CMS Issues Final Rule for Hospital Price Transparency
- Public Policy
- Policy and Advocacy News
- CMS Issues Final Rule for Hospital Price Transparency
- Nikki Golden
- December 1, 2019
On Nov. 1, as part of the OPPS/ASC Final Rule, CMS also finalized policies on price transparency. These policies follow directives in President Trump’s Executive Order, “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” and are intended to establish a foundation for a patient-driven healthcare system by making prices for items and services provided by all hospitals in the United States more transparent for patients so that they can be more informed about what they might pay for hospital items and services.
The final rule requirements would apply to each hospital operating in the United States. The rule implements Section 2718(e) of the Public Health Service Act and improves upon prior agency guidance that required hospitals to make public their standard charges upon request starting in 2015 (79 FR 50146) and subsequently online in a machine-readable format starting in 2019 (83 FR 41144). Section 2718(e) requires each hospital operating within the United States to establish (and update) and make public a yearly list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act.
The final provides definitions for all of the following:
- definitions of “hospital,” “standard charges,” and “items and services;”
- requirements for making public a machine-readable file online that includes all standard charges (including gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges) for all hospital items and services;
- requirements for making public discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges for at least 300 ‘shoppable’ services (70 CMS-specified and 230 hospital-selected) that are displayed and packaged in a consumer-friendly manner;
- monitoring for hospital noncompliance and actions to address hospital noncompliance (including issuing a warning notice, requesting a corrective action plan, and imposing civil monetary penalties), and a process for hospitals to appeal these penalties. CMS is finalizing that these policies would be effective January 1, 2021.
Definition of Standard Charges
CMS is finalizing the definition of ‘standard charges’ to include the following:
- The gross charge (the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts),
- The discounted cash price (the charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service),
- The payer-specific negotiated charge (the charge that a hospital has negotiated with a third-party payer for an item or service),
- The de-identified minimum negotiated charges (the lowest charge that a hospital has negotiated with all third-party payers for an item or service).
- The de-identified maximum negotiated charges (the highest charge that a hospital has negotiated with all third-party payers for an item or service).
For each hospital location, hospitals must make public all their standard charges (including gross charges, payer-specific negotiated charges, de-identified minimum and maximum negotiated charges, and discounted cash prices) for all items and services online in a single digital file in a machine-readable format. Specifically, hospitals must do the following:
- Include a description of each item or service (including both individual items and services and service packages) and any code (for example, Healthcare Common Procedure Coding System, or HCPCS, codes) used by the hospital for purposes of accounting or billing.
- Display the file prominently and clearly identify the hospital location with which the standard charges information is associated on a publicly available website using a CMS-specified naming convention.
- Ensure the data is easily accessible, without barriers, including ensuring the data is accessible free of charge, does not require a user to establish an account or password or submit personal identifying information (PII), and is digitally searchable.
- Update the data at least annually and clearly indicate the date of the last update (either within the file or otherwise clearly associated with the file).
CMS believes this information and format is most directly useful for employers, providers and tool developers that could use these data in consumer-friendly price transparency tools or that may integrate the data into electronic medical records and shared decision making tools at the point of care.
Hospitals must make public standard charges for at least 300 “shoppable services” (including 70 CMS-specified and 230 hospital-selected many of which include spine procedures such as fusion and disctectomies) the hospital provides in a consumer‑friendly manner. Specifically, hospitals must do the following:
- Display payer-specific negotiated charges, de-identified minimum and maximum negotiated charges, and discounted cash prices for at least 300 shoppable services, including 70 CMS-specified shoppable services and 230 hospital-selected shoppable services. If a hospital does not provide one or more of the 70 CMS-specified shoppable services, the hospital must select additional shoppable services such that the total number of shoppable services is at least 300. If a hospital does not provide 300 shoppable services, the hospital must list as many shoppable services as they provide.
- Include a plain-language description of each shoppable service, an indicator when one or more of the CMS-specified shoppable services are not offered by the hospital, and the location at which the shoppable service is provided, including whether the standard charges for the shoppable service applies at that location to the provision of that shoppable service in the inpatient setting, the outpatient department setting, or both.
- Select such services based on the utilization or billing rate of the services. In other words, the shoppable services selected for display by the hospital should be commonly provided to the hospital’s patient population.
- Include charges for services that the hospital customarily provides in conjunction with the primary service that is identified by a common billing code (e.g., HCPCS codes).
- Make sure that the charge information is displayed prominently on a publicly available webpage and clearly identifies the hospital location with which the standard charge information is associated.
- Ensure the data is easily accessible, without barriers, including ensuring the data is accessible free of charge, does not require a user to register, establish an account or password or submit PII, and is searchable by service description, billing code, and payer.
- Update the information at least annually and clearly indicate the date of the last update.
In addition, CMS will deem a hospital as having met the requirements for making public standard charges for 300 shoppable services in a consumer-friendly manner if the hospital maintains an internet-based price estimator tool that meets the following requirements:
- Provides estimates for as many of the 70 CMS-specified shoppable services that are provided by the hospital, and as many additional hospital-selected shoppable services as is necessary for a combined total of at least 300 shoppable services.
Read the Fact Sheet here.
Read the Final Rule here.