States’ hospital financial reporting laws, often referred to as “hospital transparency,” are diverse and typically seek to provide information to the public rather than to inform state health system cost-containment policies. But to address and stem rising health costs, states need specific information from hospitals and providers. States’ laws offer important lessons for policymakers who want to change reporting laws or develop new hospital financial transparency requirements.
Explore this chart for an overview of state hospital cost reporting requirements.
View this slideshow for an analysis and lessons from hospital financial reporting laws in 12 states.
The National Academy for State Health Policy (NASHP) analyzed 12 state hospital transparency laws to better understand the current landscape of states’ reporting requirements. This slideshow breaks the information into charts to highlight the 12 states laws in more detail. NASHP’s analysis shows that state requirements vary not only in purpose, but also in identifying:
What type of hospital must report;
What information must be disclosed;
Which state agency or entity collects the data; and
What penalties are imposed for noncompliance.
Most states require financial reports from acute-care hospitals – those that provide inpatient medical care and services for surgery and treat acute medical conditions or injuries. According to the 12-state analysis, only a few states require five or more types of facilities to submit financial transparency reports, which shows the wide range of states’ reporting requirements. For example, Georgia requires only nonprofit, acute-care hospitals to report while Florida requires acute, non-acute, and psychiatric hospitals, nursing homes, and hospice and intermediate care facilities to report financial data. Whether a state requires one facility type or multiple types to report financial data affects policymakers’ ability to understand the financial state of the entire health care system. Collecting information from acute-care facilities is important but provides only a partial picture of a state’s health care system.
The type of data states collect varies, with many states requiring hospitals to report some combination of audited financial statements, Medicare cost reports, and Internal Revenue Services tax Form 990 filings. Others, such as Missouri, do not require any “standard” reports that hospitals develop as a routine part of their business. Instead, Missouri, determines its own hospital financial reporting requirements through statute and agency rule making.
Given these varied approaches, what data elements should states be collecting? NASHP is currently analyzing data collected by the 12 states in the comparison chart. NASHP’s goal is to determine which required data elements yield the best information to support cost containment initiatives and what data is missing as policymakers seek to understand specific cost drivers within their health systems. NASHP is currently developing a reporting tool that states can use to ensure they are receiving meaningful and potentially actionable information from health care systems.
Beyond the data elements required, reporting style varies from state to state. Some states have their own accounting manuals to collect hospital financial data in a uniform manner across facilities (CA, FL, MD, MA and WA). Others don’t, which can result in inconsistencies across different facilities reporting information within a single state. By requiring facilities to adhere to specific accounting principles or follow a reporting manual applied statewide, policymakers are better able to analyze data and learn about the state’s health care system as a whole, rather than using a hospital-by-hospital lens.
In many states, the responsibility for hospital financial data collection is spread across different offices or agencies and there may be varying levels of collaboration across these collecting entities. The agency or office responsible for collecting data can affect whether reporting and analysis is focused on cost containment goals or more targeted objectives. For example, some states require nursing homes to report data to an office of aging where the focus is on quality of care and overall expenditures. While ensuring targeted objectives like quality of care is critical, identifying cost trend data reported by nursing homes could be missed if the agency responsible for its collection is not looking for that information.
Additionally, some states place data collection in an office focused on general health care data and financial analysis, while others place it in offices that are also tasked with certificate of need processes or facility licensure. These different offices will have different strengths and capacities to build on current data collection and analysis efforts. However, without a coordinating infrastructure to assess data from all reporting facilities, the goal of informing health system cost containment efforts may not be achieved.
All in all, states that have already implemented hospital financial reporting are providing critical information and lessons to NASHP as we seek inform future state financial reporting requirements and new transparency policies. Having meaningful data to better understand the health system’s cost drivers is an important foundation to build on and refine cost containment efforts.