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Price Transparency Requirements for Hospitals to Make Standard Charges Public

Publications - Client Alert | November 19, 2019


On November 15, 2019, the Centers for Medicare and Medicaid Services (“CMS”) issued the following final rule: Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates, Price Transparency Requirements for Hospitals to Make Standard Charges Public (the “Price Transparency Final Rule”).   The Price Transparency Final Rule revises and finalizes certain requirements for hospitals proposed in the Price Transparency of Hospital Standard Charges proposed rule, published August 9, 2019,  including finalizing the requirement that hospitals create and publicize a list of their standard charges for the items and services that they provide, as well as disclosing the prices for certain additional “shoppable services.”  Such list must be made available in a single digital machine-readable file. 

The Price Transparency Final Rule will be codified at 45 C.F.R. Part 180 and is effective beginning January 1, 2021.

The Price Transparency Final Rule

The Price Transparency Final Rule applies to hospitals in any state, including critical access hospitals, inpatient psychiatric facilities, sole community hospitals, and inpatient rehabilitation facilities and any other type of institution licensed as a hospital.  At this time ambulatory surgical centers or other non-hospital sites-of-care from which consumers may seek healthcare items and services are not subject to this rule. 

Standard Charges

The Price Transparency Final Rule requires hospitals to make public the following “standard charges”: gross charges, payer-specific negotiated charges, the discounted cash price, the de-identified minimum negotiated charge and the de-identified maximum negotiated charge.

The Price Transparency Final Rule requires hospitals to post a list of their standard charges for all items and services provided by the hospital to a patient in connection with an inpatient admission or an outpatient department visit.  Additionally, hospitals must make available their standard charges for service packages, or bundles of services, negotiated with third party payers.  According to CMS, hospitals have the flexibility to display their standard charge for service packages that are unique to each of their payer-specific contracts.  

Machine-Readable File

The single machine-readable digital file must contain a description of each item or service, the corresponding gross charge, the corresponding payer-specific negotiated charge, any code used by the hospital for purposes of accounting or billing, and the revenue code, as applicable.  The file must be prominently displayed on a publicly-available webpage that clearly identifies the hospital location with which the file is associated, and makes the standard charge data easily accessible and digitally searchable.

Shoppable Services

Hospitals must post payer-specific negotiated charges, discounted cash prices, the de-identified minimum negotiated charge, and the de-identified maximum negotiated charge for at least 300 “shoppable services.” CMS will require hospitals to list 70 specific shoppable services that CMS will designate.  The hospital may choose the remaining 230 shoppable services it will post based on the hospital’s utilization or billing rate of the services in the past year.  Hospitals that offer Internet-based price estimator tools will be deemed to have met this requirement.

Non-Compliance with Price Transparency Final Rule

CMS plans to monitor hospitals for non-compliance with the requirements of the Price Transparency Final Rule.  CMS may address noncompliance by issuing a written warning notice, requesting a corrective action plan, and/or imposing civil monetary penalties of up to Three Hundred Dollars ($300.00) per day for each violation and publicizing such penalties on a CMS website.  

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If you have any questions related to this Client Alert or the Price Transparency Final Rule, please contact a member of the Kutak Rock National Healthcare Practice Group

Client Alert: Price Transparency Requirements for Hospitals to Make Standard Charges Public