine sizes.
The study also found that increasing penalties by another $1.4 million per hospital would increase compliance rates above 95%.