Hospital price transparency lays the foundation for a patient-driven health care system by making hospital standard charges’ data available to the public and supports President Biden’s Executive Order on Promoting Competition. On July 13, 2023, the Centers for Medicare & Medicaid Services (CMS) proposed changes to the hospital price transparency regulations.
The policies in the proposed rule would further advance the agency’s commitment to increasing price transparency and enforcing compliance and would apply to each hospital operating in the United States. This fact sheet discusses the hospital price transparency proposed provisions of the calendar year 2024 Hospital Outpatient Prospective Payment System proposed rule (CMS-1786-P), which can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-14768/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment
Increasing and Enforcing Price Transparency of Hospital Standard Charges
The hospital price transparency regulations implement Section 2718(e) of the Public Health Service (PHS) Act, which requires each hospital operating within the United States, for each year, to establish, update, and make public a list of the hospital’s standard charges for items and services provided by the hospital. Effective January 1, 2021, the corresponding regulations can be found at 45 CFR part 180. Any institution licensed by a state as a hospital is subject to the requirements, although certain federal and state institutions are deemed by CMS to have met requirements. The regulations identify five types of ‘standard charges,’ which include the gross charge (aka ‘chargemaster’ rate), discounted cash price, payer-specific negotiated charge, and de-identified minimum and maximum negotiated charges.
Under the regulations, the hospital must make public its standard charges for all items and services it provides in a comprehensive machine-readable file. CMS explained in the CY 2020 final rule that CMS believed that by ensuring accessibility to all hospital standard charge data for all items and services, these data would be available for use by the public, including for use in price transparency tools, integration into EHRs for purposes of clinical decision-making and referrals, or use by researchers and policy officials to help bring more value to health care.
CMS has the authority to monitor hospitals and enforce the requirements and may assess civil monetary penalties for noncompliance. Through rulemaking, CMS increased the maximum potential penalty from just over $100,000 per hospital in 2021 to over $2 million for the largest hospitals beginning in 2022. Based on a website assessment conducted by CMS in the fall of 2022, approximately 70% of hospitals were fully meeting display criteria for the machine-readable file, 27% were partially meeting display criteria, and only 3% were failing to post any of the required information online compared to early 2021, when only 27% of hospitals were fully meeting display criteria for the machine-readable file, 43% were partially meeting display criteria, and 30% were failing to post any of the required information online. As CMS recently noted in a Health Affairs Forefront article, while CMS is pleased by the marked improvement in hospitals’ display of standard charges, CMS recognizes the need for additional work to be done.
As such, CMS recently announced enforcement process changes to increase compliance with hospital price transparency requirements, including requiring corrective action plan completion deadlines, imposing civil monetary penalties for failure to submit a requested corrective action plan on time, and eliminating warning notices for hospitals that have not made any attempt to satisfy the requirements and, instead, immediately requesting that the hospital submit a corrective action plan.[1]
To support and enhance CMS’ enforcement capabilities and to improve the public’s understanding and use of hospital standard charge information, CMS is proposing to modify the standard charge display requirements at 45 CFR 180.50 and the enforcement provisions at 45 CFR 180.70 to streamline and improve the transparency of the enforcement process.
Finally, in addition to the comprehensive machine-readable file, the regulations also require hospitals to make public some of their ‘standard charges’ for 300 shoppable services in a consumer-friendly format or to offer a consumer-friendly price estimator tool that provides a personalized estimate of the out-of-pocket costs. CMS is seeking comment from the public related to alignment with other price transparency initiatives, specifically, the Transparency in Coverage regulation and the No Surprises Act, which contain price transparency requirements designed to ensure that individuals have cost information in advance of getting a health care service.
Standardization of Hospital Machine-Readable File (MRF) Format and Data Elements
Currently, hospitals have flexibility in form and format for display of the standard charges they have established as long as they are posted online in a single machine-readable file (MRF). While the hospital price transparency regulations take some steps to bring consistency to the way standard charges are presented, hospitals and users of the MRF data have recommended improving standardization of the data required for display.
As a result, CMS is proposing to require hospitals to display the required standard charges data using a CMS template. The CMS templates would be offered as a CSV “wide” format, a CSV “tall” format, and a JSON schema, similar to the sample templates that are currently available on the CMS hospital price transparency website and are available for voluntary use.[2]
CMS is also proposing that hospitals encode all standard charge information, as applicable, that corresponds to a set of required data elements, which would include:
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General data elements including hospital name, license number, location name(s), and address(es) at which the public may obtain the items and services at the standard charge amount indicated in the MRF; the version number of the file and the date of the most recent update of the standard charge information in the file.
