The Centers for Medicare & Medicaid Services (CMS) issued the second part of its calendar year 2020 outpatient prospective payment system final rule, which finalizes problematic provisions related to price transparency requirements for hospitals. The final rule is effective for all hospitals beginning January 2021.
The South Dakota Association of Healthcare Organizations (SDAHO) is deeply disappointed that CMS has proceeded in exceeding its authority and ignoring wide opposition to requiring the release of confidentially negotiated rates between health plans and hospitals.
In the final rule, CMS establishes the following:
- Definitions of “hospital,” “standard charges,” and “items and services”
- Requirements for making public a machine-readable file online that includes all standard charges (including gross charges, discounted cash prices, payer-specific negotiated rates (but defined as charges in the final rule), and de-identified minimum and maximum negotiated rates) for all hospital items and services
- Requirements for making public discounted cash prices, payer-specific negotiated rates, and de-identified minimum and maximum negotiated rates for at least 300 “shoppable” services (70 CMS-specified and 230 hospital-selected) that are displayed and packaged in a consumer-friendly manner
- Monitoring for hospital noncompliance and actions to address hospital noncompliance — including issuing a warning notice, requesting a corrective action plan, and imposing civil monetary penalties — and a process for hospitals to appeal these penalties
Notably, CMS is expanding this requirement to all organizations licensed as hospitals by the state licensing authority. Previous postings of standard charges adopted in 2018 were required only of inpatient prospective payment system hospitals. These provisions now extend to critical access hospitals, inpatient psychiatric facilities, long-term care hospitals, and inpatient rehabilitation facilities, regardless of their Medicare certification.
While SDAHO expects the final rule to be challenged immediately in court, it does implement President Trump’s executive order and administration priority of improving price transparency in health care generally. The executive order cited existing requirements under Section 2718(e) of the Public Health Service Act, which requires each hospital operating within the U.S. to establish, update, and make public each year a list of the its standard charges for items and services provided, including for diagnosis-related groups.
