How to Prepare for the New Hospital Price Transparency Rule

On November 15, CMS finalized President Trump’s executive order on healthcare price transparency. Starting January 1, 2021,  U.S. hospitals must post pricing for the items and services they provide. So what does this mean for healthcare providers? This is the first in a three-part series that will provide some background on what information needs to be publically posted, how to plan for price transparency and use it to your advantage.

While this mandate is a year away, it’s important to plan and prepare now. With the rise of high-deductible and co-insurance plans, consumers are already shopping regardless of this rule. Embrace this move towards consumerism and become an early adopter. By doing so, this will allow you to better position yourself in this consumer-centric world and possibly even expand your market. So let’s dig in and get started.

What pricing information is required to be made available?

Standard Charges 

Hospitals will be required to post online a machine-readable file that includes all standard charges for items and services that could be provided by the hospital to a patient as an inpatient admission or via an outpatient visit. Examples can include supplies and procedures, room and board, facilities fees,  professional charges and any other items or services for which a hospital has established a standard charge. CMS’s definition of standard charges should include the following:

• Gross Charges: The charge for an item or service that is reflected on the hospital’s chargemaster. This amount should not include any discounts.
• Payer-Specific Negotiated Charges: The negotiated rate the hospital has with each health plan and insurance payer for an item or service.
• Discounted Cash Prices: The charge that applies to an individual who pays out-of-pocket for a hospital item or service
• De-identified Minimum Negotiated Charges: The lowest charge that a hospital has negotiated with all third-party payers for an item or service.
• De-identified Maximum Negotiated Charges: The highest charge that a hospital has negotiated with all third-party payers for an item or service.

Shoppable Services 

Hospitals will also be required to make public their payer-specific negotiated charges for 300 shoppable services in a consumer-friendly format. CMS defines a “shoppable service” as a service that can be scheduled directly and in advance by a consumer. This allows health care consumers to make apples-to-apples comparisons of common shoppable hospital services across health care settings.

Shoppable services can include:

• evaluation and management services for outpatient visits
• laboratory and pathology services
• radiology services
• medicine and surgery services

CMS has specified 70 of the shoppable services that a hospital is required to post online with the remaining 230 shoppable services hospital selected. Hospitals can make coding substitutions and cross-walks as necessary to be able to display their standard charges for the 70 CMS-specified services across third-party payers. The shoppable services selected for display by the hospital should be commonly provided to the hospital’s patient population. Hospitals must display payer-specific negotiated charges, de-identified minimum, and 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 provides less than 300 shoppable services, the hospital must list as many shoppable services as it provides. 

How does this pricing information need to be displayed online?

Hospitals must make their standard charges publically available online in two ways:

• in a single comprehensive machine-readable file for charges for all the items and services provided by the hospital
• a consumer-friendly shoppable services list which is for a limited set of “shoppable services” including 70 CMS-specified and 230 hospital-selected services that is provided by the hospital.

Standard Charges 

For standard charges displayed, the hospital must include:

• Required Data Elements.
  • a description of each item or service, data for all standard charges including gross charges, payer-specific negotiated charges, discounted cash prices, minimum and maximum negotiated charges) that apply to each item or service
  • the hospital inpatient and outpatient site of service
  • any code used by the hospital for purposes of accounting or billing for the item or service. for example, HCPCS, DRG codes, or other common identifiers.
• Format.  The information must be published in a single digital file that is machine-readable.  Machine-readable format means a digital representation of data or information in a file that can be imported or read into a computer system for further processing. Types of machine-readable formats include XML, JSON, and CSV.
• Location and Accessibility. The file must be displayed prominently on a publicly available website using a CMS-specified naming convention. It should clearly identify the hospital location with which the standard charges information is associated. The hospital must ensure the data is easily accessible, digitally searchable and is free of charge. It should not require a user login to access or submit ePHI.
• Updates.  Data must be updated at least annually and clearly indicate the date of the last update.

Shoppable Services 

For each shoppable service displayed, the hospital must include the following:

• A plain-language description of each shoppable service and any primary billing or accounting code used. Group the primary shoppable service with the ancillary services that the hospital customarily provides in conjunction with the primary shoppable service.
• Location at which the shoppable service is to be provided, and whether the standard charge 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.
• Format. Hospitals have the option to choose a format for making public the consumer-friendly information.
• Location and Accessibility. The information must be publically and prominently displayed online. The information must be 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.
• Updates. Information must be updated at least annually and clearly indicate the date of the last update.

How should I format my shoppable services data so that it is considered consumer-friendly?

For the shoppable services information to be considered consumer-friendly, it must display:

• the data in plain language, understandable to patients
• primary services along with associated ancillary services, facility fees, and service charges so the patient can assess the entire episode of care
• the data in an easily searchable format based on the description, code, or payer

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 obtain an estimate of the amount they will be obligated to pay for the shoppable service
• 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