Nearly two years after passage of price transparency law, only a small number of the nation’s hospitals are fully compliant, according to two separate reports
Price transparency is a major trend in the US healthcare system. Yet, hospitals, physicians, clinical laboratories, and other providers have been reticent to design their websites so it is easy for patients to find prices in advance of clinical care. Now comes news that federal officials are ready to issue fines to hospitals that fail to comply with regulations mandating price transparency for patients.
Many of the largest healthcare networks claim that complying with federal hospital price transparency regulation is costly, time consuming, and provides no return on investment. Nevertheless, the federal Centers for Medicare and Medicaid Services is quite serious about enforcing price transparency laws, and to that end the agency has, for the first time, levied fines against two hospitals in Georgia that have not complied with the regulations.
As many pathologists and medical laboratory managers know, on January 1, 2021, a federal rule on price transparency for medical facilities went into effect. The rule requires hospitals—as well as clinical laboratories and other healthcare providers—to post a comprehensive list of their services and the pricing for those services on their websites, and to provide access to a patient-friendly tool to help consumers shop for 300 common services.
The CMS recently issued its first penalties to two hospitals located in Georgia for violating the law by not updating their websites or replying to the agency’s warning letters. The letters CMS sent to the two hospitals alleged there were several violations of the transparency rules, including the failure to post a listing of their charges on their websites and requested corrective action plans by the hospitals.
In November 2021, Northside Hospital Atlanta informed regulators that consumers should call or email the facility to obtain price estimates for services. Later in January 2022, during a “technical assistance call,” a hospital representative told CMS “the previous violations had not been corrected and, in fact, the hospital system had intentionally removed all previously posted pricing files,” according to a Notice of Imposition of a Civil Monetary Penalty letter CMS sent to Robert Quattrocchi, President and Chief Executive Officer, Northside Hospital Atlanta.
Under the rules of the Hospital Price Transparency law, each hospital operating in the US is required to provide clear, accessible pricing information online about the items and services they provide in two ways:
As a comprehensive machine-readable file listing all items and services.
In a display of shoppable services in a consumer-friendly format.
CMS fined Northside Hospital Atlanta $883,180 and Northside Cherokee Hospital $214,320 for noncompliance with the law. The penalties are calculated based on the size of the hospital and the length of time of the noncompliance—up to $300 per day. In addition, the facilities could endure further monetary penalties if they continue to fail to comply. The organizations will have 30 days to appeal the charges or have 60 days to remit payment for the fines.
Both hospitals are owned by Northside, a Georgia health system with five acute care hospitals, more than 250 outpatient facilities, over 4,100 providers, and 25,500 employees, according to the provider’s website.
“CMS expects hospitals to comply with the Hospital Price Transparency regulations that require providing clear, accessible pricing information online about the items and services they provide,” said Meena Seshamani, MD, PhD, Director of CMS, in a statement provided to Fierce Healthcare. “This enforcement action affirms the Biden-Harris Administration’s commitment to making healthcare pricing information accessible to people across the country and we are committed to ensuring that consumers have the information they need to make fully informed decisions regarding their healthcare.” Clinical laboratories also are required to comply with federal price transparency regulations. (Photo copyright: Modern Healthcare.)
Compliance with Price Transparency Laws Low
Analysis of the healthcare industry shows that many facilities are not in compliance with the transparency rules. In April, a report released by health IT firm KLAS Research, found that hospitals believe the transparency rule is too costly to implement and confusing to consumers, which helps explain the low compliance issues. KLAS surveyed 66 hospital revenue cycle leaders for their report.
“There are concerns about cost, data accuracy, and patient options of pricing tools; some respondents worry about patients’ ability to understand the displayed pricing data, and today, most patients are unaware online pricing information exists,” the report states. In addition, the report notes that “many organizations are not investing beyond the bare minimum requirements, and they don’t plan to do more until there is further clarity around the regulations and the expectations going forward.”
