Administration finalizes requirement for hospitals to post rates paid by health plans

• By January 2021, hospitals must post online the rates they negotiate with individual health plans and rates for 300 “shoppable services.”
• A hospital advocate has promised to challenge the new requirements in court.
• A separate proposal would require health plans also to post rates negotiated with individual providers.

The Trump administration will require hospitals to post online the rates they negotiate with health plans, as well as rates for 300 “shoppable services,” by 2021.

The final rule from the Centers for Medicare & Medicaid Services (CMS), which prompted one hospital advocate to immediately promise to file a lawsuit, requires hospitals to post online all their standard charges (including gross charges, payer-specific negotiated charges, de-identified minimum and maximum negotiated charges and discounted cash prices) for all items and services in a single digital file and in a machine-readable format.

Details of price posting requirements include:

• Describing each item or service
• Displaying prominently and clearly identifying the hospital location
• Ensuring the data is easily accessible, without barriers, is free and does not require an account or password or for a user to submit personal information
• Updating the data at least annually

Additionally, hospitals must post online their standard charges for at least 300 “shoppable services” (including 70 CMS-specified and 230 hospital-selected) that the hospital provides. This information must be made available in a consumer‑friendly manner.

“CMS believes these requirements will allow healthcare consumers to make apples-to-apples comparisons of payer-specific negotiated charges across healthcare settings,” a CMS fact sheet stated.

The posted rates must include charges for services that the hospital customarily provides in conjunction with a primary service that is identified by a common billing code.

CMS will deem a hospital compliant with the new requirements if the hospital maintains an Internet-based price estimator tool that meets specified requirements, including real-time estimates for consumers on their costs for a shoppable service offered by the hospital.

Failure to comply with the requirements could lead CMS to impose fines of up $300 per day (totaling $109,500 annually) and to publicize a hospital’s lack of compliance on its website.

The rule also established a process for hospitals to request a hearing before an administrative law judge to appeal the civil monetary penalty. The judge’s decision can be reviewed by the CMS administrator.

What was tweaked?

The final rule included some changes from the proposed rule, most significantly delaying implementation of the new requirements until Jan. 1, 2021.

Other changes included:

• Modifying definitions for the de-identified minimum negotiated charge and the de-identified maximum negotiated charge
• Modifying the definition of shoppable services to remove reference to a “service package”
• Allowing hospitals that do not provide 300 services that can be scheduled by consumers in advance to list as many such services as it provides
• Modifying the data elements of standard charges that hospitals must publicize
• Removing the separate requirement to list all associated ancillary services

What’s next?

Within a couple hours of the rule release, the Federation of American Hospitals (FAH) promised to join individual hospitals in suing to stop implementation of the new requirements on the basis that CMS lacks the authority to establish them.

“This final regulation on hospital transparency fails to meet the definition of ‘price transparency useful for patients,’” Chip Kahn, president and CEO of FAH, said in a written statement. “Instead, it will only result in patient overload of useless information while distorting the competitive market for purchasing hospital care.”

Beth Feldpush, senior vice president for America’s Essential Hospitals, said the new requirements would “unfairly advantage health plans in negotiations with providers and threaten essential hospitals’ ability to participate in networks and maintain access to services.”

“These policies undermine hospitals’ ability to negotiate equitable payments while giving consumers little actionable information with which to make informed care decisions,” Feldpush said in a statement.

Insurer requirement also proposed

A separate proposed rule would require health plans also to post the individual rates they negotiate with providers.

Although, there was no implementation date provided, an administration official said the rule would go into effect one year after the end of the 60-day comment period, which follows its publication in the Federal Register.

The rule also would allow health plans with provisions that encourage consumers to shop for services from lower-cost, higher-value providers, and that share the resulting savings with consumers, to take credit for such “shared savings” payments in their medical-loss ratio calculations, according to a CMS fact sheet.