Episode 118:
Hospital Transparency in 2025: What’s Changed and What’s Coming

Episode Transcript

Welcome, everybody, to another episode of Compliance Conversations. I am CJ Wolf with Healthicity, and today's guest is Dave Cardelle. Welcome, Dave.  

Great. Thanks, CJ. Great to be here. 

Yeah, we're glad to have you back. Dave's been on a previous episode. So if you like what he has to say here, you should go find that other episode. And I know you will like it because he's got a lot of knowledge and a lot of experience. And I think we have a good topic today. But Dave, before we jump into the topic, why don't you tell the audience a little bit about yourself, what you do? 

Sure. Thanks again, CJ, for having me. My name's Dave Cardelle. I'm Chief Strategy Officer at AMS. We're a software company, a health affordability platform, software that does a lot of things, mostly around payment integrity, risk management, and business intelligence. We serve not only health plans, but we also serve hospitals and the provider community with some of our solutions, and one being, for the topic of the day, price transparency. transparency software. So I'm a pharmacist by profession, but I've been in the payment integrity and price transparency space for many, many years now. So really excited to kind of share some of the insights. I'm also on the Self-Insured Institute of America or SIA price transparency committee. So we do a lot of lobbyists and legislative activity to try to improve the price transparency on both sides for both hospitals and for health plans. 

Yeah. So I was actually at a conference recently with Dave, and we were talking about this a little bit, and we thought this would be a great topic. And a lot of our listeners are compliance officers, right? They're in the hospital space. And so most of them know, the compliance folks know, that there's requirements for price transparency. Why don't you give us just a little bit of background of how this came up? It's been around for years, but tell us a little bit just... setting the stage background wise? 

Sure, yeah, let me set that stage because it's kind of an interesting history. It started with the previous Trump administration about a little over four years ago where CMS put out a final rule for hospital price transparency or HPT and on the health plan side, transparency and coverage or TIC, T-I-C. And those requirements, you know, were seemingly straightforward, but there was very little, if any, standardization requirements. It was super confusing, especially for the hospital community. Over 6,000 hospitals were affected by this. And for the first time ever having to report what has been considered confidential proprietary rate information. So this was a big deal. And about four years ago when that came out, there was just a lot of ambiguity and no real guidance as far as the file structure, the data elements, the data layout, the media to use to put that massive amount of data. And it really did put a burden on hospital specifically to have resources and technology changes and kind of create these files in a way that would be compliant. I think probably a lot of hospitals had to use some consultants and spend quite a bit of money to get the these things together. And even today, four years later, because of the lack of planning of interoperability, there were files that had been submitted all different ways, which makes it almost unusable and requires companies like ourselves and other analytics companies, we're not the only one, to try to marshal that data, do a lot of curation and mapping and cleaning of that data and identify what's good, what's bad. There is a lot of missing data and I could get into that a little bit, but super challenging for hospitals to comply with this. And it's gotten better progressively over the four-year period that we've observed, but there's still a lot of holes and i think what's important for today's discussion is cms now with the new administration uh they're doubling down uh they're kind of revisiting this and saying okay it's been four years we are going to start to really penalize and find uh non-compliant hospitals. Now, the same is being said over on the health plan side, and that's kind of a little bit of a different issue. But I think for this group, at least, you know, we can spend a little bit more time on some of the things and nuances and new requirements and the new way the administration is really going after, you know, the hospital price transparency compliance side of this.  

Yeah, and I was reading a little bit on the HPT website for CMS that about enforcement, kind of their enforcement strategy. And they say, I don't know how accurate this is, but they say in one of those paragraphs that previously they were doing about 30 to 40 reviews per month, and they're using automatic, whatever that means, automatic systems, and they're up to 200 reviews a month. And that means each 200 hospitals, if I understand that right. Is that your understanding? 

