Lack of Standardization, Not Compliance, is Holding Back Hospital Price Transparency

Analysis of hospitals' machine-readable files finds inconsistencies in what and how price information is reported.

Much has been made about the widespread noncompliance to the hospital price transparency rule since it went into effect over two years ago, but the struggle to get hospitals on board is only part of the problem.

The bigger challenge to achieving effective price transparency may be the lack of data standardization and reporting specification, according to a study by Kaiser Family Foundation and the Peterson Center on Healthcare's Health System Tracker.

The analysis revealed shortcomings in price transparency data currently shared by hospitals that makes it difficult for patients to compare prices across hospitals or payers.

Researchers examined price transparency data compiled by Turquoise Health, focusing on machine-readable files and not the shoppable services identified by CMS that can be scheduled by a patient in advance. The study analyzed two payer-specific negotiated prices for two types of care associated with common procedure codes: hip and knee replacement and diagnostic colonoscopy.

Inconsistencies were found in specification of what services prices correspond with, particularly for episodes of care, such as negotiated rates attached to a treatment episode for a hip-knee replacement possibly corresponding to a per diem charge instead of the entire episode.

Data quality also varied significantly, with negotiated rates showing questionably low and high values. Finally, crucial pieces of information were missing, like contracting method and payer class (Medicare, Medicaid, and commercial).

"The issues discussed above result primarily from the way the rule is crafted, particularly from the lack of specificity and uniformity about what should be included with each charge in their machine-readable files and how that information should be laid out," researchers stated. "There are no standards for what needs to be included in the description or whether codes should include commonly used modifiers.

"Although providers are required to include de-identified minimum and maximum negotiated charges, lack of standardization for how these are labeled in the data result in difficult isolation of these values for use in further analysis."

These challenges are not necessarily because many hospitals continue to be noncompliant with the rule, the study highlighted.

A recent report by PatientRightsAdvocate.org showed that 75.5% of hospitals are still not complying with the law, with 5.8% failing to post any standard charges files. However, the report also found a wide variation in data size, further underscoring the need to establish clear standards.

CMS has offered resources to help hospitals comply with the rule, including releasing three sample formats (wide, tall, and plain) for machine-readable files. Those formats are voluntary though, meaning hospitals have no real reason to alter their process until standardization is put in place.

The Peterson-KFF study suggests the reliability and usability of data would improve with "consistent specification" of the following: the charge’s applicable hospital setting (inpatient or outpatient), charge type (facility or professional), associated charge modifiers that affect pricing or payment of a service, the time period covered, any bundles the charge is a part of, the health plan type, and how the charge differs from the base rate.

"Until there is more standardization in how machine-readable files are organized and made available, analysis of these data will be challenging," the researchers concluded. "More fundamental issues surrounding what is included in a negotiated charge remain."