Effective on January 1, 2021, the Price Transparency Rule (the "Rule") requires all hospitals operating within the United States to make public a list of their standard charges for items and services via the Internet in a machine-readable format. Hospitals must also provide prices for a list of 300 shoppable services that must be made publicly available in a searchable, consumer-friendly format. This requirement is being enforced with the intent to enable healthcare consumers to make more informed decisions based on cost, increase market competition, and ultimately drive down the cost of healthcare services, making them more affordable for all patients. Many hospitals are spending time now to determine which "items and services" require price disclosure under the Rule, and some have found that the Rule does not provide sufficient guidance in all situations.
"Hospitals" must disclose standard charges for "items and services"
For purposes of the Rule, a "hospital" is defined as an institution in any State1 in which State or applicable local law provides for the licensing of hospitals and that is: (1) licensed as a hospital pursuant to such law; or (2) approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing. In addition to applying to all Medicare-enrolled hospitals, the definition also captures all institutions that are operating as hospitals under State or local law, but might not be considered hospitals for purposes of Medicare participation.2 The requirement does not apply to governmental hospitals, including Indian Health Service facilities, Veterans Affairs facilities, and Department of Defense Military Treatment Facilities. It also does not apply to entities such as ambulatory surgical centers or other nonhospital sites-of-care from which consumers may seek healthcare items and services. Each hospital location operating under a single hospital license (or approval) that has a different set of standard charges than the other location(s) operating under the same hospital license (or approval) must separately make public the standard charges applicable to that location.
The "items and services" that hospitals are required to list prices for include all items and services (both individual and packaged) provided by the 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 of these items and services include, but are not limited to, supplies, procedures, room and board, use of the facility and other items (generally described as facility fees), services of employed physicians and non-physician practitioners (generally reflected as professional charges), and any other items or services for which a hospital has established a charge.
Hospitals must make public their standard charges in two ways: (1) A comprehensive machine-readable file that makes public all standard charge information for all hospital items and services, and (2) a consumer-friendly display of common ''shoppable'' services derived from the machine-readable file. Examples of machine-readable formats include, but are not limited to, .XML, JSON and .CSV formats. PDF is not considered a machine-readable format.
"Shoppable services" mean a service that can be scheduled by a healthcare consumer in advance. When the shoppable service is customarily accompanied by the provision of ancillary services, the hospital must present the charge for the primary shoppable service along with charges for ancillary services.3 The Rule requires hospitals to post at least 300 shoppable services.4 The Rule finalizes a list of 70 common shoppable services for which all hospitals must post charge and price data by payer.5 For the remaining 230 shoppable services, each hospital will provide a list based on the utilization or billing rate of the services in the past year.6 CMS will permit hospitals to make appropriate substitutions and cross-walks, as necessary, to allow them to display their standard charges for the shoppable services across all their third-party payers.
The Rule requires that the machine-readable file of hospital items and services and the consumer-friendly display of common shoppable services include the following information to ensure that the public will be able to compare standard charges for the same or similar items and services provided by different hospitals:
i. A description of each item or service, or each shoppable service.7
a. The consumer-friendly display must include an indicator when
one or more of the CMS-specified shoppable services are not offered
by the hospital.
b. The consumer-friendly display must include the location at which the shoppable service is provided.
ii. The following "standard charges" that apply to each individual item or service (including charges for both individual items and services as well as service packages), or shoppable services, when provided in the hospital inpatient setting and outpatient department setting.
a. gross charges8 for the machine-readable file
b. payer-specific negotiated charges9 for the machine-readable file and consumer-friendly list;
c. discounted cash price10 for the machine-readable file and consumer-friendly list;
d. de-identified minimum negotiated charge11 for the machine-readable file and consumer-friendly list; and
e. de-identified maximum negotiated charge12 for the machine-readable file and consumer-friendly list.
iii. Any code used by the hospital for purposes of accounting or billing for the item or service, including, but not limited to, the CPT code, HCPCS code, DRG, NDC, or other common payer identifier.
