On Friday, November 15, 2019, CMS published the highly anticipated hospital price transparency final rule, originally proposed earlier this summer. While CMS explains the intent of the rule is to encourage patients to better understand health care prices and become active consumers, it will also require hospitals to make significant data publicly available online. Addressing providers’ comments, CMS clarified that all hospitals will be required to post standard charges as well as the payer-specific negotiated charges – now defined as any discount the patient receives for using an in-network provider – online in a single digital, machine-readable file. Hospitals must also post similar information for at least 300 “shoppable” items and services.

CMS extended the deadline for compliance to January 2021. In the interim, although CMS spends significant time in the rule text arguing the legality of its authority, Advis anticipates hospitals will challenge this in litigation due to potential contractual and anti-trust concerns.

CMS also proposed an additional rule that, if finalized, will require health plans to provide consumers with real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services. Most group health plans and health insurers will be required to provide this information through an online tool and in paper form at the consumer’s request.

Advis will continue to monitor the proposed health plan price transparency rule, and summarizes key details of the final hospital price transparency rule below. Advis’ expert data science team will also be assisting providers in developing efficient solutions to comply with these detailed requirements.

  1. Types of Hospitals Required to Comply

CMS defines “hospital” for purposes of this price transparency rule to include all institutions licensed as hospitals under applicable state laws, regardless of whether the hospital is Medicare-certified. CMS did not provide exemptions for small or rural hospitals such as critical access hospitals or sole community hospitals.

  1. Pricing Information Hospitals are Required to Make Public

CMS explains that it would essentially like to provide patients with the ability to create their own Explanation of Benefits (“EOBs”) before the receipt of any items or services. Hospitals will therefore be required to make their “standard charges” public for patients, which CMS defines as “the regular rate established by the hospital for an item or service provided to a specific group of paying patients.” CMS explains that “standard charges” goes beyond merely the hospital’s chargemaster, and is requiring actual pricing data be made public. CMS notes that presentation of both “gross charges” and “payer-specific negotiated charges”, both defined below, is consistent with the standard charges found in a patient’s EOB that health insurance plans are required to provide to patients following a healthcare service.

CMS created four different types of “standard charges” that hospitals are required to make public so that patients can determine how much they will have to pay:

  • Gross Charges – the price the hospital actually charges for an item or service.
  • Payer-specific Negotiated Charges – the charge that a hospital has negotiated with a third-party payer for an item or service, and/or any discount the patient receives for using an in-network provider.
  • De-Identified Minimum and Maximum Negotiated Charges – the lowest and highest charge for an item or service among all negotiated third party payers.
  • Cash Discount Charges – the discounted charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service.

CMS also clarified it will continue to use the terms “rate” and “charge” interchangeably, and cites to the Oxford dictionary definition of “rate” to support this assertion. Through this interpretation, CMS will be giving patients access to data that has typically been deemed confidential and proprietary between hospitals and third-party payers. CMS spends significant time addressing the legality of its authority to implement these rules; however, given potential contractual and anti-trust concerns, Advis anticipates hospitals will challenge this in litigation.

  1. Formatting Requirements for Price Transparency Data

Hospitals will be required to create a single digital file with the required price transparency data, and post this file online in a “machine-readable format.” The file must:

    • Include a description of the item or service and its HCPCS/CPT code.
    • Display the file “prominently” and identify the hospital location that is associated with the standard charge on a public website.
    • Ensure the data is easily accessible – meaning it does not require a login or fee for anyone to access it and that it is easily searchable.
    • Update the file at least annually and note the date it was updated either in the file or where it is posted.
  1. Requirements for Shoppable Services in a “Consumer-Friendly Manner”

In addition to pricing information for all items and services described above, CMS will also require hospitals to create and make public a list of “shoppable services” for consumers. CMS clarified that “shoppable services” are those that can be scheduled in advance by a healthcare consumer. CMS would like patients to be able to search through a hospital’s list of “shoppable services” to better understand and compare pricing when selecting a provider.

To comply with this requirement, hospitals must:

    • Post at least 300 shoppable services – 70 services are specified by CMS and the other 230 are chosen by the hospital.
    • List all types of “standard charges” defined above except “gross charges”.
    • Include a description of the charge, the HCPCS code, and the location at which the service is provided, including whether the charge applies for an inpatient setting, outpatient setting, or both.
    • Display the shoppable services “prominently” and identify the hospital location that is associated with the standard charge on a public website.
    • Ensure the data is easily accessible – meaning it does not require a login or fee for anyone to access it and that it is easily searchable.
    • Update the file at least annually and note the date it was updated either in the file or where it is posted.

Additionally, hospitals can meet the “consumer-friendly” formatting requirements by creating an online price estimator that allows patients to obtain an estimate of the amount the patient would pay out-of-pocket for the 70 shoppable services specified by CMS and the additional 230 services chosen by the hospital. The price estimator tool should allow the patient to obtain a real-time estimate of the service at the time the patient is using the tool. Additionally, the tool will need to be posted on the hospital’s website and accessible to the public without requiring a fee or login.

  1. Monitoring and Enforcement of Price Transparency Requirements

CMS will review and audit public hospital websites, and monitor patient complaints to enforce these rules. Additionally, if CMS determines a hospital is noncompliant with the price transparency rules, CMS may provide a written warning of the specific violations, request a CAP, or impose a civil monetary penalty of up to $300 a day and publicize the penalty on a CMS website.

Advis’ expert data science team will also be assisting providers in developing efficient solutions to comply with these detailed requirements. Contact Advis’ data team at (708) 478-7030 today for assistance.