Hospital Price Transparency Final Rule
The holiday season is upon us and I hope that everyone had a Happy Thanksgiving. It is the time of year when certain things expand. If you believe the hype from Hallmark Christmas movies, our hearts expand with more kindness and joy at this time of year; our waistlines usually expand from all the holiday meals and sweet treats; and our Christmas list and associated budget seem to expand as it gets closer to Christmas (which reversely causes our wallets to shrink). Evidently, CMS thought it was a good time to expand on the requirements associated with hospital price transparency. They also gave an early Christmas present however by delaying the new requirements until January 1, 2021. This means for now and until January 2021, hospitals are to continue to comply with the existing guidance which requires hospitals to make public their chargemaster charges (gross charges) online in a machine-readable format.
As a reminder, this requirement comes from the Health Care and Education Reconciliation Act of 2010 that “requires each hospital operating in the United States for each year to establish (and update) and make public a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis related groups (DRGs)…” The 2019 Outpatient Prospective Payment System (OPPS) proposed and final rules updated guidelines to require hospitals to make available a list of their current standard charges via the Internet in machine-readable format and to update this information at least annually, or more often as appropriate. CMS further clarified in these rules that this requirement applies to all hospitals operating within the United States and to all items and services provided by the hospital. CMS’s reasoning for the requirements is that they believe there is a direct connection between hospital charge transparency and more affordable, lower cost healthcare.
The expansion of the requirements was originally discussed in the 2020 OPPS Proposed Rule and made final in a separate Final Rule for Price Transparency Requirements for Hospitals to Make Standard Charges Public. The new requirements are based on feedback from the 2019 revised guidelines and from an Executive Order on “Improving Price and Quality Transparency in American Healthcare to Put Patients First” (June 24, 2019). I refer readers to the actual rule for all the reasons CMS believes these new requirements are necessary. Below is a summary of what the new requirements are, including many new definitions for clarification. At the same time as the release of this final rule, CMS also released a proposed rule entitled Transparency in Coverage that would place complementary transparency requirements on most individual and group market health insurance issuers and group health plans.
The requirements apply to hospitals which are defined in the new Final Rule (FR) as all institutions recognized, licensed and/or approved as a hospital by State or applicable local laws. This includes:
- All Medicare-enrolled hospitals plus hospitals that do not participate in Medicare,
- Hospitals in all States, the District of Columbia, and US territories as listed in the FR (Puerto Rico, Virgin Islands, Guam, etc.),
- Critical access hospitals (CAHs), inpatient psychiatric facilities (IPFs), sole community hospitals (SCHs), and inpatient rehabilitation facilities (IRFs),
- Each hospital location operating under a single license or approval that has a different set of standard charges, such as a hospital outpatient department located at an off-campus location.
It does not include entities such as ambulatory surgical centers (ASCs) or other non-hospital sites-of-care from which consumers may seek healthcare items or services, although CMS encourages such entities to make public their standard charges. It also does not apply to federally-owned or operated hospitals, such as Indian Health Service (IHS) facilities, Veterans (VA), and Department of Defense (DOD) hospitals because these hospitals generally do not provide services to the general public and their payment rates are not subject to negotiation.
“Items and Services” Definition
“Items and services” provided by the hospital are “all items and services, including individual items and services and service packages, that could be provided by a hospital to a patient in connection with an inpatient admission or an outpatient department visit for which the hospital has established a standard charge.” This includes:
- Supplies, procedures, room and board, facility use, and facility fees;
- Service packages which mean an aggregation of individual items and services into a single service with a single charge (such as DRG or APC charges);
- Services of employed physicians and non-physician practitioners; and
- Any other items or services for which a hospital has established a charge.
Disclaimer – Please do not shoot the messenger if some of the new requirements do not seem to make sense. CMS is convinced that hospitals routinely contract payer-specific rates for service packages. They also clarify that the word “charges” is equivalent to “payment rates” whether for an individual item/service or a service package.
“Standard Charges” Definition
This is the big definition that is significantly expanded from the current requirements. Under the new requirements the following are considered standard charges and must be included in both the Internet-posted machine-readable format and shoppable services postings (discussed in more detail below) when the new requirements become effective in 2021.
- Gross charges – charges as recorded in the chargemaster, absent any discounts.