Hospitals must list the comprehensive machine-readable file of standard charges and the consumer-friendly display of common shoppable services on a publicly-available website, displayed prominently, and clearly identifying the hospital location with which the information is associated.13 Hospitals must ensure the standard charge data is easily accessible and without barriers (i.e., the data can be accessed free of charge, without having to establish a user account or password, and without having to submit personally identifying information). Hospitals must make public and update their files at least every 12 months, and the date of the update must be clearly indicated either within the file or otherwise clearly associated with the file.
If CMS concludes that a hospital is noncompliant with one or more of the requirements of the Rule, CMS may take any of the following actions, which generally, but not necessarily, will occur in the following order:
i. Provide a written warning notice to the hospital of the specific violation(s).
ii. Request a corrective action plan from the hospital if its noncompliance constitutes a material violation of one or more requirements. A material violation may include, but is not limited to, the hospital's failure to make public its standard charges in the form and manner required under the Rule.
iii. Impose a civil monetary penalty on the hospital and publicize the penalty on a CMS website if the hospital fails to respond to CMS' request to submit a corrective action plan or comply with the requirements of a corrective action plan.
In preparation for January 1, 2021, hospitals have been analyzing how to determine what falls into the definition of "items and services." For example, hospitals are deciding how to handle affiliated entities, like physician practices. The preamble of the Rule includes commentary on how to handle some of these situations. However, there are gaps in the commentary and some arrangements are not covered in the preamble.
Some hospitals are hoping for relief by way of a legislative or judicial fix-although there has already been an unsuccessful challenge to the Rule by the American Hospital Association and others. Given the upcoming effective date and the potential penalties for noncompliance, hospitals should use this time to ensure that they can comply with the Rule.
1. State includes each of the several States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
2. The definition includes critical access hospitals (CAHs), inpatient psychiatric facilities (IPFs), sole community hospitals (SCHs), and inpatient rehabilitation facilities (IRFs), as well as any other type of institution, so long as it is licensed as a hospital (or otherwise approved) as meeting hospital licensing standards.
3. Ancillary items and services may include, among other things, laboratory, radiology, drugs, delivery room (including maternity labor room), operating room (including postanesthesia and postoperative recovery rooms), therapy services (physical, speech, occupational), hospital fees, room and board charges, and charges for employed professional services, and other special items and services for which charges are customarily made in addition to a routine service charge.
4. HHS anticipates that this number of services will increase over time.
5. If a hospital does not provide one or more of the 70 common shoppable services, the hospital is to indicate "NA" in the file for the payer in question (or all payers, if applicable) and select an additional shoppable service to bring the total list to at least 300.
6. In cases where a hospital does not provide 300 services that could be scheduled by consumers in advance, the hospital must list as many of the services it provides that could be scheduled by patients in advance.
7. Including both individual items and services and service packages.
8. A gross charge is the charge for an individual item or service that is reflected on a hospital's CDM (or outside the charge description master in the case of pharmaceuticals), absent any discounts.
9. The payer-specific negotiated charge is defined as all charges that the hospital has negotiated with third-party payers for an item or service. Each list of payer specific charges must be clearly associated with the name of the third party payer.
10. The discounted cash price is defined as the standard charge offered by the hospital to a group of individuals who are self-pay. The "discounted cash price" would reflect the discounted rate published by the hospital, unrelated to any charity care or bill forgiveness that a hospital may choose or be required to apply to a particular individual's bill.
11. The de-identified minimum negotiated charge is defined as the lowest charge a hospital has negotiated with all third-party payers for an item or service.
12. The de-identified maximum negotiated charge is defined as the highest charge that a hospital has negotiated with all third-party payers for an item or service.
13. Hospitals that offer Internet-based price estimator tools are deemed to have met the requirement to post charges in a consumer-friendly format. The price estimator tool must follow specifically listed qualifications in the Rule.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.