Federal judge upholds price transparency rule

On June 23, a federal judge dismissed the American Hospital Association’s (AHA) challenge to the CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements final rule. The final rule, effective January 1, 2021, will require hospitals to disclose charges they privately negotiate with commercial payers, among other requirements.

The AHA filed its lawsuit in December 2019, arguing that the final rule is unlawful because it exceeds CMS’ statutory authority. The judge rejected that claim and said that the final rule is legal under sections 2718(e) and section 2718(b)(3) of the Public Health Service Act and section 1102(a) of the Social Security Act. The judge also dismissed the lawsuits claims that the final rule violates the First Amendment and will create confusion among consumers.

The AHA intends to appeal the decision, according to a statement it released.

Nevertheless, hospitals and revenue integrity professionals should be prepared to comply with the rule by January 1, 2021. Even when revenue integrity staff are not primarily responsible for ensuring compliance, they must understand the new requirements and any internal changes that are put in place to ensure compliance.

Notable provisions of the final rule include:

• Defining standard charge as the “the regular rate established by the hospital for an item or service provided to a specific group of paying patients.” The final rule also defines five types of standard charge:
  
  • Gross charge, “the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discount”
  • Payer-specific negotiated charge, “the charge that the hospital has negotiated with a third-party payer for an item or service,” with “third-party payer” defined as “an entity that, by statute, contract, or agreement, is legally responsible for payment of a claim for a healthcare item or service”
  • The de-identified maximum negotiated charge when provided to inpatients and outpatients
  • The de-identified minimum negotiated charge when provided to inpatients and outpatients
  • Discounted cash price, “the charge that applies to an individual who pays cash (or a cash equivalent) for a hospital item or service”
• Hospitals must make public a list of 70 “shoppable” services (listed in Table 3 on p. 190 of the final rule) plus an additional 230 “hospital-selected shoppable” services. The 230 hospital-selected services must be the most commonly provided at that hospital, based on utilization and billing data. In total, hospital must publish at least 300 services. If a hospital does not perform services in the list in Table 3, that hospital needs to add services so that the total publicized is 300. In this list, hospitals must post payer-specific negotiated charges, de-identified minimum and maximum negotiated charges, and discounted cash prices.
  
  In addition, the list of shoppable services must include:
  • A plain-language description of each service
  • The location at which the service is provided including whether the charges at that location apply to the inpatient setting, outpatient setting, or both