3 Key Steps for Hospital Price Transparency Compliance

January 08, 2021 - CMS now requires US hospitals to post a list of their standard charges, including rates negotiated with private payers, on a publicly available website in both machine-readable and consumer-friendly formats. It sounds simple, but price transparency compliance is proving to be a challenge for many hospitals.

Hospitals are tasked with compiling standard charges – which, according to the requirements, include gross charges, discounted cash prices, de-identified minimum and maximum negotiated charges, and payer-specific negotiated rates – for all items and services, displaying it publicly in a machine-readable format, and creating separate consumer-friendly list of prices for at least 300 “shoppable” services.

Failing to comply with the price transparency requirements could result in a fine of up to $300 per day, and CMS has already said that it is auditing a sample of hospital websites to ensure compliance with the requirements.

To avoid penalties, hospitals must review price transparency requirements from CMS and fill any gaps at their organizations as soon as possible.

Step 1: Make Public Standard Charges for All Items and Services

First and foremost, hospitals need to publish standard charges for all items and services on a “prominently or publicly available website,” CMS says. These charges must also be in a single machine-readable digital file to fully comply with new price transparency requirements.

READ MORE: Appeals Court Throws Out Hospital Price Transparency Challenge

This is a major data project for hospitals, according to healthcare lawyer Andrew Selesnick, who is a shareholder in Buchalter and a member of the firm’s Healthcare Practice Group.

“They literally have to assign people and start crunching big data,” Selesnick shared in a recent Healthcare Strategies podcast.

CMS advises hospital leaders to start by identifying each hospital in its system that must make available its list of standard charges, then pinpointing all items and services for which the hospital has already established a standard charge.

“Your hospital may have established standard charges for items and services that are time-based or unit-based or have a service package that has been negotiated with a third-party payer to include treatment for complications or follow up care. These are included in the definition of hospital items and services,” CMS states.

Once hospitals finalize a list of items and services, project leaders should start to aggregate standard charges, descriptions of the items and services, and common billing or accounting codes. CMS notes that this list does not need to be in plain language, therefore hospitals can use short descriptions for services, such as the ones used in hospital chargemasters.

READ MORE: Preparing for Hospital Price Transparency Rule Compliance

Then, project leaders should compile the data elements in a machine-readable file format, which includes but is not limited to, file types .XML, .JSON, .CSV. The file must also meet a CMS-specified naming convention, which is: __standardcharges.[json|xml|csv].

Finally, the file should be posted on the hospital’s website free of charge and with no registration or account required for access.

Step 2: Make Public Standard Charges for Shoppable Services

Another key component of the hospital price transparency requirements is the publication of the pricing information for a subset of items and services commonly provided at the facility. This list needs to be a in a “consumer-friendly” format for patients.

Hospitals can opt out of this requirement if they already have an online price estimator tool that can provide patients with estimates for as many as 70 shoppable services identified by CMS, as well as other hospital-selected services as necessary for a combined total of at least 300 shoppable service.

The price estimator tool must also provide consumers with their approximate financial responsibility for a given shoppable service and be prominently displayed on the hospital’s website free of charge.

READ MORE: Are Hospital Price Transparency Rules a Solution for Consumerism?

If hospitals do not have a qualifying price estimator tool, then the facilities must make public the consumer-friendly list of 300 shoppable services on its website.

Shoppable services are defined by CMS as any service that can (but will not always) be scheduled by a consumer in advance. CMS provides 70 examples, which must also be included in the consumer-friendly list. Examples include a new patient office visit, patient office consultation, basic metabolic panel, certain blood tests, and several radiology services, including X-rays, CT scans, and MRI scans.

For each of the 300 total shoppable services, hospitals will also need to identify the ancillary services customarily provided with the service.

Once hospitals determine the 300 shoppable services going on its list, project leaders must again gather standard charge information for each service and its ancillary services, if applicable, and accounting or billing codes. But this time, leaders must also collect or develop plain-language descriptions for each service, as well as location where services are provided (i.e., inpatient, outpatient, or both).

Other than plain-language descriptions, CMS is leaving the definition of consumer-friendly up to hospitals. The agency just requires the list to include all standard charge information and be readily accessible to the public.

A major decision hospitals will need to make with the consumer-friendly list is whether to post the information as one file for each third-party payer or make the information available without the use of flat files, which are databases that store data in a plain text file. The latter option may be the simplest and least expensive pathway for resource-strapped hospitals.

Step 3: Update Standard Charges and Advance Price Transparency

For full compliance with price transparency requirements, hospitals will need to update standard charges for all items and services and the list of shoppable services at least annually and clearly identify when the information was last updated.

But hospitals should be taking steps to enhance price transparency within their organizations.

A majority of patients are seeking out pricing information for medical care, and new research shows that most patients want an upfront explanation about their financial responsibility. Some consumers surveyed as part of the research also said new hospital price transparency requirements would push them to shop around for less costly care, even though 90 percent said having access to chargemaster prices is only somewhat helpful.

Consumers are more interested in knowing their out-of-pocket cost estimates than chargemaster rates and even payer-specific negotiated rates. Most patients rely on a health insurance carrier to foot the bulk of medical bills.

Hospitals can meet this consumer demand, at least part way. As CMS indicates in the hospital price transparency requirements, price estimator tools exist that streamline research for patients and can even estimate out-of-pocket costs if patients input their insurance plan.

Hospitals can even leverage their existing EHR systems and patient portals to switch on price estimation capabilities.

But hospitals can also enhance price transparency efforts by putting different pricing information side-by-side, including pharmacy or ancillary services, and coupling pricing information with quality of care data, the Catalyst for Payment Reform says.

Price transparency in healthcare is not going away anytime soon. High-deductible health plans and other cost-sharing arrangements continue to increase patient financial responsibility, and patients with more skin in the game are demanding more transparent pricing from their providers.

Additionally, price transparency policies have garnered bipartisan support at the federal and state levels, making it a top healthcare reform.

Bolstering price transparency now can help hospitals stay ahead of the curve and avoid penalties under new CMS requirements.