The KLAS report also noted that organizations are struggling to find the resources to comply with the price transparency rule and consider it a financial burden to continually add new employees and technology to become and remain in compliance. Many organizations see no merit in investing in a regulation that provides no return on that investment.
Another compliance report released in February by Patient Rights Advocate maintained that only 14.3% of the 1,000 hospitals they reviewed were in full compliance with the Hospital Price Transparency regulation. About 37.9% of the hospitals posted a sufficient detailing of service rates, but over half of those hospitals were noncompliant in other criteria of the rule, such as rates by insurer and insurance plans.
“We are now entering the second year since the Hospital Price Transparency rule became law, and compliance remains at very low levels,” according to the report. “The largest hospital systems are effectively ignoring the law, with no consequences.”
The Patient Rights Advocate analysis also found that a mere 0.5% of hospitals owned by the three largest hospital systems in the country—HCA Healthcare, CommonSpirit Health, and Ascension—were in full compliance of the law.
Notably, only two of the 361 hospitals owned by these three hospital systems were fully compliant. In addition, none of the 188 hospitals owned by HCA Healthcare, the largest for-profit hospital system in the country, were in compliance.
Hospitals Fail to Provide Consumers with Critical Information
The Patient Rights Advocate report found that the most significant reason for noncompliance was failure to post all payer-specific and plan-specific negotiated rates on their websites. They estimated that 85.7% of the 1,000 hospitals reviewed did not post a complete machine-readable file of standard charges, as required by the law.
“The lack of compliance by hospitals is about more than simply the failure to follow the legal requirements,” the report states. “It is also about the failure of hospitals to provide critically needed information to consumers so they can make better health decisions. Empowered with comparative price and quality information in advance of care, consumers, including employers and unions, can improve health outcomes while lowering costs by taking advantage of the benefits of competitive market efficiencies.”
With the CMS starting to issue fines for noncompliance, it is probable that more healthcare organizations will focus on adhering to the Hospital Price Transparency law. Since the transparency rules also apply to clinical laboratories, lab managers should be aware of the regulations and any further enforcement actions taken by the CMS.
As the worldwide demand for histopathology services increases faster than the increase in the number of anatomic pathologist and histopathologists, a DP platform that suggests courses of treatments may be a boon to cancer diagnostics
Europe may become Ground Zero for the widespread adoption of whole-slide imaging (WSI), digital pathology (DP) workflow, and the use of image-analysis algorithms to make primary diagnoses of cancer. Several forward-looking histopathology laboratories in different European countries are moving swiftly to adopt these innovative technologies.
Clinical laboratories and anatomic pathology groups worldwide have watched digital pathology tools evolve into powerful diagnostic aids. And though not yet employed for primary diagnoses, thanks to artificial intelligence (AI) and machine learning many DP platforms are moving closer to daily clinical use and new collaborations with pathologists who utilize the technology to confirm cancer and other chronic diseases.
Now, Swiss company Unilabs, one of the largest laboratory, imaging, and pathology diagnostic developers in Europe, and Israel-based Ibex Medical Analytics, developer of AI-based digital pathology and cancer diagnostics, have teamed together to deploy “Ibex’s multi-tissue AI-powered Galen platform” across 16 European nations, according to a Unilabs press release.
Though not cleared by the federal Food and Drug Administration (FDA) for clinical use in the US, the FDA recently granted Breakthrough Device Designation to Ibex’s Galen platform. This designation is part of the FDA’s Breakthrough Device Program which was created to help expedite the development, assessment, and review of certain medical devices and products that promise to provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions.
Benefits of AI-Digital Pathology to Pathologists, Clinical Labs, and Patients
According to Ibex’s website, the Galen DP platform uses AI algorithms to analyze images from breast and prostate tissue biopsies and provide insights that help pathologists and physicians determine the best treatment options for cancer patients.
This will, Ibex says, give pathologists “More time to dedicate to complex cases and research,” and will make reading biopsies “Less tedious, tiring, and stressful.”