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Each type of standard charge (defined at 45 CFR 180.20). For payer-specific negotiated charges, the hospital must include: the payer and plan name (as specified in the contract); the type of contracting method used to establish the standard charge; whether the standard charge indicated should be interpreted by the user as a dollar amount, or if the standard charge is based on a percentage or algorithm, and what percentage or algorithm determines the dollar amount for the item or service. If the standard charge for an item or service is expressed as a percentage or algorithm, the hospital would be required to indicate a consumer-friendly expected allowed amount in dollars for the item or service.
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A description of the item or service that corresponds to the standard charge established by the hospital, including a general description; whether the item or service is provided in connection with an inpatient admission or an outpatient department visit; and for drugs, the drug unit and type of measurement.
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Any codes used by the hospital for purposes of accounting or billing for the item or service, including modifier(s) and code type(s).
The hospital would be required to encode its standard charge information in a CSV or JSON format and conform to a CMS template layout and other specified technical instructions (like a data dictionary). Further, each hospital would be required in its MRF to affirm that the hospital, to the best of its knowledge and belief, has included all applicable standard charge information in accordance with the requirements of 45 CFR part 180 and that the information displayed is true, accurate, and complete as of the date indicated in the file. CMS is proposing that, although these requirements would become effective on January 1, 2024, CMS would provide an enforcement grace period until March 1, 2024, to provide time for hospitals to adopt the CMS template.
These proposals are directly responsive to public input received through previous requests for information and recommendations from the HHS Health Federally Funded Research and Development Center (FFRDC) that convened industry experts to explore what data elements would be necessary to improve the public’s understanding of the standard charges established by hospitals and to maximize use of the data. CMS believes that standardization will improve hospitals’ ability to comply and the public’s ability to aggregate the information, and streamline CMS’s ability to enforce the requirements.
Improving MRF Accessibility
CMS is proposing two changes to facilitate a low-burden method that would permit automated access and real-time centralization of the files and standard charges data, including: 1) requiring hospitals to place a ‘footer’ at the bottom of the hospital’s homepage that links to the webpage that includes the MRF; and 2) requiring hospitals to ensure that a .txt file is included in the root folder of the publicly available website chosen by the hospital for posting its MRF. As proposed, the .txt file would identify the URL for both the MRF and the webpage that contains the link to the MRF. CMS believes these proposals will improve automated accessibility to hospital standard charges information and streamline the ability of CMS to enforce the requirements.
Improve and Streamline Enforcement Capabilities
CMS is proposing several additions and modifications to its enforcement provisions at 45 CFR 180.70. These proposals are designed to improve CMS enforcement capabilities and improve the transparency of its enforcement activities. They include the following proposals:
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CMS may require submission of certification by an authorized hospital official as to the accuracy and completeness of the data in the machine-readable file and submission of additional documentation as may be necessary to determine hospital compliance.
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Require hospitals to submit an acknowledgement of receipt of the warning notice in the form and manner and by the deadline specified in the notice of violation issued by CMS to the hospital.
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In the event CMS takes an action to address hospital noncompliance and the hospital is determined by CMS to be part of a health system, CMS may notify health system leadership of the action and may work with health system leadership to address similar deficiencies for hospitals across the health system.
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CMS may publicize on the CMS website information related to: 1) CMS’s assessment of a hospital’s compliance; 2) Any compliance action taken against a hospital, the status of such compliance action, and the outcome of such compliance action; and (3) Notifications sent to health system leadership.
Request for Information: Alignment with Transparency in Coverage (TIC) and No Surprises Act (NSA)
The hospital price transparency statutory authority at section 2718(e) of the PHS Act allows CMS to require the form and manner under which hospitals make public the ‘standard charges’ the hospital has established. The HPT regulations require hospitals to display some of their standard charges in a consumer-friendly manner for 300 shoppable services and deem hospitals to be in compliance if the hospital elects to offer an online price estimator tool. In the CY2019 Hospital Price Transparency final rule (84 FR 65524), CMS indicated that disclosure of hospital standard charges is necessary, but not sufficient, to meet the goals for price transparency. Since that time, additional price transparency regulations and authorities (TIC and NSA) have allowed for more comprehensive and specific consumer-friendly pricing information to be released to the public, as well as consumer protections in the form of a dispute process if the final bill is significantly different from the estimate. CMS is therefore seeking comment from the public on the future evolution of HPT requirements.
Effective Date
CMS is proposing that its proposed policies, if finalized, would be effective January 1, 2024. CMS is also proposing to give hospitals an enforcement grace period for adoption of the CMS template and encoding additional data elements until March 1, 2024.
Please submit comments by September 11, 2023.
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[1] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the- american-economy/
[2] https://www.cms.gov/hospital-price-transparency/resources