HHS Announced New Price Transparency Rules
On November 15, 2019, the Centers for Medicare & Medicaid Services (CMS) issued a final rule requiring pricing information to be made publicly available. The 2020 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule will require hospitals to publish their standard charge information online along with charge information for “shoppable” services. The rule takes effect on January 1, 2021.
The Final Rule is likely to receive pushback with major hospital groups already indicating they will file a lawsuit challenging the Final Rule.
Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule
The Final Rule addresses the proposals included in the OPPS Proposed Rule in July. CMS did not finalize those policies in the OPPS Final Rule. Instead, they opted to publish a separate Final Rule on price transparency. All hospitals, except federally-owned hospitals (e.g., Veterans Administration, Indian Health Service), would have to comply with the requirement, even if the hospital does not accept Medicare or Medicaid. Non-hospital sites of care, such as ambulatory surgical centers (ASCs) and community health centers, would not be required to comply with the proposal.
The Final Rule requires hospitals to make their standard charges public, as follows:
Standard Charges List
Hospitals will be required to make public a machine-readable file online that includes all standard charges for all hospital items and services (including the gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient, and the minimum and maximum negotiated charges).
These charge lists, include:
- Gross Charge: a full un-negotiated charge for services and items, as shown on the hospital’s ChargeMaster list. These prices are what an uninsured or self-pay individual could be charged.
- Payer-Specific Negotiated Charge: the individual negotiated rates the hospital has with each health plan and insurance payer that their patients use.
- Discounted Cash Price: negotiated cash price of items and services applicable to self-pay consumers.
- De-identified Minimum Negotiated Charge: the lowest charge that a hospital has negotiated with all third-party payers for an item or service.
- De-identified Maximum Negotiated Charge: the highest charge that a hospital has negotiated with all third-party payers for an item or service.
CMS states that consumers without third-party insurance can use the de-identified minimum and maximum of negotiated changes to negotiate a charge with a hospital that is more affordable than the gross charges a hospital might bill them otherwise. Additionally, for a consumer with insurance, they would be able to determine their minimum and maximum financial obligation for an item or service, if they are obligated to pay a percentage of its negotiated rate. CMS did not finalize the inclusion of the median negotiated charge as a type of standard charge.
Shoppable Services List
Hospitals will also be required to make public payer-specific negotiated charges for 300 "shoppable" services that are displayed and packaged in a consumer-friendly manner. 70 of the "shoppable" services are specified by CMS (reflected in Table 3 on page 190), and 230 are hospital selected.
CMS defines a "shoppable service" as a service package that can be scheduled in advance by a consumer. The shoppable service list includes services that fall under four categories:evaluation and management services; 2) laboratory and pathology services; 3) radiology services, and 4) medicine and surgery services.
For small or specialty hospitals that may not offer 300 services, CMS requires that they list as many of the shoppable services they provide. Hospitals can make coding substitutions and cross-walks as necessary to be able to display their standard charges for the 70 CMS-specified services across third-party payers. Shoppable services selected by hospitals for display must be commonly provided to the hospital’s patient population.
To be considered consumer-friendly, the data must use plain language understandable to patients. Primary services will be displayed with associated ancillary services, facility fees, and service charges so the patient can assess the entire episode of care. The data must be easily searchable based on the description, code, or payer.
Monitoring and Enforcement
CMS has the authority to monitor hospital compliance with Section 2718(e) of the Public Health Service Act by evaluating complaints made by individuals or entities to CMS, reviewing individuals' or entities' analysis of noncompliance, and auditing hospitals' websites. Complaints will trigger CMS’ independent analysis before taking any enforcement action. CMS may also self-initiate the audit of a hospital’s website.
Should CMS conclude a hospital is noncompliant with one or more of the requirements to make public standard charges, CMS may assess a monetary penalty after providing a warning notice to the hospital, or after requesting a corrective action plan from the hospital if its noncompliance constitutes a material violation of one or more requirements.
- If the hospital fails to respond to CMS' request to submit a corrective action plan or comply with the requirements of a corrective action plan, CMS may impose a civil monetary penalty on the hospital, of not more than $300 per day, and publicize these penalties on a CMS website. CMS did not finalize its proposal of a $100,000 annual maximum on the CMP amount. For now, CMS does not establish a cumulative annual total limit.
- CMS finalized its proposal to establish an appeals process for hospitals to request a hearing before an Administrative Law Judge (ALJ) of the civil monetary penalty. Under this process, the CMS Administrator, at his or her discretion, may review in whole or in part the ALJ's decision.