Only about a third of the hospitals surveyed are in full compliance with giving public access to prices, the watchdog group contends, but the AHA disputes its methodology
It’s been almost four years since the Centers for Medicare and Medicaid Services (CMS) enacted its Hospital Price Transparency rule which requires hospitals—including their medical laboratories—to make their prices available and easily accessible to the public. But according to a 2024 report from PatientRightsAdvocate.org (PRA), just 34.5% of reviewed hospitals are fully compliant with the transparency rule. That’s a slight decrease from the 36% compliance rate the PRA listed in its 2023 report, the watchdog group stated in a blog post.
Released on Feb. 29, this was the group’s sixth semi-annual hospital price transparency report since the CMS rule took effect in 2021.
The rule “requires hospitals to post all prices online, easily accessible and searchable, in the form of (i) a single machine-readable standard charges file for all items, services, and drugs by all payers and all plans, the de-identified minimum and maximum negotiated rates, and all discounted cash prices, as well as (ii) prices for the 300 most common shoppable services either as a consumer-friendly standard charges display listing actual prices or, alternatively, as a price estimator tool,” the report states.
The required viewable prices are to be for, among others, medical imaging, clinical laboratory testing, and outpatient procedures such as a colonoscopies, etc.
“With full transparency, consumers can benefit from competition to make informed decisions, protect from overcharges, billing errors, and fraud, and lower their costs,” the report states. “Employer and union plans can use pricing and claims data to improve their plan designs and direct members to lower cost, high-quality facilities. However, continued noncompliance impedes this ability.”
At any time, the US Department of Justice (DOJ) could decide to file charges against a hospital or a clinical laboratory for not posting their prices on their websites in compliance with the federal rule. Such an action by DOJ officials would be to specifically put the entire industry on notice that there will be consequences for non-compliance.
The PRA’s report provides hospitals and clinical laboratories with a reminder that consumer watchdogs are also monitoring compliance.
“Our comprehensive study of 2,000 hospitals indicates nearly two-thirds (65.5%) of hospitals reviewed continue failing to fully comply with the rule, yet the Centers for Medicare and Medicaid Services (CMS) has only fined fourteen hospitals for noncompliance out of the thousands found to not be meeting all of the rule’s requirements. When hospitals don’t post their prices, they can charge whatever they want,” wrote PRA Founder and Chairman Cynthia Fisher (above) in a letter to President Biden. Hospital medical laboratories are also required to post their prices for tests. (Photo copyright: PatientRightsAdvocate.org.)
To compile their report, PRA analysts examined the websites of 2,000 US hospitals between September 3, 2023, and January 13, 2023, and found that 1,311, or 65.5%, were not in full compliance, mostly due to “missing or significantly incomplete pricing data,” the report states.
More than 6,000 licensed hospitals operate in the US, the report notes. The group said it focused on hospitals owned by the largest US health systems.
Among the notable findings:
The 2023 report found that 98% of Kaiser Permanente’s 42 hospitals were in full compliance with the rule, but in the 2024 study, none were compliant because the hospitals began posting multiple files instead of a single file.
In total, 103 hospitals rated as noncompliant in the previous report were found to be compliant in the new analysis. Conversely, 135 hospitals previously rated as compliant were listed as noncompliant in the 2024 report.
The report lauded three hospitals for posting “exemplary files” that were “easily accessible, downloadable, machine-readable, and including all negotiated rates by payer and plan.” Those were Cape Cod Hospital in Hyannis, Mass.; Christus Santa Rosa Medical Center in San Antonio; and UW Health University Hospital in Madison, Wis.
In its discussion of the findings, PRA called on CMS to step up enforcement of the pricing transparency rule. The group also wants the government to close what it describes as the “estimator tool loophole,” which allows hospitals to list non-binding price estimates and price ranges instead of concrete prices.
“Price estimator tools do not achieve the goals of price transparency policy and fundamentally undermine the intent of the regulations,” the PRA’s report contends.
In response to the 2023 PRA report, AHA Group Vice President for Public Policy Molly Smith issued the following statement, “Once again, Patient Rights Advocate has put out a report that blatantly misconstrues, ignores, and mischaracterizes hospitals’ compliance with federal price transparency regulations. The AHA has repeatedly debunked point-by-point Patient Rights Advocate’s intentionally misleading ‘reports’ on price transparency.”
