The Centers for Medicare and Medicaid Services (CMS) has released the CY 2020 final rule on Hospital Price Transparency requirements. This rule was originally proposed as part of the CY 2020 proposed Hospital Outpatient Prospective Payment System (OPPS), but it was not included in the CY 2020 final OPPS rule released on November 1, 2019. CMS finalized the hospital price transparency component separately today. The rule is a result of the Administration’s transparency efforts with a proposal to require public reporting of standard charges list of items and services provided in hospitals.

Provisions of the final rule are effective January 1, 2021.

CMS Finalizes Requirement to Publish Standard Charges List for All Non-Federally Owned Hospitals

As part of the Administration’s efforts to increase transparency in health care costs, CMS finalized the proposal to require all non-federally owned hospitals to publicly post charges for a defined set of procedures. All hospitals, with the exception of 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.

Hospitals Are Required to Make Public ‘Unnegotiated’ Prices and Individual Payer-Negotiated Rates

Hospitals will be required to publish five different price lists of their services. These charge lists, which CMS collectively refers to as “standard charges,” will include:

1. Gross Charge: a full un-negotiated charge for services and items as shown on the hospital’s Charge Master list. These prices are what an uninsured or self-pay individual could be charged.
2. Payer-Specific Negotiated Charge: the individual negotiated rates the hospital has with each health plan and insurance payer that their patients use.
3. Discounted Cash Price: negotiated cash price of items and services applicable to self-pay consumers.
4. De-identified Minimum Negotiated Charge: lowest charge that a hospital has negotiated with all third-party payers for an item or service.
5. De-identified Maximum Negotiated Charge: 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 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.

Prices Must Published in Machine-Readable Consumer-Friendly Format

Hospitals are required to publish the prices in a comprehensive machine-readable format. CMS believes that this will ensure that advocates and organizations researching on behalf of patients can develop comprehensive comparisons to help patients and policy makers. A hospital offering a price estimator tool on its website will be considered to have met the requirements to make public their standard charges for selected items and services.

CMS Specifies Services for “Shoppable Services List”

Hospitals would be required to post prices for a core set of 70 “shoppable services,” (see Appendix) identified by CMS, plus an additional 230 services selected by the hospital, for a total of 300 services. CMS defines a “shoppable service” as a service package that can be scheduled in advance by a consumer. The proposed Shoppable Service list includes services that fall under four categories: evaluation and management services; laboratory and pathology services; radiology services; and 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 made 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 description, code, or payer. Apparently anticipating questions, CMS provided some specific examples of ancillary services that might be included with a primary service: laboratory, radiology, drugs, delivery room, operating room fees (including post-anesthesia), therapy services, hospitals fees, room and board charges, local and/or global anesthesia for outpatient procedures, and charges for services of employed professionals.

Monitoring and Compliance Process Outlined in the Rule

At the outset, CMS plans on a passive monitoring system, relying on complaints made by patients, advocates, and other stakeholders to determine which hospitals are not complying with the new regulations. Complaints will trigger CMS’ independent analysis before taking any enforcement action. CMS may also self-initiate the audit of a hospital’s website.

Hospitals that continue to not comply could be subject to a civil monetary penalty (CMP) of up to $300 per day. 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. Appeals by hospitals that believe they are being wrongly penalized would to be filed in a similar manner to other circumstances where CMPs are assessed.

CMS estimates that the level of burden for a hospital to be 150 hours in 2020 and 46 hours per hospital in the subsequent years; with a cost of $11,898 per hospital to implement the requirements finalized in the rule.

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