Patients, according to Ibex, benefit from “Increased diagnostic accuracy” and “More objective results.”
And pathology laboratories benefit from “Increased efficiency, decreased turnaround time, and improved quality of service,” Ibex claims.
According to the press release, AI-generated insights can include “case prioritization worklists, cancer heatmaps, tumor grading and measurements, streamlined reporting tools and more.”
This more collaborative approach between pathologists and AI is a somewhat different use of digital pathology, which primarily has been used to confirm pathologists’ diagnoses, rather than helping to identify cancer and suggest courses of treatment to pathologists.
“This cutting-edge AI technology will help our teams quickly prioritize urgent cases, speed up diagnosis, and improve quality by adding an extra set of digital eyes,” said Christian Rebhan, MD, PhD (above), Chief Medical and Operations Officer at Unilabs, in the press release. “When it comes to cancer, the earlier you catch it, the better the prognosis—so getting us critical results faster will help save lives.” (Photo copyright: Unilabs.)
AI-based First and Second Reads
The utilization of the Galen platform will first be rolled out nationally in Sweden and then deployed in sixteen other countries. The AI-based DP platform is CE marked in the European Union for breast and prostate cancer detection in multiple workflows.
“The partnership with Ibex underlines Unilabs’ pioneering role in Digital Pathology and represents yet another step in our ambition to become the most digitally-enabled provider of diagnostic services in Europe,” Rebhan stated.
The Ibex website explains that the Galen platform is divided into two parts—First Read and Second Read:
The First Read “is an AI-based diagnostics application that aims to help pathologists significantly reduce turnaround time and improve diagnostic accuracy. The application uses a highly accurate AI algorithm to analyze slides prior to the pathologist and provides decision support tools that enable focusing on cancerous slides and areas of interest, streamline reporting, improve lab efficiency, and increase diagnostic confidence.”
The Second Read “is an AI-based diagnostics and quality control application that helps pathologists enhance diagnostic accuracy with no impact on routine workflow. The application analyzes slides in parallel with the pathologist and alerts in case of discrepancies with high clinical significance (e.g., a missed cancer), thereby providing a safety net that reduces error rates and enables a more efficient workflow.”
“Ibex is transforming cancer diagnosis with innovative AI solutions across the diagnostic pathway,” said Joseph Mossel, Chief Executive Officer and co-founder of Ibex, in the press release. “We are excited to partner with Unilabs to deploy our AI solutions and empower their pathologists with faster turnaround times and quality diagnosis. This cooperation follows a thorough evaluation of our technology at Unilabs and demonstrates the robustness and utility of our platform for everyday clinical practice.”
Use of AI in Pathology Increases as Number of Actual Pathologists Declines
Developers like Unilabs and Ibex believe that DP platforms driven by AI image analysis algorithms can help pathologists be more productive and can shorten the time it takes for physicians to make diagnoses and issue reports to patients.
This may be coming at a critical time. As nations around the globe face increasing shortages of pathologists and histopathologists, the use of AI in digital pathology could become more critical for disease diagnosis and treatment.
A 2019 Medscape survey stated that “One-third of active pathologists are burned out,” and that many pathologists are on the road to retirement.
And in the same year, Fierce Healthcare noted that in a 2013 study, “researchers found that more than 40% of pathologists were 55 or older. They predicted that retirements would reach their apex in 2021. Consequently, by the end of next decade, the United States will be short more than 5,700 pathologists.”
Dark Daily previously reported on the growing global shortage of pathologists going back to 2011.
Even China is struggling to keep up with demand for anatomic pathologists. In 2017, Dark Daily wrote, “China is currently facing a severe shortage of anatomic pathologists, which blocks patients’ access to quality care. The relatively small number of pathologists are often overworked, even as more patients want access to specialty care for illnesses. Some hospitals in China do not even have pathologists on staff. Thus, they rely on understaffed anatomic pathology departments at other facilities, or they use imaging only for diagnoses.”
