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Industry Hot Topic: Price Transparency & CMS Final Rule

Price transparency is a growing trend in healthcare today – after all, in what other industry do you not understand at least an estimate of what you are going to owe for an item or service prior to making a purchase? While healthcare has nuances that make this extremely difficult (the unplanned emergency room visit or inpatient admission, or complication that arises during surgery come to mind), the concept of price transparency has been gaining steam since the passage of the Affordable Care Act in 2010. The new Centers for Medicare & Medicaid Services (CMS) Price Transparency Final Rule aims to further demystify healthcare costs through requirements around publishing detailed charge information for all hospital items and services as well as providing “patient-friendly” information on certain shoppable services.

 

Eutemia's Take

While the push towards price transparency is important and the new CMS rule will take us further along that journey, we still are not 100% of the way there. From a patient perspective, arguably the most important factor in understanding what your personal out-of-pocket cost will be for any set of hospital services is your insurance benefits, not the gross charge, cash price, or even negotiated rate. Those benefits, after all, dictate how much you will pay before your insurance begins to provide coverage (deductible), how much you will owe in a cost-share once your insurance kicks in (co-insurance), and how much at maximum you’ll owe in any given benefit year (out-of-pocket maximum). Charges and negotiated rate certainly play a role, but even the most healthcare-literate patients will still struggle to understand personal cost without understanding their benefits. Some hospitals have or are taking the initiative to move a step further in incorporating that benefit information into estimates, but per the CMS rule there is still an inherent gap in true price transparency from a patient perspective.

 

What is the new rule?

CMS is looking to take the next step in creating a format for and enforcing price transparency in healthcare. Their new rule will require hospitals to both:


1. Publish one machine-readable file with charge information for all hospital-provided items and services, to include:

  1. Gross charge – the total charge per the facility’s chargemaster (before any discounts or negotiated rates)

  2. Discounted cash price – the price an individual would pay in cash (or cash equivalent)

  3. Payer-specific negotiated charge – the negotiated rate a hospital has contracted with a specific third-party payer

  4. De-identified minimum negotiated charge – the lowest negotiated rate a hospital has contracted with all third-party payers

  5. De-identified maximum negotiated charge – the highest negotiated rate a hospital has contracted with all third-party payers

2. Make information available on 300 shoppable (i.e., scheduled in advance) services in a consumer-friendly format.

  1. 70 of these services have been dictated by CMS.

  2. 230 services can be selected by the hospital.

When will it go into effect?

The new regulations will go into effect January 1, 2021. While there has been resistance to this date due to capacity constraints given the COVID-19 pandemic, the rule is still expected to take effect as planned.


An additional effort to challenge the legality of the ruling in requiring hospitals to publish privately negotiated rates by the American Hospital Association and other provider groups is pending appeal.


What does it mean for me?

If you are a licensed hospital in any state, the District of Columbia, Puerto Rica, Guam, American Samoa, the Virgin Islands or the Northern Mariana Islands, you will need to have both your comprehensive machine-readable file and 300 shoppable services publicly available by January 1, 2021.


Need help getting started? Follow the five steps below to start and stay on the right track:

  1. Assemble your dream team. As you begin planning and executing on this work include representation from marketing, IT, contracting, legal/compliance and revenue cycle/operations to ensure you are delivering what the ruling is asking for in a patient-friendly, accessible way.

  2. Access the right data to drive your project forward. This will include payer contracts, chargemasters, self-pay discount policies, and any historical data on procedures and services performed at your hospital(s).

  3. Determine your delivery method. Work with your team to identify how you will make your machine-readable file and shoppable services information available. Planning to use Excel files? Create a template (or use the CMS example format) and determine where on your website this information will live. Planning to use a price estimator tool for your shoppable services? Work with your internal or vendor team to determine what information is needed, where the tool will live, and how prospective patients will navigate through it.

  4. Start with a “pilot.” Start small to ensure you have the data you need in order to meet all CMS requirements and test your time to build. The pilot does not have to be a specific size – perhaps start with the 70 CMS-mandated shoppable services and one hospital facility or department for the machine-readable file. The purpose of this step is to check you have not missed anything in the preparation phases and are setting the right timeline to meet the January 1st deadline.

  5. Roll out your full machine-readable file(s) and shoppable services by January 1st.

Help!

Haven’t started on this work, or strapped for time given COVID response demands? Whether you’re looking to simply comply with price transparency requirements by the January 1st deadline or using this as an opportunity to begin a larger patient financial experience transformation, the team at Eutemia can work with you to meet your goals. Reach out!


Sources

“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.” Federal Register, 27 Nov. 2019, www.federalregister.gov/documents/2019/11/27/2019-24931/medicare-and-medicaid-programs-cy-2020-hospital-outpatient-pps-policy-changes-and-payment-rates-and.


Morse, Susan. “American Hospital Association to Appeal Ruling on Price Transparency Lawsuit.” Healthcare Finance News, 23 June 2020, www.healthcarefinancenews.com/news/american-hospital-association-appeal-ruling-price-transparency-lawsuit.

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