- Payer-specific negotiated charges – charges the hospital has negotiated with a third party payer for an item or service.
- “Third party payer” is “an entity that, by statute, contract, or agreement, is legally responsible for payment of a claim for a healthcare item or service.”
- Hospitals should display all negotiated charges, including, for example, charges negotiated with Medicare Advantage plans, Medicaid MCOs, and other Medicaid managed care plans.
- Payer-specific negotiated charges would not include non-negotiated payment rates (such as those payment rates for FFS Medicare or Medicaid).
- CMS states that hospital payer-specific negotiated charges or rates can be found within the in-network contracts that hospitals have signed with third party payers. Per CMS, such contracts often include rates sheets that contain a list of hospital items and services (including service packages) and the corresponding negotiated rates. CMS recommends hospitals request an electronic copy of their contract and corresponding rate sheet from the third party payer if it is not already available in that format.
- Discounted Cash Price – the price the hospital would charge individuals who pay cash (or cash equivalent) for an individual item or service or service package.
- Groups that would benefit from knowing the discount cash price would be the uninsured and those who may have some healthcare coverage but who still bear the full cost of at least certain healthcare services.
- The “discounted cash price” would reflect the discounted rate published by the hospital, unrelated to any charity care or bill forgiveness that a hospital may choose or be required to apply to a particular individual’s bill.
- The discounted cash price may be generally analogous to the “walk-in” rate but would apply to all self-pay individuals, regardless of insurance status.
- For hospitals that have not determined a discounted cash price for self-pay consumers the hospital’s discounted cash price would simply be its gross charges as reflected in the chargemaster.
- De-identified Minimum Negotiated Charge – the lowest charge that a hospital has negotiated with all third party payers for an item or service.
- To determine the de-identified negotiated charges, hospitals consider the distribution of all negotiated charges across all third party payer plans and products for each hospital item or service and then selects the lowest and highest rates.
- The distribution would not include non-negotiated charges with third party payers
- The third party payer with which these rates are negotiated is not identified.
- De-identified Maximum Negotiated Charge - the highest charge that a hospital has negotiated with all third party payers for an item or service.
- Bullets for de-identified minimum negotiated charge listed above also apply to the de-identified maximum negotiated charge.
HOSPITALS MUST MAKE PUBLIC THEIR STANDARD CHARGES IN TWO WAYS:
- a comprehensive machine-readable file that makes public all standard charge information for all hospital items and services, and
- a consumer-friendly display of common “shoppable” services derived from the machine-readable file.
Comprehensive Machine-Readable File
- The machine-readable list of hospital items and services is required to include the following charges, as applicable, for each item and service: – the gross charge, the payer-specific negotiated charges, the discounted cash price, de-identified minimum negotiated charge, and de-identified maximum negotiated charge
- In addition to the above charges, the listing must include:
- A description of each item or service (including both individual items and services and service packages).
- Any code used by the hospital for purposes of accounting or billing for the item or service, including, but not limited to, the CPT code, HCPCS code, DRG, NDC, or other common payer identifier.
- Hospitals must post their standard charge information in a single digital file in a machine-readable format.
- A machine-readable format is a digital representation of data or information in a file that can be imported or read into a computer system for further processing.
- Examples of machine-readable formats include, but are not limited to, .XML, .JSON and .CSV formats.
- A PDF would not meet this definition because the data contained within the PDF file cannot be easily extracted without further processing or formatting.
- CMS requires that hospitals use a CMS-specified naming convention for the file (§ 180.50(d)(5)).
- The naming convention for the file must be:
- Hospitals have discretion to choose the Internet location they use to post their files as long as
- They are displayed on a publicly-available website,
- Are displayed prominently and
- Clearly identify the hospital location with which the standard charges information is associated
- The data must be easily accessible and without barriers, which means the data can be accessed free of charge, without having to establish a user account or password, and without having to submit personal identifiable information (PII)
- The data must be able to be digitally searched
- Files must be updated annually
- This means such updates must occur at least once in a 12-month period.
- Hospitals must clearly indicate the date of the last update to the standard charge data either within the file or otherwise clearly associated with the file.
