Price Transparency Will Challenge Hospital Reporting Systems in 2024

Recently, the Centers for Medicare and Medicaid Services (“CMS”) proposed changes to the hospital price transparency rules. If finalized, the proposed changes will go into effect on January 1, 2024.

Current Requirements:

In an effort to provide price transparency to patients, a licensed hospital is currently required to establish and publish a list of standard charges for the items and services it provides. The publication requirements include the standard charges, discounted cash price, payer specific negotiated charges and the minimum and maximum negotiated charges (45 C.F.R. Part 180). Failure to publish these charges for larger hospitals can result in penalties of over $2 million.

Proposed Changes:

CMS is proposing several changes to the price transparency rules related to the content and formatting. First, CMS is proposing requiring the formatting of the standard charge data to conform to the CMS template display and to be in a comma-separated values (“CSV”) format and a JSON schema.

Second, the data elements required to be reported in the proposed format will expand. The reporting would require the hospital name, license number, and the location and address where the items and services are provided. In addition to providing the negotiated rates with payers, the proposed rule also requires including a description of the type of contracting with the payer, such as a percentage-based negotiated rate, an algorithm or a set negotiated fee schedule. Hospital decision support teams will need to evaluate each managed care contract to determine the rate calculation contracting methods with each payer and automate updates to the publication when there are changes. This may be a resource-intensive project, as many hospitals will need to manually evaluate and update this information based upon the current revenue cycle management information technology systems in use.  

In addition to the codes, the proposed rule also requires hospitals to list if the service is an inpatient or outpatient service, among other factors. In practice, it is incredibly difficult to determine inpatient versus outpatient status for patients, so hospitals may need to identify some items and services that fall within each status designation. The proposal for additional data elements also includes identifying the modifiers and code types used in billing. Often times, the use of a modifier is determined after the service has been rendered and is dependent upon billing rules and guidance. This will likely be a difficult task to capture in advance and publish for each item or service. 

Third, in seeking to ensure accessibility to the standard charge data, CMS is now proposing requiring hospitals to place a “footer” on their home pages to link to the website page that includes the data. Previously, hospitals were required to provide the information on their website. This change will eliminate the need for individuals to search through the website for the data and will immediately link the user to the data file with one potential click.

CMS believes that requiring price transparency will enhance clinical decision making. However, CMS is also seeking to enhance a patient’s understanding of the charge information and proposed enhancements to the price transparency rule. Comments on the proposed rule were due by September 11, 2023, and CMS intends for the final rule, when published, to be effective on January 1, 2024. If the proposed rule provisions remain intact in the final rule, hospitals will have a lot of work to do to be in compliance. 

Effect on Hospitals

Because of the expanded data elements and the proposed requirements for format and location on the homepage, hospitals should ensure that their information technology departments and their website developers track the developments with the proposed rule. It will be imperative to work with the information technology department and the revenue cycle team to ensure the data elements are readily available, accurate and posted in a timely manner to the website. It will also be important to ensure the website formatting is updated timely in light of the enhanced enforcement penalties, as enforcement is set to commence on March 1, 2024. Therefore, hospitals should stay focused on this developing rule and its final requirements to avoid financial penalties.