Apr 1, 2021

Continued Implementation of CMS's Price Transparency Rule

By Meghan V. Hoppe, Esq.

A new price transparency rule, promulgated by the Centers for Medicare & Medicaid Services (“CMS”), requires hospitals to publish in a consumer-friendly format on their website a price list for 300 “shoppable services,” as well as a list of its standard charges for all items and services provided by the hospital. This transparency is intended to make it easier for consumers to compare prices across hospitals and estimate the cost before seeking care, effectively eliminating surprise medical bills.  

The rule defines a “shoppable service” as a health care service that consumers can schedule in advance, such as routine care provided in non-urgent situations.  There are five standard charges that must be included in the online pricing information: (1) gross charge; (2) discounted cash price; (3) payer-specific negotiated charge; (4) de-identified minimum negotiated charge; and (5) de-identified maximum negotiated charge.

The rule includes methods to monitor compliance, such as CMS audits of hospitals’ websites, and mechanisms to address a finding of noncompliance.  If hospital is found to be noncompliant, CMS can: (1) provide a written warning notice to the hospital of the specific violation; (2) request a corrective action plan if noncompliance constitutes a material violation of one or more requirements under the rule; and/or (3) impose a civil monetary penalty not to exceed $300 per day.  CMS began auditing a sample of hospital websites in January 2021 to ensure compliance with these new price transparency requirements. 

In addition to auditing hospitals for compliance, CMS is also investigating public complaints that are submitted to the agency, which may result in penalties for the hospitals.  Consumers may submit an online complaint to CMS if they cannot find a hospital’s standard charges, which will assist CMS in identifying noncompliant hospitals throughout the country. The online complaint form strongly recommends that consumers first contact the hospital to ensure applicability before escalating to CMS.

After the rule was first announced in 2019, the American Hospital Association and other industry associations filed suit under the premise that the rates paid by third party payers are proprietary and confidential to both the hospitals and the commercial health insurers, and that their public disclosure would eliminate any ability to negotiate such pricing at arms’ length. However, after being upheld by the U.S. Court of Appeals for the District of Columbia Circuit in a December 2020 decision, the new price transparency rule went into effect on January 1, 2021. 

There were, notably, no waivers or hardship exemptions to compliance since CMS previously delayed the effective date by one year to provide hospitals with sufficient time to collect and display the required information.  Nevertheless, in a recent publication assessing compliance with the new price transparency rule, Health Affairs found that out of 100 hospitals sampled 65 were clearly noncompliant.  This evidences the continued need for hospitals to evaluate their compliance efforts and ensure that consumers can easily access the required information.

For more information, contact Meghan V. Hoppe, Esq. at mvh@spsk.com or (973) 540-7351.