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Four Tips to Prepare for CMS Price Transparency Final Rule

By , VP Revenue Integrity February 11, 2020 Financial Performance, Regulatory Requirements

Final Rule Challenged in Court, but Hospitals Should Still Prepare

As most hospital leaders know, the new CMS Price Transparency Final Rule requiring hospitals to disclose the rates they negotiate with insurers has been challenged in court. Four hospital associations and three independent hospitals are suing Health and Human Services (HSS), which oversees CMS, over the Final Rule’s statutory basis. As the case wends its way through the legal system, hospitals are advised to go ahead with preparations for complying with the rule, which is set to take effect Jan. 1, 2021.

To recap, CMS’ Final Rule requires hospitals to post their “standard charges” online. Standard charges, as defined by CMS, include:

  • Gross charges
  • Discounted cash prices
  • Payer-specific negotiated charges
  • De-identified minimum negotiated charges
  • De-identified maximum negotiated charges

The rule also mandates publishing pricing information for 300 “shoppable services.”

In the previous mandate, effective Jan. 1, 2019 hospitals had been required to disclose standard charges but not payer-specific negotiated charges.

Hospitals will need to expend substantial resources to comply. For every single chargemaster item, the five different fields of “standard charges” must be completed for each payer and for each payer’s various plans. It’s a labor-intensive process that many hospitals may end up outsourcing.

How Should Community Hospitals Prepare for the Price Transparency Final Rule?

This rule impacts community hospitals more than larger hospitals since community hospitals often have fewer resources. Preparation can be time-consuming and stressful considering staff wear many hats, yet for now, CHC advises that they:

  • Assemble a task force
  • Locate and organize payer contracts
  • Create a template for entering the required information
  • Partially fill out the template in order to estimate the time and labor required to complete the whole file

CMS provided a basic sample template (click here to download: presentation with template) in a Dec. 3, 2019, Medical Learning Network (MLN) call, but it only shows one type of standard charge that a hospital would be required to make public in a comprehensive machine-readable file.

By partially completing a template, hospital leaders will know how far in advance work must be scheduled to meet the Jan. 1, 2021 deadline. They can then muster the necessary resources and assign the work internally or outsource it. Expertise in managed care will be required to extract relevant data from the contracts.

The plaintiffs challenging the Final Rule include the American Hospital Association, the Federation of American Hospitals, the Association of American Medical Colleges, and Children’s Hospital Association. They filed their suit in the U.S. District Court for the District of Columbia, alleging that HHS does not have the statutory authority to force hospitals to publish payer-specific negotiated rates.

Plaintiffs also contend that the requirement would impose an administrative burden. While that seems obvious, the fact remains that hospitals must prepare as though the rule will go into effect as scheduled. Those that fail to publish all the standard charges online could be fined up to $300 a day. Given the time-consuming nature of the requirements and the penalty for noncompliance, community hospitals cannot afford to stay in wait-and-see mode.

By , VP Revenue Integrity February 11, 2020 Financial Performance, Regulatory Requirements
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