A Review of Price Transparency Policy and Evaluation of Hospital Compliance in Orthopedic Sports Medicine

Abstract

Background: In 2019, the Centers for Medicare and Medicaid Services (CMS) announced that beginning January 1, 2021, hospitals would be required to post pricing information in a usable format for patients via diagnosis-related group (DRG) or charge description master (CDM) sheets. Purpose/Questions: We hypothesized the new price transparency rule would pose challenges for many health care facilities. We therefore sought to find out how much pricing information was available before the rule took effect and how usable it was for patients receiving sports medicine care. Methods: In late 2019, we randomly selected 100 general hospitals (GH) from the CMS hospital list and an additional 21 orthopedic hospitals (OH). The DRG and/or CDM sheets were obtained from hospital websites. Pricing information for 6 sports medicine procedures (rotator cuff repair, shoulder arthroscopy, knee arthroscopy, anterior cruciate ligament reconstruction, meniscal repair, and steroid injection) was evaluated in qualitative and quantitative form. Results: Pricing information was provided by 74% of GH and 86% of OH. The price of steroid injections was frequently reported in usable form, with 80% by GH and 78% by OH. The remaining procedures were reported by less than 27% of GH and 40% of OH. For each procedure, component pricing was provided by at least 60% of GH and 78% of OH. No facility provided a pricing calculator or payer-type specific rates. Conclusions: Prior to the enactment of the new price transparency rule in January 2021, most facilities provided some pricing information to patients. However, reporting rates in sports medicine were low and the available data were of little use to patients.

Introduction

Cost containment and, increasingly, price transparency are extensively discussed in today’s health care climate. As the United States began tracking health care costs in 1980, they have continuously increased [6]. Countless institutional and governmental measures have been implemented, aimed at driving down the cost of health care while maintaining or improving care quality. While the effectiveness of each measure varies significantly, it is clear that a multifactorial approach will be required to improve the value of U.S. health care. In a patient-centered care model, shared decision-making includes not only information regarding disease process and treatment but also the associated financial burdens [13,15]. Thus, price transparency remains of utmost importance to empower patients to make health care decisions that best suit their circumstances.

On January 1, 2019, the Centers for Medicare and Medicaid Services (CMS) sought to promote price transparency by requiring hospitals to publish prices online in the form of either a charge description master (CDM) or diagnosis-related group (DRG) in a machine-readable format [9]. The initial policy proposal did not include specific instructions on which pricing information would be required nor did it list the penalties associated with noncompliance. In November 2019, the final rule provided information about the specific requirements that hospitals would have to meet to be deemed compliant with these new price transparency regulations [11,14].

Facilities are still required to produce standard pricing information in a machine-readable format via CDM or DRG sheets. The new rule stipulates that all Medicare and non-Medicare facilities provide not only the standard charge but also several price modifiers including (1) gross charge without applied discounts, (2) cash discounted price, and (3) payer-specific negotiated charges. The facility must also report payer-specific negotiated charges (third-party payer negotiations with the institution) in minimum and maximum format. Furthermore, facilities are encouraged to identify services as packaged items (ie, encompassing charge of entire hospital stay during an inpatient procedure) and prospectively provide them to patients. These regulations are specifically geared toward “shoppable” services, defined as those patients can schedule in advance [11]. According to the new rule, facilities must provide the negotiated charges for at least 300 “shoppable” services (including 70 CMS-specific and 230 hospital-specific selections).

Significant opposition has been raised by several entities, most notably the American Hospital Association (AHA), which filed suit in the U.S. District Court of the District of Columbia. They argued the new statute allows CMS to expand beyond the powers afforded to it by law and even violates First Amendment rights. In June 2020, the District Court ruled in favor of CMS, upholding the proposed rule [16]. The new rule took effect on January 1, 2021, with CMS monitoring for hospital compliance [11]. Hospitals will be deemed compliant if they have met the above standards in a consumer-friendly manner. While proposed real-time Internet-based prospective price calculators may be useful for patients, facilities must ensure these are as accurate and up-to-date as possible, as they are responsible for the charges presented to the patient. Penalties for noncompliance will start with an initial warning. Further penalties for noncompliance include the possibility of a fine of up to US$300 per day and formal publication of penalty by CMS.

