The Centers for Medicare & Medicaid Services (“CMS”) finalized significant updates to the Hospital Price Transparency regulation for the first time since the rule took effect on January 1, 2021. Many of the changes included in the CY 2024 Medicare OPPS and ASC Final Rule will affect all hospitals and necessitate updates, modifications and in some cases, complete overhauls, of existing hospital price transparency files. Below are additional details about the updates, including effective dates and implementation timelines.

Hall Render attorneys will be hosting an informative webinar on December 12, 2023, to discuss the new requirements and actions providers should take now following updates to the Hospital Price Transparency regulation. Register for the webinar here.

Key Points and Hospital Action Items

  • The changes will require every hospital subject to the Hospital Price Transparency regulation to update or overhaul their existing Machine-Readable Files (“MRF”).
  • All hospital MRFs must now comply with a CMS template, a markedly more prescriptive approach than previously allowed.
  • The MRFs must also meet several new requirements, some being technical.
  • Hospitals should begin updating files now in preparation for the January 1, 2024, and July 1, 2024, effective dates that apply to most of the new requirements.
  • CMS is also updating its monitoring and enforcement process as part of an ongoing increase in government oversight of hospital price transparency compliance.

Background

Since January 1, 2021, CMS has required hospitals to publicly post their “standard charges” for items and services in a consumer-friendly format and in a comprehensive MRF. CMS defined the term standard charges, to include payer-specific negotiated rates/charges, along with gross charges, de-identified minimum and maximum negotiated rates/charges and the discounted cash price, that apply to each item or service.

Since the Hospital Price Transparency regulation’s effective date, hospitals have worked to interpret and comply with price transparency requirements, and CMS has actively monitored industry compliance. Over the past two years, CMS has issued approximately 1,000 warning notices to hospitals and posted 14 notices of civil monetary penalties (half of which the target hospitals have appealed).

The latest updates reflect CMS’s “commitment to continual refinement of the regulatory requirements across all its price transparency initiatives.” CMS also emphasized that its goal is to “improve hospitals’ ability to comply, enhance the public’s ability to aggregate information (for example, for use in consumer-friendly displays), and streamline CMS’s ability to enforce the requirements.”

Mandatory Use of CMS Templates

Because hospitals reported their MRFs with a high degree of variation, CMS now requires more standardization. As a result, hospitals must:

  • Adopt a CMS template layout for the MRF, and
  • Encode their standard charge information using the CMS technical specifications and data dictionary.

CMS is allowing hospitals a choice of template format (either JSON or SCV) and the layout they will use, providing hospitals flexibility to select the least burdensome format and layout to incorporate into their current MRF development process.

Hospitals should also note that the new CMS templates are similar, but not identical, to CMS-developed existing voluntary sample formats. As a result, even hospitals currently using a CMS-developed voluntary format for the MRF will need to switch to a new template.

CMS has created a GitHub® repository that includes technical instructions and guidance for complying with the CMS template and data dictionary requirements.

CMS acknowledged that requiring hospitals to use a CMS template is a more prescriptive approach and a stark departure from the current regulation. CMS noted that some hospitals and patient advocacy groups asked CMS to standardize the MRF format and content requirements after years of ambiguity resulted in inconsistent compliance and a lack of uniformity across the industry.

Requiring hospitals to switch existing MRFs to a CMS template, however, imposes a significant one-time burden on hospitals, including hospitals with MRFs that meet the current regulatory requirements.

The effective date for this requirement is July 1, 2024.

New “Estimated Allowed Amount” Requirement

CMS finalized a new data element requirement for hospitals to display an estimated allowed amount (referred to as the “consumer-friendly expected allowed amount” in the proposed rule) to reflect an estimated dollar value when a standard charge, such as a payer-specific negotiated charge, is based on a percentage or algorithm. Hospitals previously did not have to include an estimated allowed amount when an established price with a payer was based on a percentage or algorithm.

This data element supplements the existing requirement to disclose payer-specific negotiated charges for all items and services. It does not replace the existing requirement. Hospitals must continue to include the payer-specific negotiated rates, along with the other standard charges. CMS expects these rates will continue to fall into one of three categories: (1) standard dollar amount, (2) standard algorithm or percentage, or (3) hybrid where a standard dollar amount can be identified but the final allowed amount is dependent on additional variables. In the latter two cases, the hospital must continue to describe what percentage of the algorithm determines the dollar amount for the item or service.

The hospital now must also calculate and post an estimated allowed amount, in dollars, when the negotiated rate can only be expressed as a percentage or an algorithm. CMS specified that the algorithm or percentage is based on the contract the hospital has with a particular payer for a particular plan, and the estimated allowed amount would be the average reimbursement in dollars that it has received from the payer in the past (the “historical allowed amount”). Because the “expected allowed amount” data element is meant to provide an estimate of what the algorithm produces in dollars, across the group of people covered by a particular payer’s plan, CMS clarified that such an amount should reflect the amount the hospital expects to be reimbursed for the item or service (or service package), on average.

The effective date for this requirement is January 1, 2025.

Compliance Statement

CMS added an affirmative requirement that hospitals make a “good faith effort” to ensure standard charge information is true, accurate, and complete, and to include a statement affirming this in the MRF.

CMS described that the purpose of this requirement is to “lessen public confusion related to the completeness of the data in the file and also improve CMS’s ability to assess both the completeness and accuracy of the [MRF].”

The effective date for this requirement is January 1, 2024.

Link on Hospital Homepage and Point of Contact

Each hospital must now include a link in the footer of its website, including on the homepage, which is labeled “Price Transparency” and links directly to the publicly available webpage that hosts the link to the MRF.

The hospital must also ensure the website hosting the MRF maintains a txt. file in the root folder that includes: (1) the hospital location name that corresponds to the MRF, (2) the source page URL that hosts the MRF, (3) a direct link to the MRF, and (4) a hospital point of contact information.

The effective date for this requirement is January 1, 2024.

Monitoring and Enforcement Updates

CMS finalized several updates to its enforcement process, including:

  • Updating its methods to assess hospital compliance,
  • Requiring hospitals to acknowledge receipt of warning notices,
  • Working with health system officials to address noncompliance issues in one or more hospitals that are part of a health system, and
  • Publicizing more information about CMS enforcement activities related to individual hospital compliance.

The requirement for hospitals to acknowledge receipt of warning notices and the option to work with health system officials to address noncompliance at one or more system hospitals are intended to help alleviate existing communication issues and inefficiencies present in the current enforcement process.

These changes will take effect January 1, 2024.

Full Implementation Timeline Tables

Implementation Timeline for CMS Template Adoption and Encoding Data Elements

Implementation Timeline for Other New Hospital Price Transparency Requirements