Nonprofit Patient Rights Advocate says Tennessee’s compliance is at just 12%, but other analyses paint a rosier picture.
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By Cassandra Stephenson [The Tennessee Lookout -CC BY-NC-ND 4.0] –
A visit to the doctor in January 2023 confirmed what then-37-year-old Phillip Faragalli suspected: the long-time ice hockey player’s elbow was in “bad shape.”
One $3,600 MRI later and Faragalli had sticker-shock and a choice to make.
“I could either stop being active and not do anything, or I could get surgery,” he said. “So obviously I chose to get surgery.”
Faragalli, now 38, lives in Nashville, a healthcare hub home to hospital giant HCA Healthcare’s corporate headquarters, multiple hospitals and hundreds of healthcare companies.
Faragalli’s elbow surgery came roughly two years after federal rules mandating hospital price transparency went into effect, but the rollout of hospital service cost data has proved cumbersome.
Those price transparency rules didn’t do much for Faragalli. He sat down with a hospital coordinator who explained the procedure to him, but when he asked for an estimate for how much the surgery would cost, they told him to talk to his insurance provider. His insurance provider told him to talk to the hospital.
The bill ended up being around $20,500, with Faragalli paying his $6,000 out-of-pocket maximum and insurance picking up the rest about three months after the procedure. (The hospital, he said, expected the money within 30 days).
Worrying about an unknown price tag was stressful and frustrating, he said.
“They can tell you what’s wrong pretty quick, but they can’t tell you how much it’s going to cost. It doesn’t make sense,” Faragalli said. He trusted his doctor with his medical care, but he was wary of the transaction side of medicine.
More transparent pricing “would put me at ease right away, just being up-front, honest and truthful,” he said.
A true snapshot of just how many hospitals are fully compliant with the rule remains elusive, for now. The Centers for Medicare and Medicaid Services — the only official regulator for price transparency compliance — found 70% compliance in 2022 in a review of the websites of 600 general acute care hospitals with more than 30 beds.
But the requirements have since evolved, and in the meantime, third-party companies and organizations have published their own trackers for hospitals’ adoption of the rules. For Tennessee, estimates of how many hospitals have posted required pricing information vary from 12% to 66%.
Who’s following the rules?
The Hospital Price Transparency Rule took effect in January 2021, requiring hospitals to publish prices in two formats: a consumer-friendly list of “shoppable” healthcare services that can be pre-scheduled (or a price estimator with the same information) and a machine-readable file containing all of the hospital’s standard charges for items and services.
The rule has since been updated twice, implementing new formatting rules as of July 1. The latest round of requirements is due on Jan. 1, 2025.
A November report from nonprofit Patient Rights Advocate (PRA) found only 21.1% of the 2,000 U.S. hospital websites they analyzed were “fully compliant with all requirements of the rule” as it now stands.
In Tennessee, the organization estimated 12% of hospitals are fully compliant, a significant drop from the 50% compliance rate the group last reported for the state in February.
“Hospitals have to post in a new format, which is a learning curve,” Ilaria Santangelo, PRA’s Director of Research, told the Tennessee Lookout. “A lot of the reasons for non-compliance we’re finding in these hospital files are very easy fixes.”
But PRA also argues recent CMS rule changes are making it more difficult for average patients to access and compare prices for their care, and while hospitals may be compliant with the rules, the organization presents its own “common-sense assessment” of price transparency based on the availability of dollars-and-cents prices (as opposed to now-allowed algorithms and percentages) in hospitals’ public files. Out of the 69 Tennessee hospitals reviewed in November’s report, PRA deemed 19% to have “sufficient pricing data” according to the organization’s standards.
Representatives for HCA Healthcare, Ballad Health, Baptist Memorial Health Care and Ascension Saint Thomas — some of Tennessee’s largest healthcare providers — stated that their hospitals have implemented the federal requirements. BalladHealth’s Tennessee hospitals all had pricing data deemed “sufficient” by PRA.
PRA’s semiannual reports have been criticized as “intentionally misleading” by the American Hospital Association and nonprofit Healthcare Financial Management Association, which point to another third party with a rosier outlook.
Out of the 151 hospitals in Tennessee, 66% meet requirements for publishing transparency files — the third-highest adoption rate in the country — according to Turquoise Health, a healthcare analytics company that tracks rule adoption and provides consumers with cost estimates for some procedures.
