CMS Moves Forward with Expanded Price Transparency Requirements

Thoughtware Alert Published: Dec 05, 2019
Healthcare Event

On November 15, 2019, CMS finalized policies for making charges for items and services provided by hospitals in the U.S. more transparent for patients. CMS hopes patients will be more informed about what they might pay for hospital items and services. CMS believes the final policies will help increase market competition and ultimately drive down the cost of health care services, making them more affordable for all patients.

CMS’ guidelines regarding pricing transparency, published as a supplement to the calendar-year 2020 Outpatient Prospective Payment System final rule, expand interpretations of section 2718(e) of the Public Health Service Act. In the final rule, effective January 1, 2021, CMS defines “hospital” and the “items and services” that are covered under the requirements. CMS also redefined and expanded the definition of “standard charges” to include five separate concepts: gross charge, payor-specific negotiated charge, de-identified minimum negotiated charge, de-identified maximum negotiated charge and discounted cash price.

Hospitals must make their standard charges for all items and services in the charge description master publicly available in a comprehensive, machine-readable file. In addition, hospitals must make public, in a consumer-friendly format, standard charge information for 300 shoppable services. Shoppable services are defined as non-urgent services that could be scheduled in advance. CMS selected 70 shoppable services, and hospitals must select 230 additional shoppable services. Hospitals will be required to report standard charges for the primary shoppable service as well as all ancillary services customarily provided as part of the primary service.

While the price transparency final rule isn’t effective until January 1, 2021, hospitals should be proactive and start planning for how they’ll collect and report on the required elements. CMS estimates the burden for hospitals to review and post standard charges for the first year will be 150 hours per hospital; however, the effort could be even more burdensome than CMS estimates. Failure to comply could result in civil monetary penalties of up to $300 per day.

BKD’s Health Care Performance Advisory Services (HCPAS) professionals can help hospitals navigate the new price transparency requirements and assist with developing a plan for incorporating these requirements into the hospital’s overall pricing strategy. For more information, reach out to your BKD HCPAS trusted advisor or use the Contact Us form below.

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