Hospital price transparency final rule released, effective date set for January 2021

Expanded price transparency requirements are set to become reality for hospitals effective January 1, 2021. On November 15, CMS released a final rule, CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements, that pushed ahead with many of the requirements originally included in the 2020 OPPS proposed rule.

The final rule defines terms such as “standard charges” and “hospital items and services” and builds on current requirements that hospitals post their standard charges online in a machine-readable format. It also includes long-anticipated monitoring and enforcement mechanisms including civil monetary penalties of up to $300 a day for noncompliance.

CMS estimates that the total burden for hospital for the first year will be 150 hours and $11,898.60 per hospital, and the total annual burden for subsequent years will be 46 hours and $3,610.88 per hospital.

“I believe that their estimate of time, hours, and cost is incorrect. I don’t believe there is any organization that has their [chargemaster] data also formatted by payer to show contracted rates for easy review and comparison, so just putting that together is another large ask,” says Debra May. “All hospitals use some variation of a tool, or manual work, for their insurance contracts, so I don’t know that it’s as easy as ‘print out your rates for XX codes and publish them.’ This is an extremely heavy lift for hospitals that are already buried with administrative burden to just get paid for the services they provide.”

Definitions

Definitions of key terms are largely finalized as proposed.

CMS is finalizing the proposed definition of hospital to mean an institution in any state in which state or applicable local law provides for the licensing of hospitals and is either:

• Licensed as a hospital pursuant to such law
• Approved, by the agency of such state or locality responsible for licensing hospitals, as meeting the standards established for such licensing, including critical access hospitals and other facility types such as inpatient rehabilitation facilities that otherwise meet the definition of hopsital

Although commenters suggested that CMS expand the definition to include ambulatory surgery centers (ASC), particularly as numerous CMS’ initiatives encourage the shift of services to these facilities, the agency declined to do so.

CMS also finalized as proposed the definition of items and services. Under the final rule, items and services are defined as all items and services provided by hospitals, including both individual items and services and service packages, for which the hospital has a standard charge. This includes items and services provided by employed physicians and non-physician practitioners (NPP). Examples include:

• Professional charges
• Room and board
• Supplies and procedures
• Use of the facility and other items (i.e., facility fees)
• Any other items or services for which a hospital has a standard charge

Some commenters stated that services provided by physicians and NPPs should not be included in the definition because hospitals that employ physicians and NPPs would be at a disadvantage when compared to hospitals that do not employ physicians. A hospital that does not employ physicians or NPPs would be able to post a lower standard charge even though that would not reflect the true cost to the patient as it would not include the charges for the physicians or NPPs. CMS declined to include services provided by all affiliated practitioners under the definition, stating that non-employed practitioners’ services do not fall under the definition of hospital services. CMS disagreed that hospitals that employ practitioners would be at a disadvantage because practitioners’ services may be charged as ancillary services and, therefore, listed separately from the primary shoppable service.

The definition of standard charge is finalized as “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”

Many commenters stated that they believe CMS does not have the legal authority to require hospitals to post payer-specific negotiated rates and that doing so would expose legally protected trade secrets. CMS responded at length to these comments, dismissing concerns that it is overstepping its legal authority or that publishing payer-specific rates would expose protected trade secrets. The agency also disagreed that publishing payer-specific rates would decrease competition and ultimately increase the prices patients pay.

“I just don’t see the benefit to a patient to know what other payers are paying. It’s not like they can cancel their insurance and select a new insurance any time during the year to take advantage of a better price through a different insurance,” says Kay Larsen, CRCR, CHRI, revenue integrity specialist at Adventist Health Glendale in Glendale, California.

California is one of a handful of states that has had price transparency laws, including publishing charges, on the books for a number of years. Larsen says that she’s received many calls from patients trying to estimate expenses for an upcoming surgery. Many wanted to know the cost difference between using their insurance or declaring they were uninsured.

“Although we have a good uninsured program, 90% of the time, using insurance was still better than the uninsured rate once you started adding up all the different bills and the possibility of future services,” she says.

