Change of Law: Hospital Action Required
|To:||Hospital Chief Financial Officers, Legal Counsel and Government Affairs Staff|
|Staff Contact:||Andrew Busz, Policy Director, Finance
firstname.lastname@example.org | (206) 216-2533
|Subject:||CMS Price Transparency Rule Requires Substantial Preparation and Compliance|
The purpose of this bulletin is to provide information to hospitals concerning the CMS Price Transparency Rule, which requires hospitals to post on their website in a machine-readable format an expanded definition of “standard charges”, including negotiated payment rates with insurers, for all services provided by the hospital. The rule also requires hospitals provide similar price information for at least 300 “shoppable services” in a consumer-friendly, searchable format. Hospitals must comply with the new rule effective January 1, 2021.
For purposes of the rule, the definition of ‘hospital’ means an institution in any state in which state or applicable local law provides for the licensing of hospitals, that is licensed as a hospital pursuant to such law, or is approved by the agency of such state or locality responsible for licensing hospitals, as meeting the standards established for such licensing.
The requirement applies to all licensed hospitals in Washington State, other than federal institutions. This includes prospective payment hospitals, psychiatric hospitals, rehabilitation hospitals, critical access hospitals, and long-term acute care hospitals.
Hospitals should familiarize themselves with the requirements of the CMS Price Transparency Rule and available WSHA resources. This bulletin is a summary and does not include all of the details of the rule.
WSHA is planning webinars to help hospitals prepare for the rule. More information is below. WSHA will also provide updates regarding any new developments regarding implementation of the rule. The requirements of the rule are effective January 1, 2021.
The rule is a massive step from previous price transparency requirements, which, until now, have generally been limited to information regarding billed charges. Under the rule, hospitals must also disclose the payment amount negotiated for each service with each payor.
Interaction with existing state requirements. Washington State law currently requires hospitals and providers to present an estimate of billed charges, upon request, in advance of a non-emergency service. The law does not require disclosure of the payment amount negotiated with payers. The CMS price transparency rule does not change the state requirement, though it could reduce the number of patients requesting estimates of billed charges if they are able to access the information through the hospital’s website.
Interaction with existing federal requirements. Hospitals are already required as of January 1, 2019, to post on their website “standard charges”, which has been typically defined as the hospital’s standard billed charges as reflected in the hospital’s chargemaster. The new CMS price transparency rule includes the chargemaster information, as well as additional information, such as the cash-discount price, lowest negotiated payment and highest negotiated payment, for each service or item provided by the hospital. Most WSHA member hospitals currently link to WSHA’s hospital pricing webpage, which compares average billed charges by hospital for various inpatient service categories. This site does not include all the required data elements such as negotiated rates, nor does it include all services necessary to meet the requirements of the new rule. A listing of existing state and federal notice requirements can be found here.
The American Hospital Association and other hospital groups filed legal challenges to the rule on the grounds that CMS exceeds its authority in requiring disclosure of negotiated payment rates. WSHA filed an amicus curie brief supporting AHA’s position. A court recently decided in CMS’s favor though AHA indicated it will appeal the ruling. AHA and hospital organizations have also requested CMS delay the implementation. Thus far the administration has not indicated it is inclined to grant any additional delay to the January 1, 2021, effective date.
Requirements of the rule
The information regarding the requirements of the rule is taken directly from CMS’s Price Transparency Rule Fact Sheet, unless noted as a WSHA comment.
Definition of ‘Hospital’
For purposes of the rule, CMS defines ‘hospital’ to mean an institution in any State in which State or applicable local law provides for the licensing of hospitals, that is licensed as a hospital pursuant to such law, or is approved by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing. This includes all Medicare-enrolled institutions that are licensed as hospitals (or approved as meeting licensing requirements) as well any non-Medicare enrolled institutions that are licensed as a hospital (or approved as meeting licensing requirements). Federally owned or operated hospitals (for example, hospitals operated by an Indian Health Program, the U.S. Department of Veterans Affairs, or the U.S. Department of Defense) that do not treat the general public, except for emergency services and whose rates are not subject to negotiation, are deemed to be in compliance with the requirements for making public standard charges because their charges for hospital provided services are publicized to their patients (for example, through the Federal Register).