- These requirements apply to each hospital location so that each location with separate charges makes a list public
- The naming convention for the file must be:
A “shoppable service” is a service package that can be scheduled by a healthcare consumer in advance. Shoppable services are typically provided in non-urgent situations, which allows patients to price shop and schedule a service at a time that is convenient for them.
- Hospitals must make public the following prescribed standard charges for at least 300 shoppable services in a consumer-friendly manner.
- This includes 70 shoppable services specified by CMS that are provided by the hospital, plus as many additional shoppable services as would be necessary to reach a total of at least 300 shoppable services
- If a hospital does not provide some of the 70 CMS-specified services, then the hospital would identify enough shoppable services so that the total number of shoppable services is at least 300.
- Hospitals should select services based on the utilization or billing rate of the services in the past year. In other words, the shoppable services selected for display by the hospital should be commonly provided to the hospital’s patient population.
- If a hospital does not provide 300 shoppable services, the hospital must list as many shoppable services as they provide.
- The 70 CMS-specified shoppable services are found in Table 3of the FR and are divided into four broad categories: E&M Services, Laboratory and Pathology Services, Radiology Services, Medicine and Surgery Services.
- The hospital must display the following types of standard charges described above that apply to each shoppable service (and corresponding ancillary services, as applicable)– the payer-specific negotiated charges, the discounted cash price, de-identified minimum negotiated charge, and de-identified maximum negotiated charge.
- The shoppable services list must also 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.
- The location at which the shoppable service is provided, including whether the charges at that location apply to the inpatient setting, the outpatient department setting, or both.
- Any primary code used by the hospital for purposes of accounting or billing for the shoppable service, including, as applicable, the CPT code, the HCPCS code, the DRG, or other common service billing code.
- Hospitals may use, as applicable, an appropriate payer-specific billing code (for example, an APR-DRG code) in place of the MS-DRG code indicated for the five procedures in the list of 70 CMS-specified shoppable services that are identified by MS-DRG codes 216, 460, 470, 473, and 743.
- When the shoppable service is customarily accompanied by the provision of ancillary services, the hospital must present the shoppable service as a grouping of related services, meaning that the charge for the primary shoppable service (whether an individual item or service or service package) is displayed along with charges for ancillary services.
- An “ancillary service” is an item or service a hospital customarily provides as part of or in conjunction with a shoppable primary service.
- Ancillary items and services may include laboratory, radiology, drugs, delivery room (including maternity labor room), operating room (including post-anesthesia and postoperative recovery rooms), therapy services (physical, speech, occupational), hospital fees, room and board charges, and charges for employed professional services.
- They may also include additional services that are provided by the hospital, for example, local and/or global anesthesia, services of employed professionals, supplies, facility and/or ancillary facility fees, imaging services, lab services, and pre- and post-op follow up.
- A hospital must select an appropriate publicly available Internet location for purposes of making public the standard charge information for shoppable services in a consumer-friendly format.
- The information must be displayed in a prominent manner that identifies the hospital location with which the standard charge information is associated.
- The shoppable services information must be easily accessible, without barriers, including, but not limited to, ensuring the information is: (i) free of charge; (ii) accessible without having to register or establish a user account or password; (iii) accessible without having to submit PII; (iv) searchable by service description, billing code, and payer.
- Standard charge information must be updated at least once annually and the date must be indicated with the information.
- CMS did not finalize the requirement to provide a paper copy of information on consumer-friendly shoppable services.
Price Transparency Tool
CMS encourages, but does not require, that hospitals develop a price comparison tool to make standard charges available in a machine-readable format to third-party tool developers as well as the general public. They also determined that having a price transparency tool might meet the price transparency requirements for shoppable services.
“A hospital that maintains an Internet-based price estimator that meets certain criteria is deemed to have met our requirements at 45 CFR 180.60. The price estimator tool must:
- Allow healthcare consumers to, at the time they use the tool, obtain an estimate of the amount they will be obligated to pay the hospital for the shoppable service.
- Provide 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.
- Is prominently displayed on the hospital’s website and be accessible without charge and without having to register or establish a user account or password.”
Like our hearts, waistlines, and these price transparency requirements, the length of my article has expanded beyond what I originally planned. I think that is enough information for this week’s article. Next week, I will address CMS’s plans for monitoring, penalties, and appeals.
Article by Debbie Rubio
This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.