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How hospitals can get ahead of the coming CMS price transparency enforcement wave

September 22, 2021
Brenna Jenny
By Brenna E. Jenny

The Centers for Medicare & Medicaid Services (“CMS”) appears poised to prioritize enforcement of the Hospital Price Transparency regulations. Although there has been an absence of penalties to date, the tide is turning as the new administration gains its footing and a widespread interest in healthcare price transparency sweeps the nation. Despite the pandemic’s continued demands on healthcare providers, hospitals should take steps to come into compliance with the hospital price transparency regulations by the time heightened penalties may go into effect next year.

Key regulatory requirements

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The Hospital Price Transparency regulations went into effect on January 1, 2021, following dismissal of a provider lawsuit that was upheld by the D.C. Circuit Court of Appeals on December 29, 2020. The regulations require hospitals to establish, update, and make public two sets of information: first, a list of all standard charges for all items and services in a comprehensive machine-readable file, and second, a consumer-friendly list of standard charges for a set of at least 300 shoppable services (70 of which are identified by CMS, and the remaining selected by the hospital). Alternatively, hospitals can satisfy the shoppable services requirement by maintaining an internet-based price estimator tool that allows consumers to obtain an estimate of the amount they will need to pay the hospital for each shoppable service.

Standard charges for the machine-readable files are defined to include five different charges: gross charge, payer-specific negotiated charge, de-identified minimum negotiated charge, de-identified maximum negotiated charge, and discounted cash price. Standard charges for the shoppable services must include all but the gross charge, unless no discounted cash price is available. The regulations include further technical specifications relating to the location and formatting of the required disclosures, including that they be displayed prominently on a publicly-available website and be accessible free of charge and without barriers such as a log-in name or password.

A number of publicly available studies conducted in the first half of 2021 revealed low estimated rates of hospital compliance with these new requirements. For example, a March 2021 Health Affairs analysis concluded that 65% of large hospitals reviewed were “unambiguously noncompliant,” and an April 2021 Kaiser Family Foundation review of 100 hospitals found that although approximately 80% of those hospitals disclosed gross prices in a machine-readable file and a display of shoppable services, only 34% of hospitals posted payor-specific negotiated charges in the machine-readable file and only 3% displayed payor-specific negotiated charges for shoppable services.

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