New Rules Establish Increased Price Transparency Requirements
November 2019 ~
The Department of Health and Human Services (HHS) announced, on November 15, that CMS will issue two rules in an effort to increase price transparency to “empower patients and increase competition among all hospitals, group health plans and health insurance issuers in the individual and group markets”.
The first rule is the Calendar Year (CY) 2020 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule. The second rule is the Transparency in Coverage Proposed Rule. Both the final and proposed rules require that pricing information be made publicly available.
According to the press release, consistent with the President’s Executive Order on price and quality transparency, with these rules the White House Administration is “taking action toward making sure that insured and uninsured Americans alike have the information necessary to get an accurate estimate of the cost of the healthcare services they are seeking before they receive care”.
Previously scheduled to take effect in in 2020, the Final Rule is now scheduled to become effective as of January 1, 2021 and will require hospitals to provide patients with easily accessible information about standard changes for items and services offered. A summary of the provisions under the rule can be seen below.
Increasing Price Transparency of Hospital Standard Charges
Definition of ‘Hospital’
CMS has finalized the definition of ‘hospital’ to mean an institution in any State in which State or applicable local law provides for the licensing of hospitals, that is licensed as a hospital pursuant to such law, or is approved by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing.
This includes all Medicare-enrolled institutions that are licensed as hospitals (or approved as meeting licensing requirements) as well any non-Medicare enrolled institutions that are licensed as a hospital (or approved as meeting licensing requirements). Federally owned or operated hospitals that do not treat the general public, except for emergency services, and whose rates are not subject to negotiation, are deemed to be in compliance with the requirements for making public standard charges because their charges for hospital provided services are publicized to their patients.
Definition of ‘Standard Charges’
Additionally, the agency finalized the definition of ‘standard charges’ to include the following:
- The gross charge (the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts),
- The discounted cash price (the charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service),
- The payer-specific negotiated charge (the charge that a hospital has negotiated with a third-party payer for an item or service),
- The de-identified minimum negotiated charges (the lowest charge that a hospital has negotiated with all third-party payers for an item or service).
- The de-identified maximum negotiated charges (the highest charge that a hospital has negotiated with all third-party payers for an item or service).
Definition of Hospital ‘Items and Services’
CMS also finalized the definition of hospital “items and services” to mean 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.
Requirements for Making Public All Standard Charges for All Items and Services in a Machine-Readable Format
For each hospital location, hospitals must make public all their standard changes (including gross charges, payer-specific negotiated charges, de-identified minimum and maximum negotiated charges, and discounted cash prices) for all items and services online in a single digital file in a machine-readable format. Specifically, hospitals must do the following:
- Include a description of each item or service (including both individual items and services and service packages) and any code (for example, HCPCS codes) used by the hospital for purposes of accounting or billing.
- Display the file prominently and clearly identify the hospital location with which the standard charges information is associated on a publicly available website using a CMS-specified naming convention.
- Ensure the data is easily accessible, without barriers, including ensuring the data is accessible free of charge, does not require a user to establish an account or password or submit personal identifying information (PII), and is digitally searchable.
- Update the data at least annually and clearly indicate the date of the last update (either within the file or otherwise clearly associated with the file).
Requirements for Displaying Shoppable Services in a Consumer-Friendly Manner.
Hospitals must make public standard charges for at least 300 “shoppable services” (including 70 CMS-specified and 230 hospital-selected) the hospital provides in a consumer‑friendly manner. CMS defined ‘shoppable service’ to mean a service that can be scheduled by a health care consumer in advance. CMS believes these requirements will allow healthcare consumers to make apples-to-apples comparisons of payer-specific negotiated charges across healthcare settings. Specifically, hospitals must do the following:
- Display payer-specific negotiated charges, de-identified minimum and maximum negotiated charges, and discounted cash prices for at least 300 shoppable services, including 70 CMS-specified shoppable services and 230 hospital-selected shoppable services. If a hospital does not provide one or more of the 70 CMS-specified shoppable services, the hospital must select additional shoppable services such that the total number of shoppable services is at least 300. If a hospital does not provide 300 shoppable services, the hospital must list as many shoppable services as they provide.
- 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, and the location at which the shoppable service is provided, including whether the standard charges for the shoppable service applies at that location to the provision of that shoppable service in the inpatient setting, the outpatient department setting, or both.
- Select such services based on the utilization or billing rate of the services. In other words, the shoppable services selected for display by the hospital should be commonly provided to the hospital’s patient population.
- Include charges for services that the hospital customarily provides in conjunction with the primary service that is identified by a common billing code (e.g. Healthcare Common Procedure Coding System (HCPCS) codes).
- Make sure that the charge information is displayed prominently on a publicly available webpage, and clearly identifies the hospital location with which the standard charge information is associated.
- Ensure the data is easily accessible, without barriers, including ensuring the data is accessible free of charge, does not require a user to register, establish an account or password or submit PII, and is searchable by service description, billing code, and payer.
- Update the information at least annually and clearly indicate the date of the last update.
Additionally, CMS will deem a hospital as having met the requirements for making public standard charges for 300 shoppable services in a consumer friendly manner if the hospital maintains an internet-based price estimator tool that meets the following requirements:
- Provides 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.
- Allows health care consumers to, at the time they use the tool, obtain an estimate of the amount they will be obligated to pay for the shoppable service by the hospital.
- Is prominently displayed on the hospital’s website and accessible to the public without charge and without having to register or establish a user account or password.
Monitoring and Enforcement
Under the final rule, 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. To address non-compliance, CMS will impose corrective action plans as well as civil monetary penalties of up to $300 per day (adjusted for inflation). Although an appeal process is available, any civil monetary penalty ultimately imposed will be publicized on the CMS website.
The proposed rule, according to the release, was developed in response the Executive Order and would impose price transparency requirements on health insurers offering group and individual coverage to disclose price and cost-sharing information to participants, beneficiaries, and enrollees up front. If finalized, the proposed Transparency in Coverage rule would require health plans to:
- Give consumers real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services, through an online tool that most group health plans and health insurance issuers would be required to make available to all of their members, and in paper form, at the consumer’s request. This requirement would empower consumers to shop and compare costs between specific providers before receiving care.
- Disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Making this information available to the public is intended to drive innovation, support informed, price-conscious decision-making, and promote competition in the healthcare industry. Making this information public directly helps the consumer, but, more importantly, creates new opportunities for researchers, employers and other developers to build new tools to help consumers.
The proposed rule would also encourage health insurance issuers to offer new or different plan designs that incentivize consumers to shop for services from lower-cost, higher-value providers by allowing issuers to take credit for “shared savings” payments in their medical loss ratio (MLR) calculations.
For more information on these rules, view the Calendar Year (CY) 2020 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public final rule (CMS-1717-F2) Fact Sheet and the Transparency in Coverage Proposed Rule (CMS-9915-P) Fact Sheet.
Source(s): HHS Press Office; Executive Order; CMS Fact Sheet; Health Leader’s Media; Radiology Business; Price Transparency Requirements Final Rule (PDF); Lexology;