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CMS Ratchets up Efforts on Hospital Pricing Transparency

August 30, 2019

A new proposal by the Centers for Medicare and Medicaid Services may give patients a better idea of costs they will incur for hospital services.

On July 29, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule addressing hospital pricing transparency issues that follows directives in President Trump’s executive order titled “Improving Price and Quality Transparency in American Healthcare to Put Patients First.” The purpose of Trump’s executive order and the proposed rule is to make prices for items and services provided by all hospitals in the United States more transparent for patients so that patients can better make informed decisions about their care.

The proposed rule implements Section 2718(e) of the Public Health Service Act and expands on prior agency guidance that required hospitals to make public their standard charges upon request starting in 2015 and subsequently online in a machine-readable format starting in 2019. Section 2718(e) requires each hospital operating within the United States to establish and make public a yearly list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under Section 1886(d)(4) of the Social Security Act.

In its proposed rule, CMS recommends the following:

  1. Definitions of “hospital,” “standard charges,” and “items and services”;
  2. Requirements for making public a machine-readable file online that includes all standard charges for all hospital items and services;
  3. Requirements for making public payor-specific negotiated charges for a limited set of “shoppable” services that are displayed and packaged in a consumer-friendly manner; and
  4. Monitoring for hospital non-compliance, enforcement actions to address hospital non‑compliance (including issuing a warning notice, requesting a corrective action plan and imposing civil monetary penalties) and a process for hospitals to appeal penalties.

Definitions:

  • “Hospital” is an institution in any state in which state or applicable local law provides for the licensing of hospitals and which is licensed as a hospital pursuant to such law, or was approved by the agency of such state or locality responsible for licensing hospitals as meeting the standards established for such licensing. This proposal would include all Medicare-enrolled institutions that are licensed as hospitals (or approved as meeting licensing requirements) as well as any non‑Medicare enrolled institutions that are licensed as a hospital (or approved as meeting licensing requirements).
  • “Standard charges” means the hospital’s gross charge and payor-specific negotiated charge for an item or service. Under the proposed rule, hospitals would be required to make public all hospital standard charges for all items and services provided by the hospital in a digital and machine-readable file posted online. Hospitals would also have to make public the payor-specific negotiated charge for a limited set of “shoppable” services that are displayed and packaged in a consumer‑friendly manner.
  • “Items and services” includes all hospital items and services 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 charge.

Proposed Requirements for Making Public All Standard Charges for Items and Services

CMS proposes that hospitals “make public” their standard charges, which CMS interprets as publishing standard charges online in a machine-readable format and, for “shoppable services,” in a consumer-friendly display. CMS defines a “shoppable service” as a service that can be scheduled at the hospital by a healthcare consumer in advance. CMS believes that these proposed requirements will allow healthcare consumers to make “apples-to-apples” comparisons of payor‑specific negotiated charges across healthcare settings.

CMS specifically proposes the following:

  • Display payor-specific negotiated charges for at least 300 shoppable services, including 70 CMS-selected shoppable services and 230 hospital-selected shoppable services. If a hospital does not provide one or more of the 70 CMS‑selected shoppable services, the hospital must select additional shoppable services such that the total number of shoppable services is at least 300.
  • Include charges for services that the hospital customarily provides in conjunction with the primary service that is identified by a common billing code, including, but not limited to, CPT, HCPCS or DRG.
  • The charge information must be displayed prominently on a publicly available webpage, must clearly identify the hospital and must be easily accessible and without barriers, as well as searchable.
  • This pricing information must be updated at least annually.

Monitoring and Enforcement

CMS proposes rules for monitoring and enforcing hospitals’ compliance with these pricing transparency requirements. CMS would engage in monitoring and enforcement by evaluating complaints made by individuals or entities to CMS, reviewing individuals’ or entities’ analysis of non‑compliance, and auditing hospitals’ websites. If CMS determines that a hospital is non‑compliant, CMS may assess a monetary penalty against the hospital after providing the hospital with a warning notice, or after requesting a corrective action plan from the hospital if its non-compliance constitutes a material violation of one or more requirements. If a hospital fails to submit a corrective action plan or comply with the requirements of a corrective action plan, CMS may impose a civil money penalty on the hospital not in excess of $300 per day, and may publicize these penalties assessed against the hospital on a CMS website. Hospitals will have the opportunity to appeal such civil money penalties by requesting a hearing before an administrative law judge.

Providers may submit comments to CMS on this proposed rule by no later than September 17, 2019.

The proposed rule is available in its entirety through the Federal Registrar. If you have any questions about this proposed rule, please contact one of the Phelps Dunbar LLP’s healthcare attorneys.