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White House Rule would require hospitals and insurers to disclose pricing and discounts

Friday, November 15, 2019   (0 Comments)
Posted by: CMS
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CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements (CMS-1717-F2)

On November 15, 2019, the Centers for Medicare & Medicaid Services (CMS) finalized policies that follow directives in President Trump’s Executive Order, entitled “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” that lay the foundation for a patient-driven healthcare system by making prices for items and services provided by all hospitals in the United States more transparent for patients so that they can be more informed about what they might pay for hospital items and services.

The policies in the final rule will further advance the agency’s commitment to increasing price transparency. It includes requirements that would apply to each hospital operating in the United States. This fact sheet discusses the provisions of the final rule (CMS-1717-F2), which can be downloaded from the Federal Register at: https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf.

Increasing Price Transparency of Hospital Standard Charges
On June 24, 2019, the President signed an Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First noting that it is the policy of the Federal Government to increase the availability of meaningful price and quality information for patients.  The Executive Order directed the Secretary of Health and Human Services (HHS) to propose a regulation, consistent with applicable law, to require hospitals to publicly post standard charge information.[1] We believe healthcare markets work more efficiently and provide consumers with higher-value healthcare if we promote policies that encourage choice and competition.[2] In short, as articulated by the CMS Administrator, we believe that transparency in health care pricing is “critical to enabling patients to become active consumers so that they can lead the drive towards value.”[3]

This 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 upon request starting in 2015 (79 FR 50146) and subsequently online in a machine-readable format starting in 2019 (83 FR 41144). 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.  In the final rule, we finalize the following: (1) definitions of “hospital”, “standard charges”, and “items and services”; (2) requirements for making public a machine-readable file online that includes all standard charges (including gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges) for all hospital items and services; (3) requirements for making public discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges for at least 300 shoppable services (70 CMS-specified and 230 hospital-selected) that are displayed and packaged in a consumer-friendly manner; and (4) monitoring for hospital noncompliance and actions to address hospital noncompliance (including issuing a warning notice, requesting a corrective action plan, and imposing civil monetary penalties), and a process for hospitals to appeal these penalties.  CMS is finalizing that these policies would be effective January 1, 2021.

Definition of ‘Hospital’
CMS is finalizing 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. For purposes of this definition, 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.  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 (for example, hospitals operated by an Indian Health Program, the U.S. Department of Veterans Affairs, or the U.S. Department of Defense) 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 (for example, through the Federal Register).

Definition of ‘Standard Charges’
CMS is finalizing the definition of ‘standard charges’ to include the following:

  1. The gross charge (the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts),
  2. The discounted cash price (the charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service),
  3. The payer-specific negotiated charge (the charge that a hospital has negotiated with a third party payer for an item or service),
  4. The de-identified minimum negotiated charges (the lowest charge that a hospital has negotiated with all third-party payers for an item or service).
  5. 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 is finalizing 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 of these items and services would be supplies, 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), and any other items or services for which a 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).

CMS believes 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. 

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. We define ‘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 this 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. Should CMS conclude a hospital is noncompliant with one or more of the requirements to make public standard charges, CMS may assess a monetary penalty after providing a warning notice to the hospital, or after requesting a corrective action plan from the hospital if its noncompliance constitutes a material violation of one or more requirements. If the hospital fails to respond to CMS’ request to submit a corrective action plan or comply with the requirements of a corrective action plan, CMS may impose a civil monetary penalty on the hospital not in excess of $300 per day, and publicize the penalty on a CMS website. The rule also establishes an appeals process for hospitals to request a hearing before an Administrative Law Judge (ALJ) of the civil monetary penalty. Under this process, the Administrator of CMS, at his or her discretion, may review in whole or in part the ALJ’s decision.

Effective Date
In response to comments, CMS is extending the effective date to January 1, 2021 to ensure hospital compliance with these regulations.


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