CMS: Hospital price transparency final rule update

Dec. 9, 2019 / By Barbara Aubry, RN

On December 3, I attended the CMS call on the final rule for hospital price transparency requirements. On December 4, I read an article in the New York Times stating the American Hospital Association filed a lawsuit in the U.S. District Court in Washington saying the new rule is “unlawful several times over. The lawsuit contends the requirement (for hospitals) to disclose their private negotiations with insurers violates their First Amendment rights.”

The government and patient advocates believe it is a patient’s right to know in advance how much healthcare interventions will cost. On the other side, hospitals contend the information is private and not open to public scrutiny. The legality of the Rule will be decided in court. Meanwhile, it is still important to understand what is at stake. The data that follows came directly from the December 3, 2019 CMS conference presentation. My take on this information follows.

From CMS Final Rule:

    1. Further advances the agency’s commitment to increasing price transparency
    2. Requirements apply to each hospital operating in the United States
    3. Effective date is January 1, 2021
    4. The final rule implements Section 2718(e) of the Public Health Service Act and improves upon prior agency guidance that required hospitals to make public their standard charges (defined as the hospital’s chargemaster charges) upon request starting in 2015 (79 FR 50146) and subsequently online in a machine-readable format starting in 2019 (83 FR 41144)
    5. Section 2718(e) requires each hospital operating within the United States to establish (and update) and make public a yearly list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act

Who Must Comply?

The final rule defines “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:

    • A State includes each of the several States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
    • The definition 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 (for example, hospitals operated by an Indian Health Program, the U.S. Department of Veterans Affairs, or the U.S. Department of Defense) are deemed to be in compliance with the requirements for making public standard charges.

What Are Hospital Standard Charges?

CMS finalized the definition of standard charges to include the following:

1) Gross charge: The charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts
2) Discounted cash price: The charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service
3) Payer-specific negotiated charge: The charge that a hospital has negotiated with a third-party payer for an item or service
4) De-identified minimum negotiated charges: The lowest charge that a hospital has negotiated with all third-party payers for an item or service
5) De-identified maximum negotiated charges: The highest charge that a hospital has negotiated with all third-party payers for an item or service

Which Hospital Items and Services Are Included?

CMS finalized the proposal to define 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. Examples include, but are not limited to, the following:

    • Supplies and procedures
    • Room and board
    • Use of the facility and other items (generally described as facilities fees)
    • Services of employed physicians and non-physician practitioners (generally reflected as professional charges)
    • Any other items or services for which a hospital has established a standard charge

Two Ways for Making Public Standard Charges

1) Comprehensive Machine-Readable File. A single machine-readable file that contains all five types of standard charges for all the items and services provided by the hospital. Based on public comment, we believe this information and format is most directly useful for employers, providers, and tool developers who could use these data in consumer-friendly price transparency tools or who may integrate the data into electronic medical records and shared decision-making tools at the point of care.

2) Consumer-Friendly Shoppable Services. A consumer-friendly list of some types of standard charges for a limited set of “shoppable services” (including 70 CMS-specified and 230 hospital-selected) provided by the hospital A ‘shoppable service’ is a service that can be scheduled by a healthcare consumer in advance.

We believe these requirements will allow healthcare consumers to directly make apples-to-apples comparisons of common shoppable hospital services across healthcare settings.

Requirements for Making Public All Standard Charges for All Items and Services in a Machine-Readable Format

The information must be published in a single digital file that is in a machine-readable format. Machine-readable format means a digital representation of data or information in a file that can be imported or read into a computer system for further processing. Examples of machine-readable formats include, but are not limited to, the following formats: .XML, JSON, and .CSV

Location and Accessibility:
The file must be displayed 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

The hospital must 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

Data must be updated 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 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 indicate that the service is not offered by the hospital, and select additional
    • Shoppable services such that the total number of shoppable services is at least 300
    • If a hospital provides less than 300 shoppable services, the hospital must list as many shoppable services as it provides
    • The shoppable services selected for display by the hospital should be commonly provided to the hospital’s patient population.

For each shoppable service displayed, the hospital must:

1) Include a plain-language description of each shoppable service and any primary code used by the hospital for purposes of accounting or billing
2) Group the primary shoppable service with the ancillary services that the hospital customarily provides in conjunction with the primary shoppable service
3) Indicate the location at which the shoppable service is provided, and whether the standard charge 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

Hospitals have discretion to choose a format for making public the consumer-friendly information

Location and Accessibility:

    • The information must be displayed prominently on a publicly available Internet location that clearly identifies the hospital location with which the information is associated
    • The information must be 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

Information must be updated at least annually and clearly indicate the date of the last update.

My Take:

It is admirable that CMS is undertaking this initiative, which will hopefully give patients more information regarding the cost of health care. During the meeting CMS instructed folks calling in with questions to basically provide their negotiated bundled charges for certain services. While this is a good beginning, CMS understands that the data provided is only an estimate of an individual patient’s eventual changes based on their needs. CMS suggested that using Excel format (for example) a hospital can create a tab for each of their payers and populate the negotiated rates. While this will be somewhat helpful to consumers, I believe it will be of great interest to payers. They will be able to view their competitor’s reimbursements for specific services. The good news is that the effective date is January 1, 2021 which provides a window for hospitals to prepare their data. CMS also mentioned that hospitals will be audited to assure compliance.

The slides CMS used during the meeting are available here (click on the Presentation PDF under Event Materials). The slides contain the final list of 70 CMS-specified shoppable services that hospitals will be required to display.

Barbara Aubry is a regulatory analyst for 3M Health Information Systems.