Hospital Price Transparency Final Rule

What is the Hospital Price Transparency Final Rule?

Effective January 1, 2021, the Hospital Price Transparency Final Rule contains there are two main components:

Publication of Standard Charges via machine-readable file (MRF)
Publication of prices for 300 Shoppable Services or a Patient Estimate Tool

Signed into law in November 2019, this was the first step toward price transparency as we know today.

Requirement 1: Effective 1/1/2021

Hospitals must publish a machine-readable file (MRF) to the hospital website in an easy-to-find location that is free to access. Within a healthcare system, each individual hospital must have its own individual MRF.

The MRF must be updated annually and must report five types of standard charges:

Gross Charge: Rate for an individual item or service reflected in the hospital’s chargemaster (i.e. list price)
Discounted Cash Price: Rate for an item or service administered by the hospital to a patient who will pay in cash or a cash equivalent
Payer-Specific Negotiated Charge: Rate negotiated with a third-party payer for an item or service
De-Identified Minimum Negotiated Charge: Lowest rate a hospital has negotiated with all third-party payers for an item or service
De-Identified Maximum Negotiated Charge: Highest rate a hospital has negotiated with all third-party payers for an item or service

The report must also include charge descriptions, any code used for billing (CPT, DRG, NDC, and other common identifiers), and revenue code. Hospitals that directly employ professionals must also disclose professional fees. Supplies, implantable devices, and pharmaceuticals must be included.

In addition to individual items and services, service packages are also required. Service packages can be thought of as contract rate types, such as per diems, DRG case rates, or CPT per unit rates. For example, hospitals reporting a negotiated charge of $5,000 for CPT code 92928 must specify that the $5,000 is a per-unit rate.

Exclusions

Government reimbursement rates (Medicaid, Medicare, Tricare). Excluded as they are already publicly available
Federally-owned hospitals (e.g. Veteran Affairs hospitals, hospitals operated by the Indian Health Program, or U.S. Department of Defense hospitals)
Freestanding ambulatory centers (ASCs, imaging centers, labs, etc.)

Requirement 2: Effective 1/1/2021

Hospitals must publish all core and ancillary charges associated with 300* Shoppable Services. Shoppable Services are any service that can be planned in advance, thus allowing patients to shop around before scheduling an appointment. The charges must be posted in a consumer-friendly format.

*Of the 300 Shoppable Services, 70 are pre-determined by The Centers for Medicare and Medicaid Services (CMS), and the remaining 230 are self-selected by each hospital.

Hospitals that already employ a patient-facing estimation tool are exempt if the tool meets the following requirements:

Patients can access out-of-pocket cost estimates
Estimates are available for all 300 Shoppable Services
The estimation tool is prominently displayed on the hospital’s website and has no barriers to access like logins or needing to input patient information before seeing prices

How does the Hospital Price Transparency Rule interact with other transparency laws?

Before the Hospital Price Transparency Final Rule, there was one rule requiring hospitals to post chargemaster data (aka prices) on their websites. However, chargemaster data is not nearly as valuable as negotiated rate data. This rule helped lay the foundation for Transparency in Coverage and the NSA requirements regarding patient estimates.

Enforcement and Penalties

Initial enforcement of the rule has been limited to a few hospitals but they began to increase in frequency during the summer of 2023. Noncompliance can lead to a fine of $300/day not to exceed $5,500/day, depending on the number of hospital beds. The Centers for Medicare and Medicaid Services (CMS) is the government-appointed body of price transparency enforcement. To view the status of CMS’s enforcement and penalties, click here.