Many hospitals struggle to comply with the Price Transparency Rule and No Surprises Act.
Key takeaways
Digital-first, price-aware consumers can enable hospitals to use compliance strategically.
Hospitals should use compliance to enhance the patient experience and capture market share.
An efficient, effective, and competitive marketplace requires buyers and sellers to agree on the price of a good or service. But until recently, health care consumers had little idea what many of their health care services cost, making it difficult to compare prices, shop for bargains, or control spending.
Thanks to the regulations set out by the Hospital Price Transparency Rule and the No Surprises Act, pricing simplicity and clarity for hospitals is the new standard. While each policy has different rules and requirements, they share a similar goal of requiring hospitals to publicly disclose their charges in a transparent, accessible manner so that patients are provided information on medical costs.
While these rules have existed for several years, many hospitals still struggle to meet their compliance obligations. According to the Patient Rights Advocate’s Fifth Semi-Annual Hospital Price Transparency Compliance Report, only 36% (721) of 2,000 hospitals analyzed in 2023 fully complied with the Price Transparency Rule requirements.
This considerable gap is attributable to three key challenges that many hospitals face when seeking to achieve compliance:
Implementation complexity
Under the Price Transparency Rule, hospitals must make all standard charges public through a single machine-readable file, in addition to providing a consumer-friendly cost estimator tool for at least 300 shoppable services, which can be challenging for institutions that have not taken significant steps toward compliance. Hospitals have also struggled to implement the new complex procedures designed to minimize surprise medical billing introduced by the No Surprises Act. Even hospitals that have managed to implement their programs can still struggle to optimize and sustain their efforts through required training, monitoring and patient communications.
Administrative burden
With new reports to file, new patient communications and online estimator tools to deliver, and new procedures to follow, maintaining compliance with the Price Transparency Rule and No Surprises Act requirements can be time-consuming for hospitals.
Managing payer relationships
Many insurer-provider contracts contain language that prohibits the disclosure of negotiated prices, creating a barrier to compliance. In addition, payers may use the published prices of a competitor to demand similar prices from a hospital regardless of costs, quality of care, or outcomes.
CMS enforcement changes
According to a statement by the Centers for Medicare & Medicaid Services (CMS), as of April 2023, there have been:
730+ warning notices
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269 requests for corrective action plans (CAP)
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4 hospitals fined for noncompliance
CMS also has updated its enforcement process to require that hospitals be in full compliance with regulations within 90 days of CMS issuing a CAP request. Previously, hospitals were allowed to propose completion dates. CMS will also no longer issue warning notices to hospitals that have not attempted to satisfy requirements; instead, CMS will immediately request that hospitals submit a CAP.
Leveraging opportunities beyond compliance
In the face of increased regulatory validation and enforcement, hospitals must prioritize their Price Transparency Rule and No Surprises Act compliance. However, forward-looking hospitals can use these requirements not as a regulatory ceiling, but as the foundation for creating better patient engagement and building a long-term, sustainable competitive advantage.
Two noteworthy developments illustrate this opportunity:
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The rise of digital-first consumers
Today’s consumers are more digitally savvy than ever before, leading to a significant shift in patient expectations. Not only are they comfortable navigating digital platforms, but they now expect to be able to do things like schedule appointments, look up accounts, and manage their care without having to make a phone call.
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Cost concerns are increasing
Consumers’ digital savviness is matched by a growing sensitivity to health care costs as more and more of the financial burden shifts from insurers to patients. Faced with high deductibles and out-of-pocket expenses, patients want to be more proactive in understanding and managing their health care expenditures.
A hospital that only meets the bare minimum for compliance may be able to meet the needs of today’s health care consumer who doesn’t expect digital services from their hospital and has a high-quality insurance plan to pick up the tab.
But think about tomorrow’s consumers: digital natives paying for their health care directly through an HSA or personal savings account. These patients are much more engaged with what health care services cost, along with the perceived value they receive for their health care dollars. They will also seek out—and reward—hospitals that make it as easy to shop for health care services as it is to shop online for shoes or book a vacation. Loyalty to a specific health care system, hospital, or doctor will give way to whichever provider can deliver the best care for the least cost.
To stay relevant and competitive, hospitals should use the compliance requirements of the Price Transparency Rule and the No Surprises Act as a stepping stone to a new paradigm. This shift to meeting the needs of younger consumers means embedding advanced digital capabilities and transparent pricing strategies into the core of their business. Hospitals will need to understand how they are complying with the Price Transparency Rule and the No Surprises Act and evaluate their internal technology and digital maturity to ensure they can deliver what customers want, not just what regulators require.
By leveraging strategic transparency of their pricing, hospitals can enhance the patient experience while positioning themselves as premier providers of value-based care, allowing them to attract and capture people who see themselves not just as patients, but as health care consumers.
Investigate leveraging price transparency to attract customers and compete in a rapidly shifting market.
Key internal audit considerations
Are you prepared to turn Price Transparency Rule and No Surprises Act compliance into a competitive advantage? As part of your assessment of your organization’s potential to leverage strategic price transparency, here are high-level internal audit items to consider:
Price Transparency Rule
- Gain an understanding of your price transparency program’s current work plans, established business processes, and controls and requirements supporting enterprise-wide compliance—including your hospital’s interpretation of guidance and documented rationale on how compliance is met.
- Review the overarching governance and monitoring framework for your price transparency program, including coordination of applicable stakeholder groups such as revenue, compliance, IT, and finance.
- Conduct testing to compare your machine-readable file (MRF) to CMS requirements as well as to the controls in place to maintain and update the MRF, including:
- Completeness and accuracy of listed charges
- Adequacy of descriptions
- Alignment to CMS naming convention guidance
- Assess the accuracy of pricing published on websites/any price estimator tool(s) and the ease of use for the public to obtain pricing estimates.
No Surprises Act
- Assess your organization’s billing practice by collaborating with stakeholders within key areas such as revenue, legal, compliance, and patient experience.
- Review the patient billing policy and other No Surprises Act governance procedures.
- Identify and assess existing internal controls to ensure billing for emergency services or non-emergency services provided by out-of-network providers is accurate and appropriately limited to in-network cost-sharing amounts.
- Review the content and distribution of required notices, consents, and good faith estimate (GFE) processes.
- Review whether actual billed charges are within $400 of the GFE.
- Identify and assess the internal controls and procedures implemented to ensure that balance billings for excluded services do not occur.
- Evaluate your organization’s patient-provider dispute resolution process.
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