CMS says $12,000. Hospitals say much more. So which is it?

As we’ve covered elsewhere, there’s a legal battle going on over hospital price transparency.

One of the key arguments providers make against publishing negotiated rates for shoppable services and charges online is the cost of initial compliance. In 2020 alone, hospitals contend that the costs would be staggering:

“For larger health systems, assuming it is even possible to harness and display the data as CMS requires, it could take an entire new department of personnel at the cost of thousands of dollars to lead the effort. In addition, most hospitals would need to hire technology vendors to facilitate the rapid development and implementation, which undoubtedly would come at a premium given the massive requirements and short time frame, at the cost of thousands, perhaps tens of thousands of dollars.” - American Hospital Association complaint, page 26

For context, CMS arrived at a slightly different calculation:

“We estimate the total burden for hospitals to review and post their standard charges for the first year to be 150 hours per hospital at $11,898.60....We estimate the total annual burden for hospitals to review and post their standard charges for CMS-1717-F2 7 subsequent years to be 46 hours per hospital at $3,610.88 per hospital.” - CMS-1717-F2 Final Rule, page 7

So what will it cost, really? And will critical resources be diverted from patient care?

Full disclosure: we are in the business of hospital price transparency, and we offer an end to end solution for complying with the Price Transparency Final Rule.

We have seen the full list of third party rates for every size hospital - healthcare systems spanning 10+ hospitals all the way to independent “mom and pop” hospitals serving Wrong Turn, Montana.

With that background: We agree with CMS. In fact, when most hospitals reach out to us about pricing, we usually just offer the CMS rate all-in. Sometimes less.

We are only able to quote that rate because we already have technology that makes it easier to assemble these rates and host them in a patient friendly manner. Hospitals may face financial quagmires if they undergo price transparency compliance alone, because most providers are ultimately not tech companies (nor should they be).

That said, there are a number of factors that can make price transparency compliance more difficult, including:

Rate variety and overall quantity of third party agreements

  • Most individual hospitals contract with dozens of third parties, but not hundreds. Within these dozens of contracts are a variety of rate structures that need to be accommodated.
  • Large hospital systems will have hundreds of agreements across geographic systems. These hospitals can expect to multiply the CMS number by number of hospitals in the system, with economies of scale between hospitals that share contracts.
  • Hospitals with a consistent boilerplate rate structure across payers can expect time-efficient and cost-efficient implementation.

Technical skill (and resource availability) of in-house staff

  • Many hospitals are ill equipped to deal with the sheer quantity of data the Price Transparency Final Rule requires. The cost of aggregating the data from disparate formats could weigh heavily on in-house staff.
  • This is why we recommend partnering with a third party. Our technology and expertise for aggregating rates and displaying it in our white-labelable Price Estimate Tool already exists. Why duplicate efforts and deviate staff resources from internal projects?

Technology for hosting data and supporting user traffic on an annual basis

  • When we went through 4,000 hospital websites to find chargemaster rates in 2019 for our Nationwide Chargemaster Search tool, we found that many hospitals use the most basic web hosting services available. After all, a hospital website usually exists solely as a face of the business with simple resources for patients.
  • It's not a technical burden to host a CSV file that complies with the CMS Final Rule. Even a large CSV file of every hospital charge and rate would be smaller than one average video file.
  • However, hosting a user friendly application that allows for patient queries on that data is more complex. This is why we offer to host the data and visitors’ traffic ourselves, and hospitals can simply embed the tool in their website.  

The Bird’s Eye View of Hospital Set Up Costs With the CMS Final Rule

These are estimates we give for clients that work with us. When providers opt to tackle transparency alone, these estimates do not apply - they instead would be more dependent on the technical staff at the hospital.

Despite what the AHA lawsuit claims, Price Transparency compliance can actually be affordable, efficient and lead to more patient volume.

Do you have more questions about preparing your rates for the Price Transparency Final Rule? Reach out to chris@arcosta.co to learn about how we can ease the burden of compliance.