WSHA Comment: The requirement applies to all licensed hospitals in Washington State, other than federal institutions. This includes prospective payment hospitals, psychiatric hospitals, rehabilitation hospitals, critical access hospitals and long-term acute care hospitals.
Definition of ‘Standard Charges’
For purposes of the rule, CMS defines ‘standard charges’ to include the following:
- The gross charge (the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts),
- The discounted cash price (the charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service),
- The payer-specific negotiated charge (the charge that a hospital has negotiated with a third-party payer for an item or service),
- The de-identified minimum negotiated charges (the lowest charge that a hospital has negotiated with all third-party payers for an item or service).
- The de-identified maximum negotiated charges (the highest charge that a hospital has negotiated with all third-party payers for an item or service).
WSHA comment: The rule revises and expands “standard charge” to include, “the standard rate charged to a group of patients” therefore includes negotiated rates. The rule excludes Medicare and Medicare Fee-For-Service, as these rates are not negotiated with hospitals, but does include hospitals’ negotiated rates with Medicare Advantage and Medicaid managed care plans.
Definition of Hospital ‘Items and Services’
For purposes of the rule, CMS defines hospital “items and services” to mean all items and services, including individual items and services and service packages, that could be provided by a hospital to a patient in connection with an inpatient admission or an outpatient department visit for which the hospital has established a standard charge. Examples of these items and services would be supplies, procedures, room and board, use of the facility and other items (generally described as facilities fees), services of employed physicians and non-physician practitioners (generally reflected as professional charges), and any other items or services for which a hospital has established a standard charge.
WSHA Comment: The definition does not just apply to individual services, but also to combinations of services that are customarily paid under a specific negotiated payment, such as DRG inpatient, APCs, EAPGs, etc.
Requirements for Making Public All Standard Charges for All Items and Services in a Machine-Readable Format
For each hospital location, hospitals must make public all their standard changes (including gross charges, payer-specific negotiated charges, de-identified minimum and maximum negotiated charges and discounted cash prices) for all items and services online in a single digital file in a machine-readable format. Specifically, hospitals must do the following:
- Include a description of each item or service (including both individual items and services and service packages) and any code (for example, HCPCS codes) used by the hospital for purposes of accounting or billing.
- Display the file prominently and clearly identify the hospital location with which the standard charges information is associated on a publicly available website using a CMS-specified naming convention.
- Ensure the data is easily accessible, without barriers, including ensuring the data is accessible free of charge, does not require a user to establish an account or password or submit personal identifying information (PII) and is digitally searchable.
- Update the data at least annually and clearly indicate the date of the last update (either within the file or otherwise clearly associated with the file).
WSHA Comment: The rule allows the use of multiple tabs for the single digital file. Hospitals may want to consider if it makes sense to use tabs to differentiate and group rate agreements with similar payment methodologies or product line (e.g., APRDRG vs MSDRG, Commercial, Medicaid managed care, Medicare Advantage).
Requirements for Displaying Shoppable Services in a Consumer-Friendly Manner
Hospitals must make public standard charges for at least 300 “shoppable services” (including 70 CMS-specified and 230 hospital-selected) the hospital provides in a consumer‑friendly manner. CMS defines ‘shoppable service’ to mean a service that can be scheduled by a health care consumer in advance. CMS believes these requirements will allow healthcare consumers to make apples-to-apples comparisons of payer-specific negotiated charges across healthcare settings. Specifically, hospitals must do the following:
- 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 does not provide one or more of the 70 CMS-specified shoppable services, the hospital must select additional shoppable services such that the total number of shoppable services is at least 300. If a hospital does not provide 300 shoppable services, the hospital must list as many shoppable services as they provide.