Many political and economic leaders believe if patients and other payers have access to transparent pricing data, market forces will curtail rising prices in the health care market. While the U.S. health care sector is not a pure free-market system, the “invisible hand” of market forces only work to regulate costs if clinicians and, especially, patients and payers, understand the costs of competing treatment options [12]. This is especially true in a primarily elective-based specialty, such as orthopedic sports medicine.

We aimed to evaluate the pricing information available in the field of orthopedic sports medicine after the CMS mandate for price transparency was announced in 2019 but before the final rule went into effect in 2021. Our primary goal was to measure the compliance of facilities publicly providing machine-readable pricing information on their websites. Secondary goals were to evaluate the type of information available and assess its usability for patients who are comparing their options for care.

Methods

In late 2019, we obtained from CMS a comprehensive list of facilities registered with Medicare [5]. Simple randomization was performed using a random number generator (Excel, Microsoft, Redmond, Washington) to sort the hospital list and choose the first 100 facilities. These facilities were designated as “general hospitals” (GH). We also searched the comprehensive CMS list to identify orthopedic-specific hospitals, ultimately identifying 21 hospitals designated as “orthopedic hospitals” (OH).

Facility websites were searched for publicly available pricing information in the form of CDM and DRG sheets. The available data were evaluated for the presence and quality of pricing information related to 6 commonly performed procedures in an orthopedic sports medicine practice. These included rotator cuff repair (RCR), shoulder arthroscopy, knee arthroscopy, anterior cruciate ligament reconstruction (ACLR), meniscus repair, and steroid injection.

In assessing CDM sheets, the availability of procedure price was determined using keyword search terms for each procedure (Table 1). For facilities listing multiple prices of a given procedure with varying levels of complexity or for charges associated with varying payer negotiations, an average price of the procedure was recorded (ie, RCR for small to massive size tears). To determine whether the price of components for a specific procedure were available, keyword searches were performed as well (ie, arthroscopic shaver, tubing, anchors, etc) by orthopedic residents familiar with the procedures (K.S., L.E., J.H.). These were recorded as being available or not available; specific prices of the components were not recorded.

Table 1.

Search terms for charge description master and DRG sheets.

Rotator cuff repair	Knee arthroscopy	ACL reconstruction	Meniscus repair	Shoulder arthroscopy	Steroid injection
arthro-	arthro-	ACL	arthro-	arthro-	aspiration
cuff	knee	arthro-	knee	scope	cortico-
repair	scope	cruciate	meniscal	shoulder	inj-
rotator		knee	meniscus		steroid
shoulder		ligament	repair
		reconstruction
DRG = 510, 511, 512	DRG = 509	DRG = NA	DRG = NA	DRG = 509	DRG = NA

DRG diagnosis-related group, ACL anterior cruciate ligament; NA not applicable.

In assessing DRG sheets, the corresponding DRG code for knee arthroscopy, shoulder arthroscopy, and RCR was searched (Table 1). Specific DRG codes were not available for meniscus repair, steroid injection, and ACLR, and so these procedures were not analyzed for DRG prices.

To determine the complete availability and utility pricing information available to patients, CDM and DRG sheets were combined. Data analysis was performed to determine the average and range of prices for each procedure using the available DRG and CDM sheets. Averages were calculated based on the number of facilities providing pricing information for each group. All monetary figures are represented in U.S. dollars (USD). The combined data were also evaluated for the complexity of pricing information provided and if it approached the proposed requirements by CMS (ie, negotiated pricing, cash discounts, etc).

Finally, facility websites were also searched for real-time price calculator functions provided to patients.

Results

Overall Pricing Information Availability

In the GH group, 74 out of 100 facilities (74%) provided either DRG or CDM pricing information. Seventy-two facilities (72%) provided CDM sheets, whereas 29 (29%) provided DRG information. All facilities providing CDM sheets also provided DRG sheets, whereas 2 facilities provided only DRG information. In the OH group, 18 of 21 facilities (86%) provided either DRG or CDM pricing. All OH that provided pricing information had CDM sheets available (86%), whereas 9 of 21 facilities (43%) had DRG sheets available (Table 2). At the time of our investigation, no facility provided a real-time predictive price calculator on its website.