Yes, they have increased their auditing and their review of the files. They put out a validation tool to help, but it's still pretty ambiguous and there's still a lot of confusion. And I think what's happening or is going to happen, but hasn't happened yet, there's an increase in activity, but the penalties have not really hit hard yet. And I think they're planning on that. And I think one of the things to start out with is to really what the risk is for hospitals for noncompliance. And we can talk about where specifically some of the noncompliance is, because we analyze that all the time. We kind of have a perfect blueprint for every hospital, 6,000 hospitals, because we take in all these disparate files and we do a lot with them. And We analyze them for quality. and quantity of data that's submitted. And we look for outliers and anomalies and things that are errors and we clean that up. So we kind of have a perfect roadmap for every hospital today as a by-product of our use cases for it. We kind of know where things are good and bad and there's some really good stuff that's being reported. And then there's like some real vulnerable areas specifically for hospitals where they're gonna get a poor grade and where they could actually get fines imposed. The fines are pretty significant. And if you look at it from this administration, not only saving money, but almost as a revenue generator, there's a little bit of a potential motivation there because the stakes are high. At $5,500 a day potential fine for a hospital, that can add up to over $2 million per year for a hospital, which all said could be $12 billion in revenue for the government or CMS into the trust fund. you know, there's a lot at stake here. And I did a little bit of analysis that I thought was interesting. I kind of, you know, figured out with existing staff on the compliance teams within hospitals today, and these are rough estimates, but, you know, it may cost a hospital between $250,000 to $500,000 to get a dedicated lead resource that does this full-time, that kind of leads the internal teams, and then a kind of an interdisciplinary team across different business units that should be represented. Those are existing existing resources, but all said, you know, with IT and everything involved to do this, it's probably between a quarter of a million to a half a million dollars, you know, and to mitigate the risk of potentially $2 million. But there's more than just the financial side of it. There's also, I think, just brand, image, marketing, payer relationships, government relationships. There's a lot of other things that are at stake that I would say, you know, also you know, support the need to really try to get compliant for a lot of good reasons and to be more competitive because with good, accurate, data you're now able as a hospital to look at what the competitive rates are and find where you may be underpaid and where you can maybe increase those rates so it works on both sides of the coin i think it's really important to say you know change the mindset instead of trying to be obstructive with reporting this data i don't think anybody is but the inherent nature of how confusing it is getting really clear on how to provide the information that's requested keeps you compliant you know mitigates the risk the two million dollars potentially but it also enables you to do a lot of things where just improving a few contracts you can make up for that money pretty quickly.  

Yeah so why don't you just kind of quickly tell us what's required i my understanding is You know, you have to have a single comprehensive machine readable file with all your standard charges. And then secondly, a consumer friendly kind of display of standard charges for what these are shoppable services. Do I have that right? Is there more required or tell us what you know? Yeah, 

they've kind of added, they've been adding addendums to this final rule over time and you hit the nail on the head, but they are also looking at things this last round to improve as well from the things that they've seen. So the first is Chargemaster, your CDM. It's all electronically tied to billing. Your Chargemaster is the list price. It's pretty straightforward. Nobody really pays that, but it's a kind of line in the sand baseline for fee-for-service discounts which is the percentage off billed charge. So your CDM should equal your billed charge that appears on claims that are being billed. 

