CMS finalized the Outpatient Prospective Payment System hospital price transparency rules on November 15, 2019. As of January 1, 2021, hospitals will have to publicly post (and update annually) two sets of data: first, a comprehensive list of standard charges for items services offered by the hospital, and second, a consumer-friendly list of 300 “shoppable” services, including 70 selected by the Centers for Medicare and Medicaid Services (“CMS”).

The first transparency requirement states that each hospital operating within the United States must establish and make public a list of the hospital’s standard charges for items and services provided by the hospital, including diagnosis-related groups (DRGs). Standard charge is defined as “the regular rate established by the hospital for an item or service provided to a specific group of paying patients. This includes: (i) gross charge, (ii) payer-specific negotiated charge, (iii) de-identified minimum negotiated charge, (iv) de-identified maximum negotiated charge, and (v) discounted cash price.” Items and services is defined as “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 include supplies and procedures and room and board.

A hospital that operates two locations under a single hospital license with different standard charges based upon each location must separately make public the standard charges applicable to each location. The information must be easily accessible, be provided free of charge, be contained in a file that is digitally searchable, and a hospital cannot require the information requestor to submit personal information in order to access the standard charges.

The second transparency requirement states that each hospital must make public standard charges for 300 shoppable services –or, if the hospital does not offer 300 shoppable services, for as many shoppable services as it provides- in a consumer friendly format, prominently displayed on the hospital’s website. “Shoppable service” is a service that can be scheduled by a healthcare consumer in advance. Examples include Cesarean sections, x-rays, and colonoscopies. A hospital may meet the criteria for this requirement if it maintains an online price estimator tool that meets certain requirements, but regardless of whether the information is shared via price estimator or directly on the hospital’s website, the hospital must include a laundry list of data elements including, but not limited to the minimum and maximum negotiated charges, and the payer-specific negotiated charge that applies to each shoppable service and each ancillary service, as applicable (each payor’s charge must clearly be associated with the name of the payor and plan).

CMS will monitor compliance with the new rules, which may come in the form of audits, complaint evaluations, or other mechanisms.  Hospitals that do not comply may have to submit a corrective action plan to CMS, and failure to do so could subject the hospital to civil monetary penalties of up to $300 a day.

Opponents to this final rule have argued that the information to be disclosed pursuant to this rule will not only be an extraordinarily expensive administrative burden –costing far more than the CMS estimate of $12,000 to come into compliance for the first year- but it will not provide much in the way of transparency to consumers, as the information would not directly correlate to consumers’ expected out of pocket costs. Other concerns raised relate to other types of payment arrangements that would not easily translate to the creation of a simple fee matrix.  These types of arrangements include, but are not limited to: risk-sharing arrangements, agreements such as managed care agreements that specify payment methodologies/algorithms rather than straight fees, and hierarchy fee provisions.

Consumer out of pocket cost, arguably one of the more significant reasons underlying the push to improve overall transparency in healthcare, is addressed in the transparency in coverage proposed rule CMS released simultaneously with the hospital transparency final rule. The proposed rule includes certain requirements for group health plans and health insurers, such as providing personalized out of pocket cost information for all covered health care items and services through an internet-based self-service tool or in hard copy upon request. However, since this is merely a proposed rule, it cannot be determined at this time if and when this rule will be finalized.

Although certain organizations have publicly stated their intention to commence legal action to oppose this final rule, hospitals should prepare to come into compliance effective January 1, 2021. For more information contact Danielle Sapega at dSapega@cozen.com