Thus, it may be time for an AI-driven digital platform to arrive that can speed up and increase the accuracy of the cancer diagnostics process for pathologists, clinical laboratories, and patients alike.
There are multiple companies rapidly developing AI, machine learning, and image analysis products for diagnosing diseases. Pathologists should expect progress in this field to be ongoing and new capabilities regularly introduced into the market.
With the majority of Americans living just a few miles from a Walmart, how might independent clinical laboratories compete?
Retail giant Walmart (NYSE:WMT) plans to install 4,000 primary care “supercenters” in stores by 2029 that will include clinical laboratory testing services. This is on top of the dozens of Walmart Health locations already in operation in Georgia, Florida, Arkansas, Illinois, and Texas.
Clinical laboratories already have growing competition in the healthcare marketplace from pharmacy chains CVS (NYSE:CVS), Walgreens (NASDAQ:WBA), and Rite Aid (NYSE:RAD) which have installed in-store healthcare clinics in their retail locations—many of which offer limited, but common, medical laboratory services—as well as from existing Walmart Health locations.
Now, Walmart is poised to become a much bigger healthcare player. According to MedCity News, Walmart is “looking beyond traditional retail clinics as it seeks to create ‘supercenters’ with comprehensive healthcare services.”
Presumably, this includes an expanded menu of clinical laboratory testing services—along with the EKGs, vision care, dental care, and more—that Walmart Health locations currently provide for children and adults.
And though Becker’s Hospital Review reported in March that Walmart’s “plan is in flux,” the major national retailer continues to disrupt healthcare in significant ways.
We reported that Walmart Health’s list of services included:
Primary care,
Dental,
Counseling,
Clinical laboratory testing,
X-rays,
Health screening,
Optometry,
Hearing,
Fitness and nutrition, and
Health insurance education and enrollment.
However, the new Walmart Healthcare supercenters differ from Walmart Health clinics and the clinics operated by Walmart’s retail competitors Target, CVS, Walgreens, and Rite Aid.
Those clinics are designed to draw customers into existing retail setting. Walmart has a different goal with its healthcare supercenter concept.
“There’s a big difference between offering healthcare services to drive more people to your store and offering healthcare services because you’re in the healthcare business,” said former President of Health and Wellness for Walmart, Sean Slovenski, during a panel hosted by the American Telemedicine Association. “We’re in healthcare,” he continued, “We’re not in retail healthcare. We’re recruiting physicians in all of these areas and bringing them in.”
Providing Transparency with Clear, Consistent Pricing
In response to consumer demand for transparency, Walmart is taking a different approach to charging patients for healthcare services. The cost of an appointment for primary care is $40 for an adult and $20 for a child. The patient can choose to bill insurance or not, and people without insurance can pay out-of-pocket.
Prices for individual services are equally transparent. Explaining why Walmart is becoming a player in the healthcare industry, Marcus Osborne, Senior Vice President Walmart Health, told Fierce Healthcare, “It’s issues of affordability. That people can’t afford the care they need for themselves and their families. It’s issues of access … That really is the business that we’ve been in. Walmart’s business has been about helping people afford the things they need, getting them in a more accessible, convenient way, and doing it in ways that are simple. Healthcare’s no different in that regard.”
According to STAT, some 35 million Americans were uninsured in 2020. Thus, the idea of transparent pricing and walk-in affordable care should appeal to a sizable market. Walmart is banking on that. Considering that 90% of Americans live within 10 miles of a Walmart, the potential success of the healthcare supercenters becomes clear, Becker’s Hospital Review noted.
Walmart’s Other Healthcare Moves
In addition to opening 20 Walmart Health Centers, and its plans for 4,000 healthcare supercenters, Walmart has made other moves that indicate its intention to disrupt the healthcare industry.
Walmart Insurance Services, for example, partnered with eight payers during the open enrollment period in 2020 to sell its Medicare products. Through a partnership with Clover Health, a Preferred Provider Organization (PPO), and a Health Maintenance Organization (HMO) with a Medicare contract, Walmart made its insurance plans available to 500,000 people in Georgia, Becker’s Hospital Review reported.
