Hospital Price Transparency is Coming
November 30, 2020
By: Alaina N. Crislip, Lindsay D. Petrosky, and
Three separate price transparency rules have been published or go into effect soon. Hospitals and insurers need to prepare for compliance and all of the legal issues that will arise during implementation of the rules.
The Hospital Price Transparency Rule
Beginning January 1, 2021, the Hospital Price Transparency Rule (“Hospital Transparency Rule”) goes into effect, requiring all hospitals, as defined in the Hospital Transparency Rule, in the United States to publish a list of current standard charges, including all hospital items and services. 45 C.F.R. § 180.1 The list must be available online in a machine-readable format (e.g. XML and CSV) either in a chargemaster or another form of the hospital’s choice. The Hospital Transparency Rule also requires hospitals to publicly display a list of 300 shoppable services in a consumer-friendly format. The Centers for Medicare and Medicaid Services (“CMS”) designates 70 of these services. Hospitals may use a price estimator tool to meet the shoppable services listing requirement.
Once published, hospitals must annually update the publicly posted information. Under the regulatory framework, CMS monitors compliance. Violations can incur a daily penalty up to a maximum of $300 a day. To encourage compliance, CMS will publish a list of noncompliant hospitals, including penalties assessed.2
There are no exemptions from the Hospital Transparency Rule though there are ongoing challenges to its implementation.3
Key Definitions under the Hospital Transparency Rule:
- ”Hospital” is defined as all Medicare enrolled and non-Medicare enrolled institutions that meet hospital licensing requirements.
- “Standard charges” include: (1) gross charges; (2) discounted cash price; (3) payer-specific negotiated charges; (4) de-identified minimum negotiated charges; and (5) de-identified maximum negotiated charges.
The Insurer Price Transparency Rule
The Insurer Price Transparency Rule (“Insurer Transparency Rule”), published on October 29, 2020, requires most health plans and health insurers to provide easy-to-understand information on enrollee cost-sharing for healthcare services. Health plans and health insurers must disclose the rates actually paid to healthcare providers for specific services. These Insurer Transparency Rule requirements go into effect for most non-grandfathered plans or health insurance issuers offering non-grandfathered health insurance coverage beginning on or after January 1, 2022.4 Health plans and issuers must make cost-sharing information available for 500 shoppable items or services for plan or policy years beginning on or after January 1, 2023, and must make cost-sharing information available for all other items and services for plan or policy years beginning on or after January 1, 2024.
The Inpatient Prospective Payment Systems Final Rule for 2021
The hospital Inpatient Prospective Payment Systems (“IPPS”) Final Rule for 2021, issued September 2, 2020, requires hospitals to: (1) report median payer-specific negotiated charges for Medicare Advantage5 (MA) health plans; (2) include negotiated charge data on Medicare costs reports beginning with cost reporting periods ending January 1, 2021; and (3) utilize fiscal year 2024 to set the Medicare Severity-Diagnosis Related Group (MS-DRG) relative weights used to determine Medicare inpatient hospital rates.
Contact your JK Health Law Attorney with questions on these final rules.
1 See Final Rule issued November 15, 2019, available at: https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-24931.pdf.
2 See Executive Order issued on September 24, 2020, available at: https://www.whitehouse.gov/presidential-actions/executive-order-america-first-healthcare-plan/.
3 Id. There is currently an appeal pending in the District of Columbia Court of Appeals by the American Hospital Association (AHA). Oral arguments were heard on October 15, 2020. The AHA is seeking to block the price transparency rule on the grounds that the rule is highly burdensome and violates the First Amendment. The underlying court found in favor of CMS on all arguments. It is unlikely that a decision on appeal will be issued prior to the Hospital Price Transparency Rule’s compliance deadline of January 1, 2021.
4 Grandfathered plans are those plans in existence as of March 23, 2010, the date of enactment of the Patient Protection and Affordable Care Act (“PPACA”), and that are only subject to certain provisions as long as such plans maintain their grandfathered status.
5 The payer-specific negotiated charges used by hospitals to calculate these medians would be the payer-specific negotiated charges for services offerings hospitals will be required to make public under the Hospital Transparency Rule.