Evaluation of Hospital Compliance With Federal Price Transparency Regulations and Variability of Negotiated Rates for Spinal Fusion

Abstract

Introduction: To improve price transparency, the Centers for Medicare & Medicaid Services (CMS) requires hospitals to post accessible pricing data for common elective procedures along with all third-party-negotiated rates. We aimed to evaluate hospital compliance with CMS regulations for both price estimators and machine-readable files for spinal fusions and to evaluate factors contributing to variability in hospital-negotiated pricing.

Methods: We reviewed the top 100 orthopaedic hospitals ranked by US News & World Report to assess compliance with CMS price transparency regulations for all spine diagnosis-related groups. We recorded gross inpatient charge, cash price, and deidentified maximum and minimum rates for the 11 spine diagnosis-related groups (DRGs). Variability was compared with geographic practice costs (GPCI), expected Medicare reimbursements, and poverty rate and median income ratio.

Results: Only 72% of hospitals were fully compliant in reporting spinal fusions on their price estimator, and 39% were fully compliant in reporting all mandatory rates for spinal fusions. The overall estimated cash price was $96,979 ± $56,262 and $62,595 ± $40,307 for noncervical and cervical fusion, respectively. Cash prices at top 50 hospitals were higher for both noncervical and cervical fusions ( P = 0.0461 and P = 0.0341, respectively). The average minimum negotiated rates ranged from 0.88 to 1.15 times the expected Medicare reimbursement, while maximum and cash prices were 3.41 to 3.90 and 2.53 to 4.08 times greater than Medicare reimbursement. GPCI demonstrated little to no correlation with DRG pricing. However, minimum negotiated rates and cash prices demonstrated weak positive correlations with the median income ratio and weak negative correlations with the poverty rate.

Discussion: Most US hospitals are not fully compliant with CMS price transparency regulations for spinal fusions despite increased overall utilization of price estimators and machine-readable files. Although higher ranked hospitals charged more for spinal fusions, DRG prices remain widely variable with little to no correlation with practice cost or socioeconomic parameters.