Format

The final rule makes some modifications to CMS’ proposed file format and data element requirements. The file must contain the following information for each item and service:

• Description of each item or service (individual and packaged)
• The de-identified maximum negotiated charge when provided to inpatients and outpatients
• The de-identified minimum negotiated charge when provided to inpatients and outpatients
• The discounted cash price when provided to inpatients and outpatients
• The gross charge when provided to inpatients and outpatients
• The payer-specific negotiated charge when provided to inpatients and outpatients
• Any code used for accounting or billing including CPT® code, HCPCS code, DRG, APC, National Drug Code, or other common payer identifier

Hospitals will not be required to include revenue codes, although CMS is encouraging their inclusion where appropriate.

The final rule prohibits hospitals from charging for access to the file, requiring individuals to create a user account to access it, or requiring individuals to enter any personally identifiable information.

Shoppable services

In addition to and separate from the public list of all items and services, 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

The same file format, location, and accessibility requirements apply to the list of shoppable services as to the larger list of all services and items.

Hospitals that maintain an internet-based price estimator tool that meets specific requirements will be exempt from the requirement to post the list of 300 shoppable services. That’s a promising addition to the final rule, says John Settlemyer, MBA, MHA, CPC, CHRI, assistant vice president, corporate revenue management/CDM operations at Atrium Health in Charlotte, North Carolina. That exemption was suggested by the Provider Roundtable and other industry organizations.

Monitoring and enforcement

Under the final rule, CMS’ monitoring and enforcement actions will be guided largely by complaints lodged by individuals or entities. Complaints may be reported to PriceTransparencyHospitalCharges@cms.hhs.gov. CMS will evaluate complaints and then, if necessary, conduct audits of hospitals’ websites.

If a hospital is not in compliance, CMS will issue a warning notice or request a corrective action plan from the hospital. If the hospital does not respond, CMS may fine the hospital up to $300 per day and publicize the penalty on a CMS website.

Hospitals will be able to appeal monetary penalties through the Administrative Law Judge process.

Conclusion

Hospital must thoroughly review the final rule and develop a plan to comply with the requirements by 2021. Although industry stakeholders such as the American Hospital Association have already voiced their opposition to the final rule, hospitals cannot rely upon it being overturned before it goes into effect. CMS has recently set a precedent for ignoring legal objections even after a policy has been vacated by a federal judge, such as the recent cuts to the 340B drug discount program and reimbursement for certain services at grandfathered off-campus provider-based departments.

“I’ve never seen anything like the environment we are in now where massive amounts of time and resources are being wasted because our government is more interested in creating chaos than community by finalizing more and more unlawful regulations and policies that simply invite more and more legal action”, says Jugna Shah, MPH, CHRI, president and founder of Nimitt Consulting Inc, in Spicer, Minnesota.

Revenue integrity professionals should mobilize now by preparing their organizations to comply with the new requirements and advocating for modifications to the rule before the 2021 effective date.

“My initial reaction was that Christmas came early this year—one whole extra year to prepare, advocate/petition/take legal action to try to get this revised into something that might actually be helpful for our patients,” says Tracy Cahoon, MBA, CHRI, director of revenue integrity, Southwest General Health Center, Brecksville, Ohio.

Along with the final rule, CMS released a proposed rule, Transparency in Coverage Proposed Rule, that would require insurers and group health plans in the individual and group markets to disclose cost-sharing information and an estimate of beneficiaries’ financial liability for covered items and services. The proposed rule is likely to face opposition from industry groups.

“As if the first rule was not bad enough requiring hospitals to release their rates, now they add health plans. CMS has doubled their trouble,” says Ronald Hirsch, MD, FACP, CHCQM, CHRI, vice president of physician advisory services at R1 RCM in Chicago. “No way health plans are going to sit back and release their rates.”

Editor's note: To learn more about the final rule’s policies and how to implement them at your facility, attend HCPro’s price transparency final rule webinar, November 21 with Caroline Rader Znaniec, MBA, MS-HCA.