GAO: CMS cannot assure hospital pricing data is accurate or complete

The topic of hospital pricing continues to perpetuate our public discourse and, in a recently published report to the US House Committee on Energy and Commerce, the Government Accountability Office (GAO) found that the Centers for Medicare and Medicaid Services (CMS) cannot verify the accuracy and completeness of hospital pricing data to determine whether additional enforcement actions are necessary. As hospitals work to comply with CMS’s price transparency regulations, the GAO report highlights the agency’s shortcomings in implementing and enforcing these requirements. Consequently, the GAO recommends that CMS assess whether hospital price transparency data are “sufficiently complete and accurate to be usable” and implement additional enforcement actions as needed. This comes amidst the inception of CMS transmission and investigation of complaints lodged by consumers and the increased need to transmit significant pricing, good faith estimate and response data to CMS upon request.

Background

CMS implemented a regulation in 2021 that requires hospitals to publish gross charges, discounted cash prices, payor-specific negotiated charges and minimum and maximum negotiated charges for hospital items and services. The regulation also requires that hospitals publish a list of standard charges for at least 300 non-emergency services that patients may schedule in advance. CMS updated these requirements in 2024 to address specific challenges in hospital pricing data, including standardized file formats and enforcement actions.

The stakeholder interviews

The GAO interviewed 16 stakeholder groups representing users and experts in hospital pricing data to gather their experiences before the 2024 requirements. The groups described difficulties in making effective comparisons and compiling the data for large-scale use, including challenges relating to:

• Technical issues with machine-readable files
• Difficulties in interpreting the data in the machine-readable files
• Comparing prices across hospitals due to the complexity and variation in pricing methods
• Missing or perceived incomplete and inaccurate data

Recognizing that the application of hospital price transparency data has been limited thus far, stakeholders anticipate increased patient engagement as the usability of the data tools improves. They envision employers and health plans will learn to effectively utilize this data in their pricing and network negotiations over time, potentially in conjunction with other data sources like insurer price transparency. Stakeholders further mentioned using hospital pricing data in litigation involving employer oversight of third-party administrators.

CMS enforcement actions

The GAO noted that CMS monitors hospitals to ensure compliance with required data reporting. Between 2021 and 2023, CMS initiated 1,287 enforcement actions, including 851 in 2023 alone. Additionally, over US$4 million in penalties were imposed on 14 hospitals for failing to correct compliance deficiencies promptly. Observing the agency’s uncertainty over whether hospital pricing data is accurate and complete, the GAO found that while CMS has taken enforcement actions, it “has not assessed the extent to which reported pricing data are sufficiently complete and accurate or whether any related issues jeopardize the usability of the data.”

The updated requirements expressly state that hospitals should make a “good faith effort” to report accurate pricing data as of January 1, 2024, and to include an affirmation statement regarding the completeness and accuracy of pricing data as of July 1, 2024. While achieving complete and accurate hospital pricing data may not be feasible due to limited resources, the GAO suggests CMS consider specific “cost-effective” options to verify provider information. These include risk-based or random sampling and comparing hospital-negotiated prices with publicly available insurer prices.

Future legislation? 

The Lower Costs, More Transparency Act (HR 5378) passed by the House in December 2023 would codify and expand the hospital price transparency rules and increase the maximum civil monetary penalty for non-compliant hospitals. With strong bipartisan support and widespread public backing, some form of hospital price transparency legislation could pass as part of a broader end-of-year legislative package. Should the 118th Congress fail to pass hospital price transparency legislation, expect lawmakers to revisit the issue in 2025. This issue has proven to have traction in both Democrat and Republican circles and, thus, we can foresee continued legislative focus on this area.

Our team of experienced lawyers and professionals at Norton Rose Fulbright will continue to closely monitor legislative and regulatory proposals and enforcement actions relating to hospital price transparency. If you have any questions, please do not hesitate to contact us.