Health Reform WK-EDGE Hospitals must make standard charges publicly available beginning in 2021
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Friday, December 6, 2019

Hospitals must make standard charges publicly available beginning in 2021

By Rebecca Mayo, J.D.

A new final rule establishes requirement that all hospitals make hospital standard charges available to the public.

As healthcare costs continue to rise, CMS has been looking for ways to make healthcare more affordable. According to CMS, there is a direct connection between transparency in hospitals standard charge information and having more affordable healthcare and lower healthcare coverage costs. Studies show that in a market where consumers have better pricing information for healthcare services, providers face pressure to lower prices and provide better quality care. As prices fall, more consumers may have access to healthcare. To increase price transparency to empower patients, increase competition and lower costs CMS has finalized a rule requiring hospitals to provide patients with clear, accessible information about standard charges for the items and services they provide beginning in 2021 (Final rule, 84 FR 65524, November 27, 2019).

Purpose. Under the Patient Protection and Affordable Care Act (ACA), the Public Health Services Act requires each hospital to annual establish and update a public list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis related groups. In a 2019 final rule, the guidelines were updated to require hospitals to make available a list of their current standard charges via the Internet in a machine-readable format and to update the information at least annually. Two sets of Frequently Asked Questions were also published to provide additional guidance to hospitals.

More than half of the states have passed legislation establishing price transparency websites or mandating that health plans, hospitals, or physicians make price information available to consumers. Some self-funded employers and many large insurers have begun making price transparency tools available to consumers purchasing healthcare services. However, despite these efforts to make price information available, there continues to be a gap in easily accessible pricing information for consumers to use for healthcare shopping purposes.

Information sharing. To allow for easier information sharing among employers, providers and tool developers, all hospitals must put all of their standard charges for all items and services in a single digital file in a machine-readable format. The file must include a description of each item or service along with the gross charge, payer-specific negotiated charge, de-identified minimum and maximum negotiated charges, and discounted cash price. This data must be updated at least annually, and the file should clearly indicate the date of the last update. The file must be easily accessible and displayed prominently on a publicly available website using a CMS-specified naming convention.

Consumer information. To allow consumers to make cost comparisons of charges across healthcare settings, all hospitals must provide a consumer-friendly list of the standard charges for at least 300 shoppable services. Shoppable services are services that can be scheduled by a healthcare consumer in advance such as x-rays, outpatient visits, imaging and laboratory tests or bundled services like a cesarean delivery, including pre- and post-delivery care. Each shoppable service should include the payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient for an item or service, and the minimum and maximum negotiated charges. Each service should also include a plain-language description of the services, an indicator when the service is not offered at the hospital and where it is provided and at what charge, and whether the services is inpatient or outpatient. Charges for the services that the hospital customarily provides in conjunction with the primary services that is identified by a common billing code should also be provided to avoid surprises. The information should be made easily accessible and prominently displayed on a publicly available webpage. The information should be updated at least annually and clearly indicate the date of the last update.

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