Understanding the 7 Options for CMS’s Hospital Charge Posting Rule

The FY19 IPPS (Inpatient Prospective Payment System) Final Rule requires hospitals to make public a list of their standard charges via the internet. This section of the final rule revisits a reminder contained in the FY15 IPPS Proposed Rule and ultimately the initial calls for transparency in the Affordable Care Act (ACA), specifically, 2718(e) of the Public Health Service Act. That language required hospitals to “either make public a list of their standard charges (whether that be the chargemaster itself or in another form of their choice) or their policies for allowing the public to view a list of those charges in response to an inquiry.” 

It is no surprise that the Centers for Medicare & Medicaid Services (CMS) is attempting to continue this national dialogue as many providers still struggle with how to effectively improve price transparency. In fact, our firm has conducted national provider surveys on how hospitals are approaching price transparency and the areas that tend to receive the most price inquiries from patients. We’ve found that the vast majority of hospitals are complying with the Affordable Care Act (ACA) transparency language by providing a means for patients to request pricing information—but not—through public display of pricing information via a website or some other form. 

As a result, the FY19 IPPS Final Rule indicates that: “as one step to further improve the public accessibility of charge information, effective Jan. 1, 2019, we announced the update to our guidelines to require hospitals to make available a list of their current standard charges via the internet in a machine-readable format and to update this information at least annually, or more often as appropriate. This could be in the form of the chargemaster itself or another form of the hospital’s choice, as long as the information is in machine readable format.” 

At the end of September 2018, the Centers for Medicare & Medicaid Services (CMS) posted responses to frequently asked questions (FAQs) to its website to provide additional clarity on the new rule. Based on these responses to the FAQs, as well as the original language of the rule, we are providing our position on how hospitals can comply.

We believe there are four keys to compliance:

Type of information. A hospital must show standard charges via the chargemaster or another form of the hospital’s choosing—however—all items and services must be represented.

Availability of information. Information must be made available on the internet; however, participation in a state online transparency initiative does not exempt a hospital from the requirement.

Format of information. Data must be machine readable

Updates of information. At least annually.

If a hospital can check the above four boxes, then, given the language in the rule, the hospital should be in compliance. However, CMS, likely intentionally, has allowed for significant room for compliance interpretation. There are a variety of different approaches a hospital could take to comply, so, we have presented a continuum to illustrate different options.

The Compliance Continuum

We have presented a compliance continuum in order of increasing usefulness to the patient with regard to price and payment transparency. It is important to note that any of the compliant options presented, we believe, are technically compliant on their own. For example, a hospital would not have to have a minimum chargemaster provided in order for the “encounter charges” option to be compliant. However, this is our interpretation of the rule and clearly a hospital’s own internal stakeholders and counsel may come to a different conclusion. 

See related tool: Compliance Continuum: FY19 IPPS Final Rule – Requirement for Hospitals to Make Charges Public

In the paragraphs below, we provide context on each option on the continuum:

No reporting

• Status: non-compliant
• Price reporting level: not applicable
• Notes: Some providers have questioned the value of reporting information to be in compliance given the risks of confusion it could cause for patients and additional administrative burden to post data and field questions. These hospitals could still be providing access to information to patients, consistent with the ACA language, but feel this new requirement is not worth the added resource costs of compliance. While these hospitals will not be in compliance, there are no penalties for failure to comply at this time.

Minimum chargemaster

• Status: compliant
• Price reporting level: per unit
• Notes: In this option, the provider would simply post on their website a basic chargemaster with charge code and current standard price (multiple columns or an average could be used if more than one fee schedule exists). While this information wouldn’t be useful to the patient, as there wouldn’t be any identifying information (description, HCPCS, etc.) it would technically satisfy the language of the rule. If taking this option—or any other for that matter—we believe the hospital should still provide contact information for additional details and questions should the patient need further assistance.

Top consumer codes

• Status: non-compliant
• Price reporting level: per unit
• Notes: In this option, the hospital would provide the current price (or multiple/average pricing if several fee schedules) by HCPCS, with description for frequently requested—or top consumer-oriented—services. This option is an improvement to the patient because it provides focus for top services where the majority of patient concerns and questions originate. However, while this option initially seemed compliant under the language in the final rule, the responses to FAQs posted by CMS at the end of September 2018 state that all items and services need to be represented in the reporting. 

Expanded chargemaster

• Status: compliant
• Price reporting level: per unit
• Notes: This option builds on the last, as it would provide the entire chargemaster with identifiers, such as HCPCS and descriptions, for patients to view. While this would be more useful than the minimum chargemaster, it could be argued that this would be more challenging to navigate than the reduced list of top sensitive codes. It is worth noting that some states have requirements that hospitals post charges at the HCPCS level—either on their website or through some centralized portal for the entire state. If so, the responses to FAQs now state that state-level reporting is not sufficient for compliance—the hospital must post independently.  

Encounter charges

• Status: compliant
• Price reporting level: per encounter
• Notes: Average encounter charges have advantages for pricing transparency as they are better representations of patients’ usual charges for specific types of services. In this option, the hospital would present the average charge—and potentially other statistical measures—by inpatient (e.g., MS-DRG) and outpatient encounter (e.g., primary APC [ambulatory payment classification]). A hospital could even create groupings like those presented on Medicare’s Hospital Compare website that could facilitate comparison among other reported quality metrics. This option would be compliant as it represents a non-chargemaster display of standard charges that is “another form of the hospital’s choice.” However, based on the responses to FAQs, all inpatient and outpatient encounters would need to be displayed as “the current requirements apply to all items and services provided by the hospital.”

Encounter payments

• Status: non-compliant
• Payment reporting level: per encounter
• Notes: Consider this the same reporting as “encounter charges” only that instead of gross prices being presented, the hospital displayed average payment levels. These averages could be further broken down into generic payer groupings, such as government and commercial. However, specific payer payments by encounter would likely be met with legal resistance. Still, this level of reporting would be a step closer to providing patients with their ultimate concern: cost to them. While this option is preferable to patients, it would not satisfy the rule’s interpretation for “standard charges”—meaning, list or gross prices—not, reimbursement. The final rule states that nothing precludes hospitals from doing this, and in fact, encourages greater transparency efforts to include this information.

Patient-specific payments

• Status: non-compliant
• Payment reporting level: per encounter
• Notes: Ultimately, patients are interested in knowing what their service is going to cost them. For this reason, this option is at the end of our usefulness spectrum. Many insurers are already helping their members understand specific payment responsibilities based on their offerings, agreements with providers, and how patients’ utilization of services with other providers would impact copayment and deductible amounts. However, there are a number of hospitals that are helping to provide this level of information to patients in advance, as well. While it’s likely that insurers are best positioned to provide this information as the agreements with their members—and their members’ utilization of other healthcare services—will change frequently to impact patient responsibility, this is an option providers have and can pursue. Unfortunately, this level of reporting would not satisfy the rule’s requirements for machine readable posting of charges (not payments).

In sum, we believe that hospitals have several available options to satisfy the FY19 IPPS Final Rule Requirements for Hospitals to Make Public a List of Their Standard Charges via the internet. These options range from minimum levels of reporting that will satisfy the rule’s language to those that provide greater depth of detail to patients. Although there are drawbacks to all of the options, we believe hospitals will select a strategy that they believe will provide the most value to their patients in an evolving healthcare marketplace.

This article first appeared on the Cleverley & Associates website in an extended version.

Jamie Cleverley is president, Cleverley & Associates, and is a member of HFMA’s Central Ohio Chapter.