H&A Comments on Hospital Price Transparency Final Rule

Price Transparency Final Rule Breaking News

Price transparency mandates will take on new and more extensive requirements based on a Final Rule published within the Federal Register on 11/16/19. Despite many comments from the industry regarding the rule’s implementation challenges and administrative burdens, CMS’ requirements remain closely aligned with the Proposed Rule and the Executive Order on Price Transparency. Our comments on various sections of the CMS Press Release are included in this article.

Federal Register Document Release

On Friday, 11/15/19, HHS released two press releases and pre-released two rules for price transparency. Later on 11/16 unpublished display copy versions were added to the Federal Register. The formal publication of both rules is scheduled for the end of November – one Final Rule for hospitals and another Proposed Rule for health plans.

This article summarizes the hospital rule by duplicating the CMS Press Release text and adding our comments

CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements (CMS-1717-F2)

On November 15, 2019, the Centers for Medicare & Medicaid Services (CMS) finalized policies that follow directives in President Trump’s Executive Order, entitled “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” that lay the foundation for a patient-driven healthcare system by making prices for items and services provided by all hospitals in the United States more transparent for patients so that they can be more informed about what they might pay for hospital items and services.

The policies in the final rule will further advance the agency’s commitment to increasing price transparency. It includes requirements that would apply to each hospital operating in the United States. This fact sheet discusses the provisions of the final rule (CMS-1717-F2), which can be downloaded from the Federal Register at: https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf.

H&A comment: Upon an initial review of the Final Rule, we have noted that CMS has implemented most of the earlier Proposed Rule guidance. However, the Rule does provide some modifications as well as more clarification, so detailed review of the actual Final Rule language is suggested. On a bright note, CMS has extended effective date to January 1, 2021 rather than the proposed January 1, 2020 date giving hospitals over a year to develop their action plans. We suggest that hospital teams review the Final Rule language as they develop their Price Transparency action plans. This will help avert false starts and ensure that strategically-developed methodologies fully comply with CMS’ mandates. The Final Rule’s 324 pages (display copy) are relatively easy to review and helpful for understanding more about this monumental regulatory requirement.

Increasing Price Transparency of Hospital Standard Charges

On June 24, 2019, the President signed an Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First noting that it is the policy of the Federal Government to increase the availability of meaningful price and quality information for patients.  The Executive Order directed the Secretary of Health and Human Services (HHS) to propose a regulation, consistent with applicable law, to require hospitals to publicly post standard charge information. We believe healthcare markets work more efficiently and provide consumers with higher-value healthcare if we promote policies that encourage choice and competition. In short, as articulated by the CMS Administrator, we believe that transparency in health care pricing is “critical to enabling patients to become active consumers so that they can lead the drive towards value.”

This final rule implements Section 2718(e) of the Public Health Service Act and improves upon prior agency guidance that required hospitals to make public their standard charges upon request starting in 2015 (79 FR 50146) and subsequently online in a machine-readable format starting in 2019 (83 FR 41144). Section 2718(e) requires each hospital operating within the United States to establish (and update) 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 the final rule, we finalize 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 (including gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges) for all hospital items and services; (3) requirements for making public discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges for at least 300 ‘shoppable’ services (70 CMS-specified and 230 hospital-selected) that are displayed and packaged in a consumer-friendly manner; and (4) monitoring for hospital noncompliance and actions to address hospital noncompliance (including issuing a warning notice, requesting a corrective action plan, and imposing civil monetary penalties), and a process for hospitals to appeal these penalties.  CMS is finalizing that these policies would be effective January 1, 2021.

