IPPS CDM Public Access Announcement Causing Confusion & Concerns: Part 1 New Medicare Rules

With minimal guidance in the IPPS Final Rule, hospital teams are wondering how they should address expanded Charge Master publication requirements regarding price transparency coming in January. Many have concerns about anti-competitive and public relations impacts. Others are more focused on the operational processes that need to be done during the busy fourth quarter.

In this H&A CDM Transparency Series we wanted to share what others are asking and provide some tips to help your team prepare. 

The Road to Price Transparency

CMS, Congress, advocacy groups, and the press have been raising concerns about excessive hospital charges for decades. As most know, price transparency has been a widely-suggested method for bringing about fair and reasonable rates for healthcare.

Transparency has grown in popularity as patient out of pocket costs have risen with the proliferation of insurance plans offering lower rates, yet high deductibles and bigger co-pay percentages. Multiple states have enacted legislation requiring annual submission of hospital Charge Master files as well as other reporting requirements. Several have implemented rate controls and mandatory reporting of projected annual increases.

Many believe patient engagement and competitive pressures will force providers to adopt more realistic pricing. However, industry insiders feel we’re a long way from seeing dramatic decreases in hospitals’ total billed charges. Surprisingly, many commercial insurance contract terms still utilize charge-based reimbursement methods for some portion of providers’ charges. Also, many hospitals are reluctant to change prices because of ongoing focus on gross charges for hospital budgets, payer contract terms, or for fear of impacting cost to charge ratios. Some industry opinions and studies on price transparency and publication of CDM files are shown in Appendix A.

Despite questions about the effectiveness of price transparency mandates, Medicare is moving forward with expanded Charge Master publication requirements in January. Because of the lack of specific guidance at the time of this writing, we think it’s helpful to read through the salient points in earlier Final Rule and ACA language.

IPPS 2019 Final Rule Requirements

In April 2018, expanded publication of hospital Charge Master prices was proposed within the Medicare Inpatient Prospective Payment System (IPPS) Proposed Rule. CMS and Health and Human Services leadership justified this expanded requirement as another way to “increase transparency and improve patient’s access to information”. The requirements expand existing ACA mandates for patient access to pricing data. For many hospitals, new CMS requirements reflect policies already in place in their state.

The Final Rule released August 2nd includes public comment, CMS responses, and final decisions on IPPS policy. Section X. “Requirements for Hospitals to Make Public a List of Their Standard Charges via the Internet” included discussion of expanded publication requirements for hospital Charge Master data. Unfortunately, not much detail was provided beyond earlier Proposed Rule language and ACA guidance.

The Hospital Inpatient Prospective Payment System (IPPS) Final Rule will take effect Oct. 1 for the 2019 fiscal year, but publication requirements for charge data are not mandated until January 1, 2019.

No further implementation requirements or data specifications were offered by CMS in 2019 IPPS Final Rule language beyond the following:

“…After consideration of the public comments we received, we currently do not believe there is a need to further update our guidelines beyond the updated guidelines that we previously announced would be effective January 1, 2019, which are that hospitals’ list of standard charges be made available to the public via the Internet in a machine-readable format and that hospitals update this information at least annually, or more often as appropriate…”

IPPS Proposed Rule guidance was that CMS would:

“…require hospitals to make available a list of their current standard charges via the Internet in a machine-readable format and to update this information at least annually, or more often as appropriate. This could be in the form of the chargemaster itself or another form of the hospital’s choice, as long as the information is in machine-readable format…”

Numerous organizations, individuals, and associations have weighed in on the complexities of hospital charging masterfiles, and have expressed doubts about the efficacy of the CMS requirements. On one hand, CDM prices are misleading in that they don’t reflect final negotiated rates or patients’ responsibility. On the other hand, Charge Master prices are the most reasonable data elements to publish without mandating patient cost estimator tools.

Many believe that broader national CDM publication requirements will not prove helpful to most patients, and will result in increased confusion and complaints. Others think that ‘shopping’ for certain services may grow in popularity and possibly influence hospital rates.

Regardless of the expected outcomes, Hospital teams need to be prepared for pricing challenges and take steps to quickly resolve incorrect prices prior to January.

As we await further CMS guidance, we’ve provided some considerations to help with your team’s plans for CDM publication.

[See other blogs in this H&A CDM Transparency series for input on what hospitals are asking, outcomes we are forecasting, and CMS’ expanded guidance.]