CMS FY 2021 IPPS Final Rule Price Transparency Clarification

Thoughtware Alert Sep 29, 2020
Healthcare Event

The release of the fiscal year (FY) 2021 Inpatient Prospective Payment System (IPPS) final rule, which includes requirements aimed at advancing price transparency, has caused some confusion with how the rule relates, or doesn’t relate, to price transparency requirements in the calendar-year (CY) 2020 Outpatient Prospective Payment System (OPPS) final rule.  

The FY 2021 IPPS rule requires hospitals to calculate and report on their cost report the median negotiated rates the hospital has negotiated with all its Medicare Advantage (MA) payors, by MS-DRG, beginning with cost reporting periods ending on or after January 1, 2021. Hospitals that don’t comply with this requirement could have Medicare payments stopped. 

The CY 2020 OPPS price transparency rule requires hospitals to post “standard charges” by January 1, 2021, and carries a potential penalty of up to $300 per day, per hospital, for noncompliance. The median MA rate reporting requirement in the FY 2021 IPPS rule and the CY 2020 OPPS requirement to post standard charges are two separate requirements (see table below). While CMS is likely assuming hospitals will have complied with the OPPS rule, CMS believes preparing the information required for the cost report won’t be burdensome because the hospital has potentially already prepared part of this information as a result of complying with the January 1, 2021, requirement. Failure to comply with the January 1, 2021, requirement to post standard charges wouldn’t affect Medicare payments. 

In the CY 2020 OPPS price transparency rule, CMS cited Section 2718(e) of the Public Health Service Act for its authority to require posting of charge information. Section 2718(b)(3) provides the authority for enforcement including the civil monetary penalty of up to $300 per day. For the requirement to report median negotiated MA prices, CMS cites a different provision, §1815(a) and §1833(e) of the Social Security Act. This provision states that no Medicare payments will be made to a provider unless it has furnished the information, as may be necessary, to determine the amount of payments due to the provider under the Medicare program. This provision doesn’t address whether a hospital is compliant with the price transparency provisions. Based on the information in the noted requirements, it doesn’t appear that CMS can withhold Medicare payments for failing to post standard charges, as the information required in the standard charge posting requirement won’t be used to set Medicare rates. 

CMS Rule Graph

BKD’s Health Care Performance Advisory Services (HCPAS) professionals can help hospitals navigate the price transparency requirements, develop a compliance plan, and incorporate the requirements into their 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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