Definition of ‘Hospital’

CMS is finalizing the definition of ‘hospital’ to mean an institution in any State in which State or applicable local law provides for the licensing of hospitals, that is licensed as a hospital pursuant to such law, or is approved by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing. For purposes of this definition, a State includes each of the several States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.  This includes all Medicare-enrolled institutions that are licensed as hospitals (or approved as meeting licensing requirements) as well any non-Medicare enrolled institutions that are licensed as a hospital (or approved as meeting licensing requirements). Federally owned or operated hospitals (for example, hospitals operated by an Indian Health Program, the U.S. Department of Veterans Affairs, or the U.S. Department of Defense) that do not treat the general public, except for emergency services, and whose rates are not subject to negotiation, are deemed to be in compliance with the requirements for making public standard charges because their charges for hospital provided services are publicized to their patients (for example, through the Federal Register).

H&A comment: Despite that these regulatory requirements are listed under “OPPS/ASC” payment systems, price publication mandates will apply to other hospitals paid under other reimbursement methodologies. Review the Final Rule section referenced above to confirm whether your organization is impacted. CAH-reimbursed hospitals should be alerted that, as in 2019, they are included in the applicable hospitals.

Definition of ‘Standard Charges’

CMS is finalizing the definition of ‘standard charges’ to include the following:

  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 payer-specific negotiated charge (the charge that a hospital has negotiated with a third-party payer for an item or service),
  4. The de-identified minimum negotiated charges (the lowest charge that a hospital has negotiated with all third-party payers for an item or service).
  5. The de-identified maximum negotiated charges (the highest charge that a hospital has negotiated with all third-party payers for an item or service).

H&A comment: Many individuals and organizations provided comments to the proposed rule on the confusion that had been created with CMS’ use of the “Standard Charges” verbiage.

Some commenters were hoping that minimum and maximum prices might suffice without payer-specific negotiated rates. Instead, CMS expanded its requirements to include these as well as the payer-specific rates. De-identified minimum and maximum are defined as the lowest and the highest charges that a hospital has negotiated with all third party payers for an item or service. Median charges were dropped from the proposed rule price display requirements.

CMS states that hospitals must consider “all third party payer plans and products for each hospital item or service” when determining whether a rate should be included in the distribution analysis. CMS also clarifies: “if an item or service is not negotiated, it should not be included.” This answered some of the questions that arose in the Listening Session from individuals asking about publication of National, State, and other reimbursement rates rather than what it considers “negotiated rates”.

Hospital teams will want to read Final Rule language to ensure correct interpretation of CMS’ definitions for each of the mandated charge types. It should be noted that the five charge types noted above differ from the Proposed Rule. Note that there is mention in the Final Rule language that “…if a court were to invalidate the inclusion of an individual definition, the remaining definitions would remain defined as types of standard charges.” This is likely referring to legal action and court decisions invalidating parts of this rule.

Definition of Hospital ‘Items and Services’

CMS is finalizing the proposal to define hospital “items and services” to mean 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 the hospital has established a standard charge.  Examples of these items and services would be supplies, procedures, room and board, use of the facility and other items (generally described as facilities 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 standard charge.

H&A comment: The detailed language within the above-referenced section clearly articulates CMS’ intent for all charge items to be displayed whether from Patient Accounting masterfiles (e.g., CDM, EAP, etc.) or other ancillary masterfiles (Pharmacy modules, Materials Management, interfaced systems, etc.). Developing a single file to comply with the CMS rule will require hospitals to define their organization’s applicable data elements, and confirm the source files or source applications from which they are housed. Not only will formatting, populating, and designing the public view file take time and effort, but documenting the methodology will be equally important for subsequent annual file updates.

Requirements for Making Public All Standard Charges for All Items and Services in a Machine-Readable Format

For each hospital location, hospitals must make public all their standard changes (including gross charges, payer-specific negotiated charges, de-identified minimum and maximum negotiated charges, and discounted cash prices) for all items and services online in a single digital file in a machine-readable format. 

H&A comment: We suspect CMS’s reference to ‘online in a single digital file’ and listing various data formats will prompt more industry questions.