Otherwise, there's a problem. And we have seen that problem in real life where there's, you know, to the penny, you know, the thousands, tens of thousands of different items that could be charged on a charge master or menu list price. sometimes are appearing 400% higher than what that charge master is as a billed charge. Now those are few and far between. It's probably about 4% of all the charges that we've analyzed and we've analyzed a lot on actual claims data, but that has hundreds of millions of dollars in discrepancy. So right there, you know, not only CMS compliance fines and so forth, but from a payment integrity perspective, those are things that could be zeroed in very easily by health plans to say, Hey, you know, you owe us this money because your bill charges are inflated compared to what your menu says it should be on fee-for-service claims. So that's the one, but that's actually what I call is a source of truth or a pillar of truth because almost all the hospitals are reporting very good data other than the few percentage that I just mentioned. Getting the charge master data should be pretty straightforward and easy to report and update that accurately. The second thing is kind of off of that, the discounted cash price for an uninsured patient. And originally it was 300 shoppables. You know, it's basically, and there's some nuances to it, but it's really around the top procedures that you're providing. They wanna know what are the discounted cash prices for the services that you actually provide in volumes. It makes sense, common sense, right? So this is something that once you put that in the machine readable file, and you mentioned that it should be in an easy to read or access file on a website so that patients can shop. If they need a total knee or elective surgery or some other procedure, and they want to look at three or four hospitals in their general vicinity, they can go in and research each website for each of those hospitals and figure out approximately what those costs are going to be for an uninsured cash customer. Now, that also equates to a out-of-network where a patient may have coverage or insurance, but they're not contracted or covered under your particular facility. So that cash prices, discounted cash price is really important because that's kind of like saying to the universe, now that it's posted in MRF, this is the price that we're willing to accept as a hospital to provide one service to one patient. So to me, that's an even better benchmark of what the price really is. And what I have also noticed CJ is that most hospitals, if not all, it's usually at 20% or whatever that percentage is doesn't matter. It's usually pretty consistent, not only for the 300, but it flows through to just about every procedure. So it's kind of across the board discount off of that list price or bill charge, which equals your charge master. if that makes sense. The third one, just to get that out there, because I think it's important, and this is where everybody's vulnerable. So those two data points are pillars of truth, source of truth that can be relied upon for the most part, except for those few variances that I think could easily be fixed. But the third one that's in the requirements for the final rule is what's giving everybody a problem and where almost everybody's non-compliant. And that's the average negotiated rate by payer, by line of business. And there's a good reason why that's a really tough one for hospitals to report. First of all, it's off of utilization data. 

And so if you think about it from a practical standpoint, which I don't think went into the thinking here, is that a lot of hospitals specialize in certain things and they don't do a lot of other services. And they may have different geography where they may have a small population of Aetna, Cigna, United, and a high concentration of Blue Cross type patients. And then there's different lines of business, HMO, Medicare, Medicaid, PPO, commercial, what have you. So those different lines of business are complicated by the different health plans and their patients and members that are going to that hospital. There's just not a lot of volume of a lot of procedures, if any. So there's a lot of blanks and in those blanks, hospitals have been reporting a nine, nine, nine, nine, nine, et cetera, as a miscellaneous or junk code when there's no data. And so that has caused a problem where now in the new requirements that's banned and they're requiring hospitals to put an estimate if there's no data, which means like, how do you do that, right? For an average negotiating price, if you don't have it for that line of business for that health plan. So then you have to put comments as well. well so that the reader can understand how you came up with that estimate and what it's based on. If you have one incident, then you put that price point or average negotiated rate, and then you put the narrative that explains that this is one price point for that. Or if there's multiple, you put the range and you put the number of incidents. So they're asking for a lot more granular detail to try to get rid of these miscellaneous prices and to get to actual estimated prices rather than percents or 999s or blanks. And that to me is still a real problem because of the lack of utilization. It's not coming off of contract paper that says this is the average negotiated rate. It's coming off of actual claims data, which is the ERA or the 835 data. So, you know, for hospitals and compliance, I would advise as a tip is to get a real good handle on that 835 ERA data and segregate that pipe of data and information and parse it in a way that you can actually do the metrics, replicate that in a scalable way so that you can comply with what's required. So really focusing on the 835, I think can help, even though it's, you know, in my mind, it's very partial data. There's a ton, every hospital has tons missing data. And so theoretically, 6,000 hospitals times $2 million, that's $12 billion in potential fees that if they decide to go after that aggressively, you know, could be a real issue for hospitals. 

Yeah, that's so interesting. I want to ask a follow-up question to that, but we're going to take a quick break and we'll be right back, everybody. Welcome back from the break, everybody. Dave, I wanted to follow up on what you were just talking about before the break. A couple of questions.  

The first one is, are they supposed to give like a line item estimate? Let's say it's an outpatient total knee replacement or something like you were saying. Are they supposed to give an estimate for that? Or are they supposed to include like supplies and... you know, number of minutes in the operating room, because that's going to vary, right? When they give a price for that procedure, is it supposed to be an all-inclusive price? So that's a great question. 