- Include a plain-language description of each shoppable service, an indicator when one or more of the CMS-specified shoppable services are not offered by the hospital and the location at which the shoppable service is provided, including whether the standard charges 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.
- Select such services based on the utilization or billing rate of the services. In other words, the shoppable services selected for display by the hospital should be commonly provided to the hospital’s patient population.
- Include charges for services that the hospital customarily provides in conjunction with the primary service that is identified by a common billing code (e.g. Healthcare Common Procedure Coding System (HCPCS) codes).
- Make sure that the charge information is displayed prominently on a publicly available webpage, and clearly identifies the hospital location with which the standard charge information is associated.
- Ensure the data is 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.
- Update the information at least annually and clearly indicate the date of the last update.
Additionally, 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, at the time they use the tool, obtain an estimate of the amount they will be obligated to pay for the shoppable service by the hospital.
- 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.
WSHA comment: CMS will accept a price-estimator tool that meets the above requirements in lieu of a mechanism to display negotiated rates for the 300 shoppable services. It does not replace the requirement to display all standard charges for all items and charges in a machine-readable format.
Monitoring and Enforcement
Under this rule, CMS has the authority to monitor hospital compliance with Section 2718(e) of the Public Health Service Act, by evaluating complaints made by individuals or entities to CMS, reviewing individuals’ or entities’ analysis of noncompliance and auditing hospitals’ websites. Should CMS conclude a hospital is noncompliant with one or more of the requirements to make public standard charges, CMS may assess a monetary penalty after providing a warning notice to the hospital, or after requesting a corrective action plan from the hospital if its noncompliance constitutes a material violation of one or more requirements. If the hospital fails to respond to CMS’ request to submit a corrective action plan or comply with the requirements of a corrective action plan, CMS may impose a civil monetary penalty on the hospital not in excess of $300 per day and publicize the penalty on a CMS website. The rule also establishes an appeals process for hospitals to request a hearing before an Administrative Law Judge (ALJ) of the civil monetary penalty. Under this process, the Administrator of CMS, at his or her discretion, may review in whole or in part the ALJ’s decision.
WSHA Comment: WSHA does not believe this will be the final word regarding penalties and believes penalties may significantly increase if there is a pattern of noncompliance, including loss of Medicare participation. Also, CMS plans to publicize the names of hospitals that are not in compliance with the rule, which can have adverse ramifications. While we believe there are significant challenges to hospitals being in full compliance by January 1, 2021, we recommend hospitals make best efforts to at least partially comply by the effective date of the rule and develop an action plan to become fully compliant.
Webinars. On October 1, 2020, WSHA will provide a webinar regarding the rule requirements, which will include Ariel Levin, Senior Associate Director, from the American Hospital Association. Webinar connection information is below.
Date: October 1, 2020
Time: 4:00 – 5:00 pm PST
Login/registration Information: https://attendee.gotowebinar.com/register/6920416754582217742
WSHA is also planning a second webinar later this year to help hospitals prepare for questions they will receive once the negotiated rates are made public. Information regarding the second webinar will be available once that has been scheduled.
Vendor Resources. WSHA is in the process of identifying a set of vendors and consultants that can help hospitals comply with the rule. Vendors and consultants vary in what portions of the rule they can provide assistance (such as setup of machine-readable file, shoppable services, etc.). Also, there is not yet a uniform understanding what will satisfy CMS regarding compliance. As of this date we are unable to recommend specific consultants/vendors and we recommend hospitals thoroughly vet vendors they are considering to ensure the vendor’s product or services meets the hospital’s specific needs and aligns with the hospital’s approach toward compliance with the rule. We plan to provide more information regarding vendor resources soon.
WSHA’s 2020 New Law Implementation Guide
Please visit WSHA’s 2020 implementation guide online, where you will find a list of the high priority laws that WSHA is preparing resources and information on to help members implement the new laws, as well as links to resources such as this bulletin. In addition, you will find the Government Affairs team’s schedule for release of upcoming resources on other laws and additional resources for implementation.
Background and References