CMS reiterated it’s 2019 FAQ responses with the definition of “machine-readable” format in this text: “We are finalizing our definition of machine-readable format as a digital representation of data or information in a file that can be imported or read into a computer system for further processing. Examples of machine-readable formats include, but are not limited to, .XML, .JSON and .CSV formats. A PDF would not meet this definition because the data contained within the PDF file cannot be easily extracted without further processing or formatting.” CMS did determine that the alternative of a hard copy would not be required.

Specifically, hospitals must do the following:

  • Include a description of each item or service (including both individual items and services and service packages) and any code (for example, HCPCS codes) used by the hospital for purposes of accounting or billing.

H&A comment: We advise review of the full language of this section to ensure a complete display file. CMS notes that it is finalizing its proposed display of: “standard charges, service description, and code” and explains all of this in the Rule.

Service Description –

Regarding charge descriptions, it should be noted that CMS is not advising hospitals to modify or change chargemaster descriptions for the purposes of the public view display file. While there is discussion of “plain-language description” guidelines in the separate shoppable services section, Don’t mistake CMS’ instructions as a requirement to “dummy down” this critical data element. Chargemaster descriptions serve internal purposes and require specificity and clinical or technical details that the general public may not fully-understand. (CMS references the federal plain language guidelines here: Plain Language Guidelines).

Also note that even if your team prefers to display for public view the AMA CPT short descriptions that these are typically insufficient for Charge Master data integrity.  (See our two-article series on improving charge descriptions for helpful tips at www.chargeassist.com .

Codes-

We suspect there may be industry confusion about the codes to be reported. CMS clarified in the Final Rule that it only requires the code where applicable and will allow “…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.” CMS notes that for the public view file, individual charge items included in the representative DRG or code is not required for this portion of the mandate.

Since publication of the CPT is new, it should be noted that AMA released guidance in 2019 allowing publication of its CPT-4 licensed codes if codes are licensed in the patient accounting application. Otherwise, licensing will be required. Here is the AMA guidance: https://www.ama-assn.org/practice-management/cpt/cpt-licensing-health-care-delivery-organizations .

In points of clarification, CMS states that it is not asking hospitals to assign codes to charge items that currently have no codes within masterfiles. Additionally, CMS does not specifically state that it requires one type of code over another (for example NDC codes rather than HCPCS codes, or CMS-mandated HCPCS override codes over CPT-4 codes) . It is curious that CMS doesn’t mention billing multipliers or modifiers that are populated in some software vendors’ charging masterfiles. CMS also decided that Revenue Codes would not be required.

There is a sample table (Table 1) that shows an optional layout. We suspect the sample table may create more questions and feel that a better example is needed.

  • Display the file prominently and clearly identify the hospital location with which the standard charges information is associated on a publicly available website using a CMS-specified naming convention. 

H&A comment: In the Final Rule CMS clarifies its expectations that the public charge data be in a “single file” and notes that it assumes that machine-readable is inherently searchable. In one section CMS talks about various ‘tabs’ in XML format as examples of how data may be displayed for various negotiated payer and plan rates. Also, CMS clarifies that it doesn’t expect providers to list separate charge components of “service packages” .

CMS finalized a specific naming convention for the public view file. They state this is “to more easily allow localization of the comprehensive machine-readable file that contains all hospital standard charge information.” As stipulated in the Final Rule, the naming convention that must be used for the file is:

<ein>_<hospitalname>_standardcharges.[json|xml|csv]

in which the EIN is the Employer Identification Number of the hospital, followed by the hospital name, followed by “standardcharges” followed by the hospital’s chosen file format.
We agree with the benefits of using standardized file name but hope for even more clarity in required website location of files. CMS notes that it will permit hospitals to utilize a public-facing website or web page for the “comprehensive machine-readable list of all standard charges.”

  • Ensure the data is easily accessible, without barriers, including ensuring the data is accessible free of charge, does not require a user to establish an account or password or submit personal identifying information (PII), and is digitally searchable.

