Is Your Hospital Ready for the Price Transparency Rule?

Starting Jan. 1, 2021, CMS will require hospitals to publicly list their standard charges available in multiple consumer-friendly formats. The stated goal of the Hospital Price Transparency Rule under Section 2718(e) of the Public Health Service Act is to make the information available so individuals can make more informed financial decisions related to their healthcare. Hospitals failing to comply with the Price Transparency Rule will likely incur civil monetary penalties of $300 per day.

The Hospital Price Transparency Rule applies to all Medicare-enrolled and non-Medicare enrolled institutions that are licensed as hospitals, including critical access hospitals, specialty hospitals, and state owned or operated facilities. The regulations require hospitals to post their standard charges on a publicly-available website, including negotiated payment rates with insurers, for all services provided by the hospital. The rule also requires hospitals to provide similar price information for at least 300 “shoppable services,” which are services that can be scheduled by a healthcare consumer in advance. Hospitals must provide this information in a consumer friendly, searchable format.

For purposes of complying with the Hospital Price Transparency Final Rule, hospitals are required to publish “standard charges,” which means the regular rate established by the hospital for an item or service. This includes all payor-specific standard charges. There are five types of standard charges:

1. The gross charge (the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts).
2. The discounted cash price (the charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service).
3. The payor-specific negotiated charge (the charge that a hospital has negotiated with a third-party payor for an item or service).
4. The de-identified minimum negotiated charge (the lowest charge that a hospital has negotiated with all third-party payors for an item or service).
5. The de-identified maximum negotiated charge (the highest charge that a hospital has negotiated with all third-party payors for an item or service).

CMS defines “items and services” 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 a hospital has established a standard charge, such as supplies and procedures, room and board, services of employed physicians and non- physician practitioners.

For those that fail to comply, CMS may issue a warning notice, request a corrective action plan, impose a civil monetary penalty of $300 per day, and publicize the penalty on CMS’ website. Hospitals should carefully review CMS’ guidance to ensure compliance by the Jan. 1, 2021 deadline.