“We’re going to have a consumer revolution in retail for point of care,” John Sculley, former Apple CEO and current chairman at RxAdvance (now called nirvanaHealth), told CNBC. “Why? Because if the Walmart tests are successful, and I suspect they will be, people will be able to go in and get these kinds of health services at a lower cost than if they had health insurance.”
“A lot of the opportunity is just about bringing what we’re doing to more people. I think about Walmart Health and what we launched a little over a year ago in Georgia and the impact we’ve seen in the communities where it launched. I think one of the biggest things to do is how do we continue to find ways to make that model work so we can reach more people with it in more communities,” Marcus Osborne (above), Senior Vice President Walmart Health, told Fierce Healthcare. Walmart certainly has experience in disruption. The retailer upended the grocery industry from the moment it entered the market, and it was the first to offer $4 prescriptions, which disrupted long-standing retail relationships consumers had with their pharmacies. Clinical laboratories should realize that Walmart will likely make similar waves in the healthcare sector. (Photo copyright: Consumer Goods Forum.)
How Will Clinical Laboratories Compete?
Change is constant. Clinical laboratories that cannot adapt to changing market forces are ill-equipped to withstand the coming “consumer revolution.” However, labs that have already begun to plan for more direct-to-consumer interactions will be better positioned to adjust as changes come.
“My goal is that we have done the work on Walmart Health as a model, to really get it to work from a consumer perspective and get it to work in a way that it scales effectively, that we are able to reach more people,” Osborne told Fierce Healthcare.
Clinical laboratory leaders should understand that this trend is being driven by consumer demand for convenience, lower costs, and price transparency. Labs that don’t prepare to address those forces will be left behind as Walmart provides what consumers want.
Financial losses for hospitals and health systems due to cancelled procedures and coronavirus expenses will lead to changes in healthcare delivery, operations, and clinical laboratory test ordering
COVID-19 is reshaping how people work, shop, and go to school. Is healthcare the next target of the coronavirus-induced transformation? According to two experts, the COVID-19 pandemic is pushing hospitals and health systems toward a “fundamental and likely sustained transformation,” which means clinical laboratories must be prepared to adapt to new provider needs and customer demands.
Burik and Fisher called attention to the staggering $50 billion-per-month loss for hospitals and health systems that was first revealed in an American Hospital Association (AHA) report published in May. The AHA report estimated a $200 billion loss from March 1, 2020, to June 30, 2020, due to increased COVID-19 expenses and cancelled elective and non-elective surgeries.
Adding to the financial carnage is the expectation that patient volumes will be slow to return. In “Hospitals Forecast Declining Revenues and Elective Procedure Volumes, Telehealth Adoption Struggles Due to COVID-19,” Burik said, “Healthcare has largely been insulated from previous economic disruptions, with capital spending more acutely affected than operations. But this time may be different since the COVID-19 crisis started with a one-time significant impact on operations that is not fully covered by federal funding.
“Providers face a long-term decrease in commercial payment, coupled with a need to boost caregiver and consumer-facing digital engagement, all during the highest unemployment rate the US has seen since the Great Depression,” he continued. “For organizations in certain locations, it may seem like business as usual. For many others, these issues and greater competition will demand more significant, material change.”
A Guidehouse analysis of a Healthcare Financial Management Association (HFMA) survey, suggests one-in-three provider executives expect to end 2020 with revenues at 15% below pre-pandemic levels, while one-in-five of them anticipate a 30% or greater drop in revenues. Government aid, Guidehouse noted, is likely to cover COVID-19-related costs for only 11% of survey respondents.
“The figures illustrate how the virus has hurled American medicine into unparalleled volatility. No one knows how long patients will continue to avoid getting elective care or how state restrictions and climbing unemployment will affect their decision making once they have the option,” Burik and Fisher wrote. “All of which leaves one thing for certain: Healthcare’s delivery, operations, and competitive dynamics are poised to undergo a fundamental and likely sustained transformation.”