H&A comment: Several ‘barriers’ prompting CMS’s access requirements are cited in the rule, and reflective of H&A’s auditors’ findings noted in our 2019 survey. We found challenges such as 1) requiring review of an informational movie prior to seeing pricing data, 2) log-in requirements, 3 ) statements dismissing the value of CMS’ publication requirements, 4) different naming conventions of the public view chargemaster, and 5) deeply-embedded and illogical locations of chargemaster public file locations in hospital/health system websites.

Understanding CMS’ expectations for data formats and display was a big challenge in preparing for 2019. Most likely, there will be further questions from the industry about display and formatting of the public view data.

  • Update the data at least annually and clearly indicate the date of the last update (either within the file or otherwise clearly associated with the file).

H&A comment: CMS clarified that ‘at least annually’ means the data is updated at least once in a 12-month period with separate files applicable to each hospital location.

In the summary portion of this section, CMS notes that it believes that future standardization of the display data or more “open” Application Programming Interface(API) standards would be beneficial, and refers to the 2020 rule’s requirements as an “initial step.” In other words, more requirements may be on the horizon.

Requirements for Displaying Shoppable Services in a Consumer-Friendly Manner

H&A comment: The finalized rule language for Shoppable Services follows closely with the Proposed Rule aside from several needed changes, definitions, and clarifications. The good news is that CMS is going to allow price transparency tools to satisfy the “shoppable services” mandate. Please note that our comments within this section are based on a first pass through this section and are not comprehensive.

Hospitals must make public standard charges for at least 300 “shoppable services” (including 70 CMS-specified and 230 hospital-selected) the hospital provides in a consumer?friendly manner. We define ‘shoppable service’ to mean a service that can be scheduled by a health care consumer in advance. CMS believes these requirements will allow healthcare consumers to make apples-to-apples comparisons of payer-specific negotiated charges across healthcare settings.

H&A comment: The CMS “Shoppable Services” sample selection will be an important first step for organizations. The rather-general CMS definition above with perhaps more of your own organization’s selection criteria will need to be defined. Selection criteria should be incorporated into price transparency policies to streamline future data maintenance.

Specifically, hospitals must do the following:

  • Display payer-specific negotiated charges, de-identified minimum, de-identified maximum negotiated charges, and discounted cash prices for at least 300 shoppable services, including 70 CMS-specified shoppable services and 230 hospital-selected shoppable services.  If a hospital does not provide one or more of the 70 CMS-specified shoppable services, the hospital must select additional shoppable services such that the total number of shoppable services is at least 300.  If a hospital does not provide 300 shoppable services, the hospital must list as many shoppable services as they provide.
  • Include a plain-language description of each shoppable service, an indicator when one or more of the CMS-specified shoppable services are not offered by the hospital, and the location at which the shoppable service is provided, including whether the standard charges for the shoppable service applies at that location to the provision of that shoppable service in the inpatient setting, the outpatient department setting, or both.

H&A comment: We suspect CMS’s use of the term “Plain-Language” in this section will create questions from the industry in 2020 as hospitals prepare their Shoppable Services lists. We advise against over-simplifying descriptions to the point of losing key clinical terms that differentiate one service from another. CMS provides additional commentary on “plain language” within the Final Rule.

  • Select such services based on the utilization or billing rate of the services.  In other words, the shoppable services selected for display by the hospital should be commonly provided to the hospital’s patient population.
  • Include charges for services that the hospital customarily provides in conjunction with the primary service that is identified by a common billing code (e.g., Healthcare Common Procedure Coding System (HCPCS) codes).
  • Make sure that the charge information is displayed prominently on a publicly available webpage, and clearly identifies the hospital location with which the standard charge information is associated.
  • Ensure the data is easily accessible, without barriers, including ensuring the data is accessible free of charge, does not require a user to register, establish an account or password or submit PII, and is searchable by service description, billing code, and payer.
  • Update the information at least annually and clearly indicate the date of the last update.