So what you're talking about is really bundled procedures. And that's another flaw and another concern and challenge is because those bundles, you know, the average patient doesn't understand what all those different things are individually. Exactly. So what I would say right now is get compliant with the individual, with everything on your charge master from a fee for service perspective. Also, from a place, that's a good question because now you have to be specific on the place or the care setting, inpatient, outpatient. And you also have to be specific against that line of business for each and every one of those items. And if it's DRG, put your DRG indicator, or if it's CPT, or if it's HCPCS, there hasn't been really good compliance at all with that level of granularity. So think about it as a line item repricing, There's gonna be a lot of repetitive information, but make sure that you line item these things out if you can at the CPT, designate exactly what that price relates to because a lot of the complaints are, hey, DRG pricing information is non-existent or JCODE and there's some new requirements around that stuff too.  

Yeah, because I'm just thinking, because I've gone to hospitals' websites and they have all these disclaimers on their price transparency page where it says, these are listed by item, but each individual patient might have variation in price depending on how long the surgery takes or this or that. And not every charge on the charge master even has a code. So that's an interesting kind of scenario. The other thing I wanted to ask is talking about if CMS is doing reviews for compliance, my suspicion is they're probably just doing the low hanging fruit, which is, do they have the file? Is it readable or not? They're not necessarily doing like a full audit, whether that data is correct, are they? 

Well, that's a great point. So for the last four years, folks have really complained that they're getting, you know, hospitals are getting away because it's like they just posted garbage file that doesn't mean anything, you know, or they post something with like a billion files that are really hard to curate. They've therefore posted something. And that's where the industry's been. There's only been something like 17 real penalties and letters, even though there's been a lot of reviews and a lot of corrective action plans. But at the end of the day, it's been very nominal. And I think that where things are changing and they're getting much more aggressive. They're doubling down and they're going to start to get into the weeds on the compliance side. Now, I don't think they're going to go after the bundles because it's not required at that level. You know, AMS, not to give a plug, but we actually do the work to try to bundle those types of common procedures because we know clinically what are involved. For the most part, we can give nice ranges, but we're a software company. But the MRFs, no. That's not something that I would worry about. What I would worry about more is that average negotiated rate by place of care or setting by line of business and by code. I mean, if you can get that off the ERA and then put the comments that indicate the basis of that and put estimates, never put a percentage or a 999, that's going to satisfy, I think, to the level of auditing that they're going to do, you'll be in way better shape that way.  

And does that, you know, having worked in a hospital and we're updating the charge master all the time, how do you then update that when prices change? Best practice, you'd think there'd be some sort of automatic, you know, if I just change these 2% of my charge codes this year, but not all of them, how do I just get those changed in the file? Do you have any thoughts on that? 

Yeah, that's a great question. There is version control. So what they're requiring and really the best way to do it is put a version control on that so that there's a reference as to this file is the most updated. And so historically, AMS archives and we keep all of those historical files so we can see the changes from version to version. From a compliance issue, it's super easy. I can run data right now for 6,000 hospitals and say, X percent have not sent in a new version. They sent one a year and a half ago. And so, you know, that could be a very easy thing to audit, right? So making sure that you're submitting, you know, your versions when required, your updates when required, I think is just another one that they could easily audit if they go there. So keeping up to date is going to be really important. And having around that and, you know, a plan around it internally with the interdisciplinary group of folks from, you know, the different parts, not just compliance, but all the different representatives, I think a task force or committee is really important for folks to really get around this. 

Yeah. So how is AMS getting these files? Are you going out to each hospital's individual website, or is there a central place where all of these are? There's no central place. We become the de facto centralized place and companies like us, not just us, but we have to go out. It's heavy lift. It's a lot of data. It is massive. It's probably the largest data. In fact, the health plan data is even bigger than the hospital data. And we keep both the tick MRFs and the hospital. So collectively to give both sides of the coin, because on the health health plant side, they actually have the average negotiated rates by line of business much more cleanly because they're not doing it and they have any volume and they have paper. So they're able to report that. So if as a consumer or for myself, I look at this and say, hospitals have really solid information that's usable and trusted for charge master and discounted cash price over here. On the other side of the corn, I want to go to the tick to get the average negotiated rate so that you can see the competitive prices between Aetna, Cigna, and others at any one hospital. And our software kind of does that and makes it easy, but it's not easy to do. 