Nearly all Tennessee hospitals have posted machine-readable files, but about 29% have not yet adjusted to the new formatting rules. But Turquoise notes that its tracker “is not an indicator of overall compliance to the Hospital Price Transparency Rule.”
The company also offers services to health organizations to help them comply with federal transparency laws and generates hospital transparency scorecards ranking hospitals out of five stars. Turquoise’s scores for machine-readable file price transparency are currently marked as “pending.”
Shawn Stack, a policy director for HFMA, said “compliance is not where it needs to be” under new format requirements, but is improving. “I know hospitals and providers are trying to work to get that compliance better as they understand what CMS wants in those data files.”
A CMS spokesperson said the federal agency does not comment on outside reports, but “is aware of several different outside efforts to assess hospital compliance, with findings of alleged compliance ranging from approximately 5% to nearly 85%, depending on the date of review and the organization’s methodological approach, including how closely the organization adheres to the regulatory requirements. We regularly review such reports which are used to inform our enforcement.”
The federal agency has issued 22 warning notices and 22 corrective action plans to Tennessee hospitals found to have deficiencies since June 2021. Twenty-five cases have been closed, indicating hospitals addressed any issues, and hospitals met requirements in 24 of the agency’s price transparency reviews. CMS has yet to issue any fines for noncompliant hospitals in Tennessee.
The Health and Human Services Office of the Inspector General released a report in November estimated that around 46% of the 5,879 hospitals that fall under the rule nationwide did not meet the requirements. But that audit, too, has caveats; the OIG used the set of rules that went into effect in January 2022 and sampled hospital websites between January and March 2023, so the data does not reflect current compliance.
CMS also contends that the OIG’s audit improperly weighted smaller hospitals more than hospitals that are part of a larger health system, which make up about 70% of hospitals in the United States and “may have more resources to devote to compliance efforts,” the report states.
The cost of care
Santangelo, with PRA, said she wants to see more actual dollar signs and less algorithms and percentages in hospitals’ machine-readable files. Algorithms require access to other, often expensive, data sets to calculate estimates.
“This is totally going to impede consumers’ access to real prices, and it’s going to impede their ability to get the best quality of care at prices they know they can afford,” she said.
CMS’ spokesperson stated in an email to the Tennessee Lookout that it believes allowing algorithms in the machine-readable files “squarely aligns” with the rules, and a new requirement for an “estimated allowed amount” will be added to provide “contextual information” to items with prices listed this way.
Stack, with HFMA, said the machine-readable files aren’t supposed to be customer-facing. They are used by hospitals and data analytics companies like Turquoise Health to provide estimates to customers based on their specific healthcare needs. He draws a comparison to a trip to IKEA to buy a bookshelf.
The machine-readable file is like a list of “every laminate, every shelf, every screw, every bolt that they use on bookshelves in the entire store, and … the pricing for it,” he said. “That’s the same thing for healthcare. You’re just putting lists out there of all the items and services that that healthcare provider is providing, but you have no idea how those fit together in an episode of care.”
He said costs for care beyond diagnostic tools (think MRIs and X-Rays) can vary from patient to patient based on their needs and how they react to treatment, making fixed pricing difficult.
“The idea that those service costs are not going to fluctuate at all is just not realistic based on the human body,” Stack said.
But Santangelo and PRA want to see movement toward “accountable, binding, dollars-and-cents prices for every item and service.”
“Estimates are non-accountable, they’re non-binding, and they often end up thousands or tens of thousands of dollars more than quoted,” she said.
Faragalli, who was introduced to PRA amid his pricing frustrations for his elbow surgery, recalled a more recent experience with an X-Ray and MRI this year. He got an estimate for the imaging before he paid up front. Three months later, he received a letter stating he owed another $700. He’s not sure what caused the additional charges.
Stack has hope that price transparency will continue to improve as hospitals offer more prices for service “bundles” and CMS and insurance regulators work out a system for auditing payer machine-readable files from insurance companies (something he’s yet to see any movement on). Ultimately, patients should be able to review an estimate from the hospital and insurance company under the No Surprises Act, though the timeline for that is unclear.
In the meantime, Stack has recommendations for patients navigating an admittedly imperfect system.
“Call the hospital and get a good faith estimate. Chances are they’ll give it to you, even if you’re insured, they’re going to give you the out-of-pocket price, they’re going to work out an estimate for you,” he said. “And then after that service, don’t delay if you have questions about your medical bill. Call the hospital and talk to a financial counselor.”