As a result, the two experts predict these pandemic-related changes to emerge:
Payer-Provider Complexity on the Rise; Patients Will Struggle. As the pandemic has shown, elective services are key revenues for hospitals and health systems. But the pandemic also will leave insured patients struggling with high deductibles, while the number of newly uninsured will grow. Furthermore, upholding of the hospital price transparency ruling will add an unwelcomed spotlight on healthcare pricing and provider margins.
Best-in-Class Technology Will Be a Necessity, Not a Luxury. COVID-19 has been a boon for telehealth and digital health usage, creating what is likely to be a permanent expansion of virtual healthcare delivery. But only one-third of executives surveyed say their organizations currently have the infrastructure to support such a shift, which means investments in speech recognition software, patient information pop-up screens, and other infrastructure to smooth workflows will be needed.
“Through all the uncertainty COVID-19 has presented, one thing hospitals and health systems can be certain of is their business models will not return to what they were pre-pandemic,” Guidehouse Partner Chuck Peck, MD (above), a former health system CEO, said in a statement. “A comprehensive consumer-facing digital strategy built around telehealth will be a requirement for providers. Moreover, shifting hardware and physical assets to the cloud, and use of robotic process automation, has proven to be successful in improving back-office operations in other industries. Providers will need to follow suit.” Clinical laboratories and anatomic pathology groups should track these developments and respond appropriately to meet the changing needs of the hospitals and physicians they serve with diagnostic testing services. (Photo copyright: Athens Banner-Herald.)
The Tech Giants Are Coming. Both major retailers and technology stalwarts, such as Amazon, Walmart, and Walgreens, are entering the healthcare space. In January, Dark Daily reported on Amazon’s roll out of Amazon Care, a 24/7 virtual clinic, for its Seattle-based employees. Amazon (NASDAQ:AMZN) is adding to a healthcare portfolio that includes online pharmacy PillPack and joint-venture Haven Healthcare. Meanwhile, Walmart is offering $25 teeth cleaning and $30 checkups at its new Health Centers. Dark Daily covered this in an e-briefing in May, which also covered a new partnership between Walgreens and VillageMD to open up to 700 primary care clinics in 30 US cities in the next five years.
Work Location Changes Mean Construction Cost Reductions. According to Guidehouse’s analysis of the HFMA COVID-19 survey, one-in-five executives expect some jobs to remain virtual post-pandemic, leading to permanent changes in the amount of real estate needed for healthcare delivery. The need for a smaller real estate footprint could reduce capital expenditures and costs for hospitals and healthcare systems in the long term.
Consolidation is Coming. COVID-19-induced financial pressures will quickly reveal winners and losers and force further consolidation in the healthcare industry. “Resilient” healthcare systems are likely to be those with a 6% to 8% operating margins, providing the financial cushion necessary to innovate and reimagine healthcare post-pandemic.
Policy Will Get More Thoughtful and Data-Driven. COVID-19 reopening plans will force policymakers to craft thoughtful, data-driven approaches that will necessitate engagement with health system leaders. Such collaborations will be important not only during this current crisis, but also will provide a blueprint for policy coordination during any future pandemic.
As Burik and Fisher point out, hospitals and healthcare systems emerged from previous economic downturns mostly unscathed. However, the COVID-19 pandemic has proven the exception, leaving providers and health systems facing long-term decreases in commercial payments, while facing increased spending to bolster caregiver- and consumer-facing engagement.
“While situations may differ by market, it’s clear that the pre-pandemic status quo won’t work for most hospitals or health systems,” they wrote.
The message for clinical laboratory managers and surgical pathologists is clear. Patients may be permanently changing their decision-making process when considering elective surgery and selecting a provider, which will alter provider test ordering and lab revenues. Independent clinical laboratories, as well as medical labs operated by hospitals and health systems, must be prepared for the financial stresses that are likely coming.
