A provision of the Affordable Care Act includes a requirement that hospitals disclose their standard charges to the public. 42 U.S.C. § 300gg-18(e) states that “[e]ach hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act.”

While the statute does not include an effective date, a reasonable interpretation is that the law was not self-implementing and only became effective when the Secretary issued her “guidelines.” CMS recently established guidelines in the FY 2015 Inpatient Prospective Payment System Final Rule (effective October 1, 2014) for how providers should comply with the statute. CMS’s guidelines include two options for providers to consider:

[O]ur guidelines for implementing [the statute] are that hospitals either make public a list of their standard charges (whether that be the chargemaster itself or in another form of their choice), or their policies for allowing the public to view a list of those charges in response to an inquiry.

79 Fed. Reg. 49854, 50146 (Aug. 22, 2014). CMS states that Congress included this provision in the ACA in order “to help patients understand what their potential financial liability might be for services they obtain at the hospital, and to enable patients to compare charges for similar services across hospitals.” Id.

While neither the statute nor the guidelines contain any sanction for non-compliance, hospitals of course should strive to comply with the law. The most obvious questions that arise under this provision are: what are “standard charges,” and how does a provider “make public” those charges?

On the first question, it appears that CMS has interpreted “standard charges” to mean amounts contained in a hospital’s chargemaster and appearing on claims for services. For instance, the guidelines themselves explicitly reference the chargemaster. CMS has posted on its website hospital chargemaster amounts appearing on Medicare claims for the 100 most common Medicare inpatient DRGs. In addition, CMS notes that MedPAC has suggested that providers be required to post their chargemasters online for public viewing. 79 Fed. Reg. at 50146. CMS agreed that this would be one (but not the only) way for hospitals to comply with the statute.

However, nothing in the statute nor the guidelines bars a hospital from reporting information in addition to chargemaster data. For example, a hospital may also make available with the chargemaster data its financial assistance policies for low-income patients, prompt pay discounts, and information regarding how copayments may or may not be affected by hospital charges. These resources would promote Congress’s purpose of helping patients understand their potential financial liability for hospital services.

Along with their standard charges for services, hospitals also must make available standard charges for diagnosis-related groups. Notably, CMS did not address how providers should make available standard charges for individual DRGs – and often providers do not have such charges. A DRG is the product of grouping numerous diagnoses and services that can vary from encounter to encounter based on an individual patient’s clinical condition. Compiling average charges by DRG would be labor-intensive and raise the risk of human error in attempting to manually map individual charges for items and services into a DRG. Assuming that a hospital does not have “standard” charges for DRGs, the hospital could credibly state that it has nothing to make public. Hospitals also could refer inquirers to the CMS website above.

CMS stated that MedPAC’s suggestion of posting the chargemaster online is not the only way to “make public” a provider’s standard charges. Hospitals may either make public their chargemaster or their policies for allowing the public to view a list of their charges. Thus, at a minimum, a hospital may provide public notice of its policy for making available its charges without necessarily publicly posting the charges themselves. Patients may be better served by such an approach. A typical hospital chargemaster uses technical language not readily understood by a layperson. Without proper context, patients may misinterpret what their financial liability may actually be for a given service. If a hospital posted online a policy requiring prospective patients come to the hospital during normal business hours to review charges with hospital personnel, that would likely be sufficient to comply with the statute while also helping advance the statute’s purpose.

CMS’s guidelines are available by clicking here.