CMS Hospital PRICE Transparency Rule

The Basics

The Hospital PRICE Transparency Rule was first implemented by Center for Medicare & Medicaid Services (CMS) on January 1, 2021 with the goal of “empowering patients with the necessary information to make informed health care decisions.” This ruling sets a standard for all hospitals to report pricing and care costs in a publicly available document on the CMS website, promoting healthcare affordability and ultimately a value-based care model.

Those affected include all institutions licensed as hospitals by their respective state or governing authority that allows for the licensing of hospitals (CMS FAQ). Notable exceptions are federally owned/operated hospitals for which no price negotiations are incurred and that do not treat the general public.

The Hospital Price Ruling requires each hospital to provide standard charges for all items and services offered by the hospital in a single file on a publicly available website. Additionally, there must not be any barriers to access of the file (i.e. requiring payment, set up of a username/password, or personal information).

The following are required to be reported by each hospital:

• Description of the item or service
• Gross charge of each item or service when provided
• Payer-specific negotiated charge
• De-identified minimum and maximum negotiated charge
• Discounted cash price of the item or service
• Any codes used to bill or account for the item or service (i.e. Common Procedural Terminology codes, National Drug Codes (NDC), etc.)

No less than 300 shoppable services must also be available to the public freely by each hospital, unless that hospital provides fewer than 300 shoppable services in which case all should be publicly available. These services include consultations, routine labs, imaging, psychotherapy and can be found on the CMS Website [Hospital Price Transparency Final Rule (cms.gov)]. 

How is the Hospital Price Transparency Ruling being Enforced?

Enforcement of the Hospital Price Transparency regulations is implemented in a phased manner, starting with a compliance review, often followed by a written warning of the specific violations, requisition of a Corrective Action Plan (CAP) from the hospital, and finally a monetary penalty for violation of requirements. Moreover, CMS may publicize information regarding hospital compliance or regulatory actions on their website.

Hospital Price Transparency in Practice

Implementing price transparency comes with challenges and benefits. Complex billing structures such as shadow bundling require special attention as they are constituted of several services and items, for which each requires a price consensus among all involved parties. Furthermore, relationships with insurers and employers may be impacted by price transparency initiatives with subsequent changes in the market factors as price transparency contributes more greatly to patient selection of providers and locations.

Price transparency on an organizational level promotes trust from the patients. As patients become more aware of price transparency efforts, it is more likely that they will seek out providers and organizations that display costs as it can be seen as a reflection of the organization or provider’s quality of care and patient-oriented practice.

Though the price transparency regulations are targeted primarily at hospitals, proactive implementation of price transparency initiatives among private practices sets groups apart for consumers wishing to engage in cost conversations with their providers. The OrthoForum highlights the importance and value in displaying costs in a recent Price Transparency Spotlight, with additional discussion of the challenges and benefits of promoting price transparency within your own practice.

Price Transparency: A Value-Based, Patient-Centric Approach

Value in healthcare is defined as patient-reported outcomes (PROs) per dollar spent for an episode of care. Value-based care is the patient-centric approach in which healthcare systems strive to improve patient-reported outcomes while minimizing costs incurred by patient and healthcare system alike. The CMS Hospital PRICE Transparency Act, in conjunction with recent jurisdiction mandating PRO reporting after inpatient total joint procedures, are steps toward a value-based care model that promotes transparency, trust, and patient-centered care across orthopaedic providers. Early adopters of price transparency initiatives, PRO collection and shared decision-making will quickly become trusted leaders in the field. 

Sources |  Hospital Price Transparency Frequently Asked Questions |  Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates. Price Transparency Requirements for Hospitals To Make Standard Charges Public |  Hospital Transparency Final Rule Presentation |  CMS Hospital Price Transparency Menu