I gotcha. Yeah. So from a compliance standpoint, you mentioned that there have been some reviews. And as I understand it, I was on their website this morning, and they published those reviews by hospital. And you can see the hospitals that have been fined and which ones are under review. And so... compliance folks can read those. So you get kind of get a sense of what they're looking at. Is that something you'd recommend compliance teams do? Absolutely. And you could even click into the PDF of the actual letter because they're all a little bit different. Some hospitals are getting ping dinged on different things. I actually go into the PDFs and I like reading those because you can see to your point, it's a nice blueprint of what could be happening out there. Things are changing and they're gonna ratchet up scrutiny. So they're gonna be looking at a little bit more than what they had been. And again, it was pretty nominal. So compared to 75%, there's a couple of sources that say roughly 75% in our own source, of hospitals could be deemed non-compliant for some pretty specific, basic things, mostly around that average negotiated price.  

Wow. That's amazing. 

Yeah. And with the, with the kind of the strategy vision and, and, and I don't know if rhetoric's the right word that comes from the administration, they want to go after that. And, and that's what it seems like to me. 

Yeah, with $12 billion at stake, a lot of folks look at that differently, right? Is it motivation for them to double down because it's a revenue center? Or is it because they believe, and maybe it's both, that true price transparency can only be had and all the benefits of it, which are more than just shopping for pricing, but all the benefits of price transparency to kind of get to an equilibrium of what real pricing should be in a competitive market, all of those good things can only be had only happen when everybody's compliant. So, you know, there's probably a couple of drivers there, but either way, you know, I fall on the side of default for hospitals to say, Hey, you know, spend a quarter of a million, a half a million dollars, whatever it takes to get your team in place and to get everything kind of really as a, as a, you know, a solid process that you could feel comfortable about, not only to save 2 million, but all the other things that go with it to improve your pricing. 

Yeah, such good information. Dave, we're getting kind of towards the end, but I want to see if I haven't asked you anything that you think is really important for our listeners to hear from you. 

Yeah, thanks, CJ. Yeah, a couple things. You know, there's other nuanced details around the ease of posting the files on the MRF to make it more accessible to patients so they don't have to go through a CAPTCHA or through some kind of a login and all this registration and stuff. They're trying to put in requirements to make it super easy for folks that are shopping to do that. And so I would recommend definitely read the, you know, the detail of the requirements. I think, you know, any team inside of a hospital should really know that well so that they're compliant that way too. The other thing I would say is that I'm working right now with the committee, the Price Transparency Committee, and there's an open comments opportunity for the prescription drug price transparency rule or pricing that's going into effect. So they're trying to fix, CMS recognizes that the lack of standardization and interoperability from the original price transparency rule. They're trying to address that in the prescription one that's coming up. So July 21st is the cutoff. So I would say anybody interested in this, make sure you get your comments and concerns to CMS. They're looking for input from the industry. I've created that for myself and for our organization, but there's an opportunity to fix some of this stuff and address concerns that hospitals may have around this. But they are trying to get it more specific. They're saying it's got to be be a CSV or a JSON file. They're giving specific, you know, detailed information to try to mitigate some of the things that have happened from the original. Wow. The last thing is the next on the list is going to be imaging and diagnostic and labs. So it's going to keep going. So just expect it to eventually get to physicians and fee schedule. You know, they're just going to be asking for just about everything that can be billed out there. 

Yeah, that's really valuable to hear you say. You've been around a while. You can read the tea leaves, and you can see this wave of transparency that's going on. I worked in the medical device industry for a while, and there was this sunshine law where anything that pharma or med device gave to hospitals or physicians had to be reported. And that's out on a website. And so I think you're right. Kind of this wave of transparency is going to affect it all. Absolutely. Yeah. Well, Dave, this has been wonderful. Thank you so much for sharing this information today. Oh, my pleasure.

It's always great to connect with your audience and any feedback of other topics related from the health plan or payment integrity side that I can share. I'd love to do that. 

Great. And we'll put in the show notes anything that you send us if you want to include a link of how to get a hold of you or your team. And so if people need to ask further questions or interested in your services, they can reach out to you that way. Absolutely. Thank you. Appreciate it. Okay. Well, and thank you to all our listeners for listening to another episode. As always, we ask you if you have topics or speakers that you'd like to hear on the show, please reach out to us. Until next time, everyone, take care.