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Hospital Price Transparency Rules Finalized

Hospital Price Transparency Rules Finalized November 20, 2019

On Friday, CMS finalized the proposed hospital price transparency rules which will be effective January 1, 2021.  Hospitals will be required to make available standard charges, including discounted and negotiated rates, for all items and services in a specified online format as well as update the files annually.  The rule applies to all hospitals, except federally-owned hospitals, including those hospitals that do not accept Medicare or Medicaid.

INTENT

The intent of the rule is to make pricing for items and services provided by all hospitals more transparent for patients/consumers so they can make informed, meaningful decisions about their healthcare and know their out-of-pocket costs prior to receiving care.  The ultimate goal stated by CMS is to increase competition and lower health care costs “for ALL Americans”. 

WHAT YOU SHOULD KNOW

  1. The final rule specifically defines “hospital”, “standard charges”, “items and services” and “shoppable services”: 
Standard Charges Gross chargesDiscounted cash pricesPayor specified negotiated chargesDe-identified minimum and maximum negotiated charges made with all third-party payors
Hospital Any institution in any State in which State or applicable local law provides for the licensing of hospitals, other than a Federally owned or operated hospital (e.g., Indian Health Program, Veteran’s Affairs, etc.)
Items and Services 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.  (For example, supplies, room and board, procedures, facility fees, and services of employed physicians and non-physician practitioners)
Shoppable Services A service that can be scheduled by a health care consumer in advance
  • The final rule requires hospitals publish their standard charges for all hospital items and services in a public, online, machine-readable format.  Each item/service must include a description of the item/service, charges, and any code (CPT/HCPCS) used for billing and/or accounting.  All of this information must be available to the public in a single, digital, machine-readable format, (not a pdf) and updated at least annually.
  • The final rule also requires that hospitals provide standard charges, as defined above, for 300 “shoppable” services that are displayed and packaged in a consumer-friendly manner.  This means the language must be understandable to patients and include all 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.   70 of the “shoppable” services are required by CMS.  The remaining 230 are hospital selected but must be services that are commonly provided to the hospital’s patient population. There are 4 main categories of “shoppable” services: evaluation and management, laboratory and pathology, radiology and medicine/surgery services.  In instances where a hospital provides less than 300 services, CMS requires the list contain each of the services they provide.

ENFORCMENT

Hospitals who are determined to be non-compliant will receive written notice from CMS.  CMS may also require a written corrective action plan.  Hospitals who continue to be non-compliant or fail to respond to written requests from CMS will be subject to civil monetary penalties of no more than $300 per day with no annual maximum limit.  Further, violations will be posted publicly on a CMS website. 

REALITY

To no one’s surprise, there is widespread industry debate, concern and pushback from major hospital groups and associations as well as insurers.   The American Hospital Association, Association of American Medical Colleges and the Children’s Hospital Association have all indicated they will be filing lawsuits challenging the legality of the new rule.  If the legal challenges fail, hospitals will face extreme difficulties in complying with the requirements and it will likely cause more confusion for health care consumers.

RECOMMENDATIONS

The final rule includes many more details and specifications that will require careful consideration.  With just over a year to comply with the requirements, we recommend you read the complete Final Rule now and develop a committee and formal implementation plan to ensure compliance and avoid penalties.  HBE’s team of experts is available to assist you with this process.

The Final Rule can be accessed here:  https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf

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