Table 2.

Pricing information available from hospitals.

	Pricing information available
	General hospitals N = 100	Ortho hospitals N = 21
CDM or DRG	74 (74%)	18 (86%)
CDM	72 (72%)	18 (86%)
DRG	29 (29%)	9 (43%)

CDM charge description master. DRG diagnosis-related group.

DRG Procedure Price Availability

Of the 29 GH providing DRG information, 15 (52%) provided a price for RCR. For knee and shoulder arthroscopy, 5 (17%) of the facilities provided a price for each procedure (Table 3). Of the 9 facilities that provided DRG information in the OH group, 3 (33%) provided a price for RCR. For knee and shoulder arthroscopy, 2 (22%) provided a price for each procedure (Table 3). The average and range of prices for each procedure are shown in Table 4.

Table 3.

Price availability from hospitals providing DRG or CDM sheets.

Price availability
CDM sheets
	General hospitals N = 72	Ortho hospitals N = 18
RCR	4 (6%)	4 (22%)
Knee arthroscopy	9 (13%)	5 (28%)
Anterior cruciate ligament reconstruction	5 (7%)	4 (22%)
Meniscal repair	5 (7%)	2 (11%)
Shoulder arthroscopy	6 (8%)	5 (28%)
Steroid injection	59 (82%)	14 (78%)
DRG sheets
	General hospitals N = 29	Ortho hospitals N = 9
RCR	15 (52%)	3 (33%)
Knee arthroscopy	5 (17%)	2 (22%)
Shoulder arthroscopy	5 (17%)	2 (22%)

DRG diagnosis-related group. CDM charge description master. RCR rotator cuff repair.

Table 4.

Average and range of price for hospitals providing CDM and DRG sheets

Average and range of price for CDM and DRG sheets
	General hospitals		Ortho hospitals
	CDM	DRG	CDM	DRG
	Price (US$) range (min-max)	Price (US$) range (min-max)	Price (US$) range (min-max)	Price (US$) Range (min-max)
Rotator cuff repair	5201 (1869-14,288)	63,928 (28,661-165,115)	10,538 (4684-23,794)	61,444 (28,212-111,103)
Knee arthroscopy	4284 (1098-8373)	34,305 (9216-66,738)	8909 (4100-16,852)	26,873 (26,540-27,205)
Anterior cruciate ligament reconstruction	6589 (2130-14,288)	NA	12,418 (4684-28,807)	NA
Meniscal repair	4195 (1858-8168)	NA	12,225 (6652-17,797)	NA
Shoulder arthroscopy	4541 (1018-9929)	35,557 (15,477-66,738)	9017 (3516-16,852)	26,873 (26,540-27,205)
Steroid injection	695 (73-2161)	NA	884 (171-3072)	NA

CDM charge description master. DRG diagnosis-related group; NA not applicable.

Prices and ranges are represented in U.S. dollars.

CDM Procedure Price Availability

Of the 72 GH facilities providing CDM information, 4 (6%) provided a price for RCR. Nine facilities (13%) provided a price for knee arthroscopy, whereas 5 (7%) provided a price for ACLR. Meniscal repair price was also reported by 5 facilities (7%), whereas shoulder arthroscopy was reported by 6 (8%). Finally, steroid injection was more frequently reported, with prices provided by 59 facilities (82%) (Table 3).

Of the 18 OH facilities providing CDM information, 4 (22%) provided a price for RCR. Five facilities (28%) provided a price for knee arthroscopy, whereas 4 (22%) provided a price for ACLR. Meniscal repair price was reported by 2 facilities (11%), whereas shoulder arthroscopy price was reported by 5 facilities (28%). Prices for steroid injections were reported by 14 OH facilities (78%) and 59 GH facilities (82%) (Table 3). The average and range of prices for each procedure for OH and GH groups are demonstrated in Table 4.

Usable Pricing Information

Of the 74 GH facilities that provided DRG or CDM pricing information, 19 (26%) provided a predictive price for RCR. Fourteen facilities (19%) provided a price for knee arthroscopy, whereas 5 (7%) provided prices for ACLR and meniscal repair. Shoulder arthroscopy price was provided by 11 facilities (15%) and steroid injection price was provided by 59 facilities (80%).