Citing CMS data, Smith said that as of 2022, 70% of US hospitals had complied with two key federal rules:
One requiring hospitals to post machine-readable files with pricing information.
The other mandating a list of prices for at least 300 “shoppable” services.
More than 80% of hospitals had complied with at least one of the rules, she contended in an AHA press release.
Speaking to the New Orleans Times-Picayune, PRA Founder and Chairman Cynthia Fisher said her group performs a more in-depth study of pricing data compared with CMS.
“They did not do a comprehensive review,” she told the publication. “We do a deep dive for full compliance.”
The PRA study came on the heels of a January report from Turquoise Health that offered a rosier assessment of hospital compliance, albeit with different criteria. According to the Turquoise report, as of Dec. 15, 2023:
90.7% of 6,357 US hospitals had posted machine-readable files,
83.1% posted information about negotiated rates, and
77.3% posted cash rates.
The Turquoise Health end-to-end price transparency platform uses a 5-point system to rate the quality of hospitals’ machine-readable files and said that more than 50% scored five stars. Clinical laboratory managers and pathologists may find it timely to review their lab organization’s compliance with this federal price transparency rule.
Ascension’s refocus exemplifies challenges facing healthcare systems as shrinking reimbursement rates, stagnant inpatient admissions, and changing care models put a financial squeeze on traditional hospitals
Hospital-based medical laboratories and anatomic pathology groups are adapting rapidly to both external and internal forces in the healthcare continuum. Efforts to shift clinical care from hospitals to ambulatory settings is a trend that impacts how, where, and when ordering physicians request testing.
One good marker for this trend is the year-over-year change in hospital admissions. Data given to Congress in the latest MedPac (Medicare Payment Advisory Commission) report on Medicare payment policy show that, between the years 2006 and 2016, the cumulative percent change in the number Medicare inpatient discharges per beneficiary declined by 21.8%. During these same years, the cumulative percent change in the number of outpatient visits per Medicare beneficiary increased by 49%!
Now, Ascension Healthcare of St. Louis—reportedly the nation’s largest nonprofit healthcare system—also appears to be shifting its focus from hospital-based care to less expensive outpatient settings and services. It is doing this by using new staffing models and external businesses.
The move highlights an industry trend. Driven by continued economic, regulatory, and care delivery challenges, hospitals and health systems have been forced to consider different business/clinical models that better serve the evolving needs of their patients.
However, fewer hospitals and shrinking budgets also could impact hospital-based medical laboratories’ revenue, as hospitals seek new formulas for profitability.
In a video message, Ascension President and CEO Anthony R. Tersigni (above), EdD, FACHE, told 165,000 employees that Ascension would be reducing its hospital footprint and administrative costs, while exploring telemedicine and other outpatient care delivery models. This is potentially a major shift in how the nation’s largest nonprofit healthcare system does business, which could impact in-hospital and local independent medical laboratories. (Photo copyright: Ascension.)
New Strategic Direction
According to Modern Healthcare, Ascension President and CEO Anthony Tersigni, EdD, FACHE, outlined the company’s “advanced strategic direction” via video message to his 165,000 employees on March 23. He told his employees a new strategy was needed, due to dwindling reimbursements from both federal and private insurers, increasing regulatory complexity, skyrocketing pharmaceutical costs, and a shift from inpatient to outpatient care and from fee-for-service to value-based care.
“We are in the midst of major transitions, not only in how we provide care, but in how we are reimbursed for the services we provide,” Tersigni revealed in the video message.
Tersigni stated that the world’s largest Catholic health system needs a “dual transformation,” a process that would both “transform current healthcare delivery and operations to meet the challenges presented by the rapidly changing environment” and “safeguard a sustainable presence in its communities that responds to the changes in how people are accessing care.”
In his remarks, Tersigni outlined changes Ascension already had made to reduce administrative costs by $400 million. Further leadership and organizational restructuring is expected to net $61 million of additional savings in fiscal 2019.
In addition, he noted, the health system would save $57 million a year by “aligning its pay practices” to eliminate inconsistencies and follow common benchmarks.
