Digital Debut

CMS Finalizes New Hospital Price Transparency Requirements

ASCs not subject to the new regulations

BY ALEX TAIRA | DECEMBER 2019

On November 15, the US Department of Health & Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) announced a final rule aimed at increasing healthcare price transparency. The rule, Price Transparency Requirements for Hospitals to Make Standard Charges Public, was originally included as part of the CY 2020 OPPS/ASC Proposed Payment Rule but was eventually separated into its own final rule. The rule creates two new requirements for hospitals: a requirement to make all standard charges for items and services publicly available via machine readable format and a requirement to publicly display “shoppable services” in a consumer-friendly manner.

ASCs are specifically not included in the definition of “hospital” as delineated in the final rule and, therefore, are not subject to any of the new price transparency regulations.

Background

The statutory motivation behind the administration’s price transparency rule stems from language passed as part of the Affordable Care Act (ACA). Section 2718(e) of the act created a new requirement that hospitals establish “a list of the hospital’s standard charges for items and services provided by the hospital,” with guidelines for making this list publicly available to be developed by the secretary for HHS. Although this provision was passed into law in 2010, it would take until 2014 for CMS to begin issuing price transparency guidelines. In the FY 2015 Inpatient Prospective Payment System (IPPS) Proposed Rule, CMS reminded hospitals of the ACA price transparency requirement, stating that hospitals must either publish a list of standard charges, or set policies that would allow patients to request and view standard charges. Notably, CMS stopped short of requiring that hospitals make their chargemaster public, with the agency stating its belief that “hospitals are in the best position to determine the exact manner and method by which to make the list [of charges] public.”

With surprise billing becoming an increasing topic of discussion within the healthcare industry, CMS took further steps to compel hospital price transparency in the CY 2019 IPPS Final Rule. In that rule, CMS finalized a requirement that hospitals make public a list of their standard charges via the internet in a machine-readable format, with the list updated at least annually. However, CMS specifically declined to provide a standard definition for terms such as “charges” or “prices,” stating that updated policy only pertained to how the pricing information was made available and not what information was required to be disclosed. Because of this, the new requirement seemed to have little effect in making prices more accessible to patients with many hospitals posting obscure lists of prices that seemed to comply with the letter of the law rather than the spirit.

New Requirements for 2020

With surprise billing still on the minds of lawmakers and regulators alike, CMS introduced the most comprehensive price transparency requirements to date in the CY 2020 Outpatient Prospective Payment System (OPPS) & ASC Proposed Rule in July 2019. Attempting to rectify the ambiguity of past guidelines, CMS proposed concrete definitions, public-facing posting requirements and new enforcement tools. Despite significant opposition to the proposal from a number of stakeholder groups, CMS finalized the requirements in the final rule released November 15.

Of note, CMS finalized a definition of “standard charges” that includes gross charges, the discounted cash price, the payer-specific negotiated charge, or the de-identified minimum or maximum negotiated charge. Each of these charges, as well as a description for each item or service, must be displayed prominently in an easily accessible, clearly identified, publicly available website. CMS also finalized a broad definition of “items and services” covered under the rule, stating that all items or services “that could be provided by a hospital to a patient in connection with an inpatient admission or outpatient department visit for which the hospital has standard charge” must be disclosed.

CMS and commenters anticipated that the above information could prove unwieldy, with long lists that would not be useful for the majority of healthcare consumers. Because of this, CMS created an additional requirement that hospitals disclose payer-specific negotiated charges for a much smaller set of common “shoppable services.” CMS defines a “shoppable service” as a service that can be scheduled by a consumer in advance, and hospitals must make public prices for at least 300 such services, as well as a plain language description of each service to aid patients.

Finally, CMS asserted its authority as the oversight body to monitor hospital compliance under the new requirements. CMS will evaluate complaints against hospitals as well as perform random audits of hospital websites. Hospitals that are found to be noncompliant will be notified and given an opportunity to create and execute a corrective action plan. Further failure to comply may result in the imposition of a civil monetary penalty up to $300 per day.

Anticipating pushback as well as time needed to implement compliance plans, CMS has set an effective date of January 1, 2021. A number of hospital groups already have announced plans to file legal challenges in opposition. Review a fact sheet on the rule and the full final rule text.

For more information, please write Alex Taira, ASCA’s regulatory policy and research manager.