Of the 18 OH facilities providing DRG or CDM pricing information, 7 (39%) provided a predictive price for RCR, knee and shoulder arthroscopy. Four facilities (22%) provided pricing for ACLR, whereas 2 (11%) and 14 (78%) provided pricing for meniscal repair and steroid injection, respectively (Table 5).

Table 5.

Usable price information for hospitals providing either charge description master or diagnosis-related group sheets.

Usable price information
	General hospitals	Ortho hospitals
	N = 74	N = 18
Rotator cuff repair	19 (26%)	7 (39%)
Knee arthroscopy	14 (19%)	7 (39%)
Anterior cruciate ligament reconstruction	5 (7%)	4 (22%)
Meniscal repair	5 (7%)	2 (11%)
Shoulder arthroscopy	11 (15%)	7 (39%)
Steroid injection	59 (80%)	14 (78%)

No facility in either the OH or GH group provided a comprehensive pricing structure per new regulations. Several facilities provided multiple prices on the same procedure; however, these were solely based on the complexity of the case (ie, size of the tear, medical comorbidities) and not on the variations of price via cash payments, institutional discounts, or third-party payer negotiations. In addition, while most of our selected sports medicine procedures are outpatient, some do require overnight observation or frank admission. No facility provided a bundled price prediction for an observation/inpatient stay in combination with the procedure.

CDM Component Pricing Availability

Pricing of individual components related to the 6 procedures investigated was more frequently available than prices for entire procedures. In the GH group, component pricing was available for 43 facilities (60%) for RCR, knee and shoulder arthroscopy, ACLR, and meniscus repair. Component pricing was available for steroid injection from 64 facilities (89%). In the OH group, component pricing was available for 15 facilities (83%) for RCR, knee and shoulder arthroscopy, ACLR, and meniscus repair. Component pricing was available for steroid injection from 14 facilities (78%) (Table 6).

Table 6.

Components related to the given procedure available on CDM sheets.

Procedure component pricing available on CDM sheet
	General hospitals N = 72	Ortho hospitals N = 18
Rotator cuff repair	43 (60%)	15 (83%)
Knee arthroscopy	43 (60%)	15 (83%)
Anterior cruciate ligament reconstruction	43 (60%)	15 (83%)
Meniscal repair	43 (60%)	15 (83%)
Shoulder arthroscopy	43 (60%)	15 (83%)
Steroid injection	64 (89%)	14 (78%)

CDM charge description master.

Discussion

To our knowledge, this is the first study to investigate the level of compliance with new price transparency regulations in the field of orthopedic sports medicine prior to the rule being enacted in 2021. As we continue to shift our focus toward value-based health care, evaluation of the quantity and quality of information available to patients is paramount to understanding the future of the medical landscape in the United States. A large proportion of the hospitals we evaluated complied with the initial regulations requiring a limited complexity of pricing information be made available to patients. Further evaluation found that in late 2019 no facility complied with the new rule that was set to go into effect on January 1, 2021.

This study is not without limitations. Several facilities may have been in the active process of compiling comprehensive pricing structures. While our results may underestimate the actual system-wide participation moving toward price transparency, they are an accurate depiction of the pricing information available at the time of our investigation. Second, we did not have the ability to verify whether prices listed on websites accurately reflected the prices experienced by patients. While future work must verify the accuracy of available pricing, we feel our study reflects the actual process a patient will undergo in a prospective manner of attempting to price plan an upcoming surgery.

Our measurement of the usability to patients of the available information was based on the ability to predict the price based on CDM or DRG codes without advanced technical knowledge of a procedure or a health care background. For all procedures, except steroid injections, usable pricing information was available from less than 40% of facilities. Furthermore, even among hospitals providing some form of pricing data, less than 25% reported usable predictive pricing for the vast majority of the procedures. These findings are consistent with another study of multiple specialties outside the field of orthopedic sports medicine with around 20% of facilities typically providing pricing information [7]. Even the facilities that provided some level of pricing information did not provide the depth of pricing required for a patient to accurately compare prices based on insurance coverage. Ultimately, the breadth of information required for informed price-conscious decision-making from the patient perspective is not available at this time.