Reducing Hospital Footprint and Controlling Patient Experience
Modern Healthcare also noted that the health system had “implemented new staffing models and productivity standards for nurses and other caregivers, as well as for nonclinical positions that align with other Ascension facilities.”
“There has always been a need for hospitals in our country, but not as many as we have today,” Tersigni told Modern Healthcare. “We don’t need to control everything. What we need to do is collectively control the patient experience along the continuum.”
In addition to selling off hospitals in cities where it is not the market leader, Ascension is looking for partners that will enable it to expand its reach in outpatient settings, such as:
Ascension’s plans also include minimizing business travel to reduce costs and hiring a Chief Digital Officer, whose job will include improving price transparency, Modern Healthcare reported.
Are the Days of Large Hospital-based Health Systems Numbered?
Healthcare Dive reported that admission rates for many health systems are declining as expenses are rising. That double-edge sword is causing the healthcare industry to question “whether the days of large hospital-based health systems are numbered.” The article also noted Tenet Healthcare (a network of 69 acute care and specialty hospitals in 11 states) and Community Health Systems (operator of 126 hospitals in 20 states) both are shedding hospitals in an effort to reduce debt. Tenet’s restructuring also includes laying off 2,000 employees.
According to Ascension’s website, the healthcare system operates more than 2,600 sites of care—including 153 hospitals and more than 50 senior living facilities—in 22 states and the District of Columbia. Nevertheless, it has not been immune from the multi-faceted pressures facing the healthcare industry.
Becker’s Hospital Review reported that Ascension’s operating income dropped 78% to $84.7 million in the first half of fiscal 2017, while operating revenue fell to $11.3 billion from $11.4 billion during the same period one year ago. The decline in revenues was largely attributed to the 2017 sale of Ministry Saint Joseph Hospital in Marshfield, Wis., and the divestiture of Door County Medical Center in Sturgeon Bay, Wis., in 2016.
Gwen MacKenzie, former Senior Vice President, Ascension Healthcare, and Ministry Market Executive, Ascension Michigan, oversaw Ascension Health in Michigan’s employee layoffs and management restructuring, which saw the 14-hospital system lay off 500 workers, including 20 executives and managers.
Concerning Ascension’s new direction, she told Modern Healthcare, “We think this is our new normal. The landscape we are navigating here is the new reality.”
If Ascension’s restructuring of its operations away from hospital-centric care is a harbinger of things to come, hospital-based and independent clinical laboratory leaders may be forced to revamp their business models as well, to survive the changes.
These annual rankings show that the nation’s largest healthcare systems continue to grow in revenue and bed count
When it comes to the nation’s largest healthcare systems, it is no surprise that the U.S. Department of Veterans Affairs (VA) tops the list, at least when ranked by annual revenue. That is the finding of a “Top 10” survey of healthcare systems recently published by Modern Healthcare magazine.
This survey is useful to pathologists and clinical laboratory managers because these “Top 10” healthcare system rankings also provide insight as to where the nation’s largest hospital-based laboratory organizations can be found. For example, the VA operates 164 acute-care hospitals. That represents a large volume of clinical laboratory testing for those inpatients.
Healthscope bids also fuel speculation of a big clinical pathology transaction
Last week in Australia, investment insiders shared rumors that Quest Diagnostics Incorporated (NYSE: DGX) was interested in acquiring Sonic Healthcare Ltd. (ASX: SHL). However, press stories discounted the possibility of a deal between these two billion-dollar clinical pathology laboratory behemoths. Neither company has issued a public statement addressing this issue.
In assessing the possibility of Quest Diagnostics acquiring Sonic Healthcare, the Sydney Morning Herald (SMH) threw cold water on the idea. It pointed out that Sonic’s stock price is trading at a multiple of 10.8 times earnings before interest, taxes, depreciation, and amortization (EBITDA). That would make Sonic an expensive purchase for Quest Diagnostics, since Quest’s share price trades at a multiple of seven times EBITDA. Further, SMH’s reporter pointed out that Sonic’s market capitalization of A$5.7 billion would make it a major acquisition for Quest Diagnostics, which has a market capitalization of U.S.$9.5 billion.