Additionally, CMS will deem a hospital as having met the requirements for making public standard charges for 300 shoppable services in a consumer-friendly manner if the hospital maintains an internet-based price estimator tool that meets the following requirements:

  • Provides estimates for as many of the 70 CMS-specified shoppable services that are provided by the hospital, and as many additional hospital-selected shoppable services as is necessary for a combined total of at least 300 shoppable services.
  • Allows health care consumers to, at the time they use the tool, obtain an estimate of the amount they will be obligated to pay for the shoppable service by the hospital.
  • Is prominently displayed on the hospital’s website and accessible to the public without charge and without having to register or establish a user account or password.

H&A comment: The Final Rule’s Shoppable Services section provides significant details on the choice of services and service packages as well as options for their display. CMS notes that it is deliberately not mandating any specific sample selection methods. Likewise, CMS’ final decision to allow the use of price estimator tools is good news for hospitals already using such tools. However, many hospitals do not currently use commercial price estimator software and have concerns about such software applications ranging from cost, implementation efforts, functionality, and reliability.

Monitoring and Enforcement

Under this rule, CMS has the authority to monitor hospital compliance with Section 2718(e) of the Public Health Service Act, by evaluating complaints made by individuals or entities to CMS, reviewing individuals’ or entities’ analysis of noncompliance, and auditing hospitals’ websites. Should CMS conclude a hospital is noncompliant with one or more of the requirements to make public standard charges, CMS may assess a monetary penalty after providing a warning notice to the hospital, or after requesting a corrective action plan from the hospital if its noncompliance constitutes a material violation of one or more requirements. 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, CMS may impose a civil monetary penalty on the hospital, not in excess of $300 per day, and publicize the penalty on a CMS website. The rule also establishes an appeals process for hospitals to request a hearing before an Administrative Law Judge (ALJ) of the civil monetary penalty. Under this process, the Administrator of CMS, at his or her discretion, may review in whole or in part the ALJ’s decision.

H&A comment: It’s clear that CMS was steadfast in sticking with their proposed Price Transparency plans to implement the Executive Order mandates and develop various methods encouraging compliance. We suspect the CMP aspect of this rule will case Price Transparency to be discussed in compliance circles as well as in closed-door meetings with legal counsel.

In our opinion, hospitals should be prepared for far more time, effort, and challenges than CMS calculates. Aside from the public display of charges (discussed in the earlier part of this article), the Shoppable Services requirements will require time, strategic planning, and new processes. While the market may disagree with many of Medicare’s stated viewpoints, the Public Comment process did little to change much within this important regulatory release.

Effective Date

In response to comments, CMS is extending the effective date to January 1, 2021 to ensure hospital compliance with these regulations.

H&A comment: The Final Rule clarifies CMS’ intent and mandates quite well. CMS also notes where flexibility has been granted which should eliminate some of the types of misinformation that spread in 2019.

We do expect market questions and great concern as providers read the rule and plan their approach. However, unlike 2019, we anticipate a more engaged industry, more interactive CMS communication and improved market direction related to the 2021 expanded requirements.

In summary, we expect significant buzz on the Final Rule mandates with experts and providers alike weighing in. Likewise, we will provide more details in future communications as our team, and our network of consulting peers, work with hospitals across the country on the new mandates.

Here are the URLs for CMS Rules and Fact sheets:

Fact sheet on CY 2020 OPPS & ASC Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule (CMS-1717-F2: https://www.cms.gov/newsroom/fact-sheets/cy-2020-hospital-outpatient-prospective-payment-system-opps-policy-changes-hospital-price

Fact sheet on the Transparency in Coverage Proposed Rule (CMS-9915-P), (the payer requirements rule): https://www.cms.gov/newsroom/fact-sheets/transparency-coverage-proposed-rule-cms-9915-p

Hospital Price Transparency Final Rule  –  CY 2020 OPPS & ASC Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule

Health Plan Price Transparency Proposed Rule – Transparency in Coverage Proposed Rule (CMS-9915-P)

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