Several organizations, including the AHA and Association of American Medical Colleges, voiced significant reservations about these new policies. They argued that the rules would not provide effective transparency to patients, would cause widespread confusion for patients, and would even violate First Amendment rights (16). In addition, the variation between facility pricing is affected by several factors and is not provided to give contextual information for pricing [4]. Adding confounding information to health care decision-making can further complicate an already difficult time in patients’ and families’ lives. Despite these reservations, in June of 2020, the U.S. District Court of the District of Columbia ruled against their claims and paved the way for the rule to take effect as planned [16].

It is important to recognize that economic factors are not the only considerations in treatment decisions. From the patient perspective, health care decision-making involves a complex set of factors, each of which affects the psyches of the patient and family [15]. In 2017, Manning et al found the most important aspects patients looked for when choosing a sports surgeon were finding one who was well known for a specific expertise and one who practiced within the patient’s insurance network. Other factors that played a significant role included physician age, availability, and distance [10]. Yet, while price information can empower patients in their decision-making, it is only a single variable within a complex equation. As several entities within health care have suggested, the addition of incomplete pricing data only further complicates decision-making. Before price transparency can play a significant role in modulating the health care market, information that is grounded in context must be available, and the wide variability between individual surgeries must be adequately accounted for.

In 2019, Lambert et al demonstrated that several patient-specific factors, as well as the variability within procedures performed, significantly affected the cost of a RCR [8]. While the primary focus of the study was cost, it can be inferred that price variability for the patients was also widely affected by case specifics. In addition, the procedures we evaluated in our study are primarily performed on an outpatient basis, consistent with many sports medicine procedures. Previous investigations by Boddapati et al have demonstrated that 6% to 16% of ACLR and 6% to 12% of RCR patients require an overnight stay or full admission [2,3]. These rates are heavily influenced as well by patient comorbidities and the complexity of the case. Ultimately, without modularity of predictive pricing on a case-by-case basis, there cannot be full price transparency for the individual.

Our secondary analysis of CDM sheets to determine whether component prices for specific procedures were available demonstrated an increased availability of component price compared with procedure price. While it is important to have all pricing information available to patients, it is of little use to the average patient in a prospective capacity. The CDM sheets were searched by orthopedic residents with prior knowledge of components of each procedure. It is unreasonable to assume the average patient would be able to search the CDM sheets to identify specific components of their procedure. In addition, as stated before, the complexity of each case varies not only in preoperative planning but is also dependent upon intraoperative findings. Thus, it remains difficult for someone without intimate knowledge of a procedure to accurately predict prices based on CDM component prices. Hopefully, sophisticated insurance companies will find ways, such as machine learning, to use these data to help their patients choose among providers based on price (among other variables). However, for most patients and providers, comprehensive prices for a given procedure are much more meaningful. Going forward, federal requirements for price transparency should focus on these broader prices rather than the prices of individual tools such as shavers and suture anchors.

Finally, this study demonstrates a major opportunity for improvement in reducing price variability. As seen in Table 4, there is enormous variability in the reported prices of several procedures, consistent with previous studies outside the field of orthopedic sports medicine [1,7]. As noted above, geography and other factors can play a role in predictive pricing; however, it is unreasonable to assume that a price range of almost US$100,000 could be due to geography alone. Furthermore, these highly variable prices typically do not represent what insurance companies pay, as those negotiations are often confidential. Instead, these are the base prices for patients paying out-of-pocket. Such variability can be unfair for patients and inefficient for the health care market. Other mandates, such as the Transparency in Coverage Proposed Rule, CMS-9915-p, aim to make the negotiations between insurers and hospitals public, thereby driving down base prices and reducing price variability [4,11].

Conclusions

The vast majority of hospitals evaluated as of late 2019 did provide some level of pricing information to patients in compliance with the initial broad federal requirements. No facility, however, complied with the most recent requirements regarding the wide breadth of pricing information that were set to take effect January 1, 2021. Regarding orthopedic sports medicine, pricing information was largely lacking, and the available data would be rarely useful for patients attempting to figure out the price for a surgery. Efforts toward price transparency face several obstacles; however, continued work in this area provides an opportunity to better serve our patients by harnessing market forces.