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Price Transparency Preparedness – Two Hospital Considerations

Author: Dawn Osborn, MHS, RHIA, CPC, MT

We are already halfway through 2020, with a new and fast approaching federal regulation specific to hospitals. Federal price transparency requirements, or more specifically the CY 2020 Hospital Outpatient Prospective Payment (OPPS) Updated Hospital Price Transparency Requirements (CMS-1717-F2), were issued by the Centers for Medicare & Medicaid Services (CMS) on Nov. 15, 2019, and require hospitals to disclose the rates they negotiate with insurers beginning January 1, 2021.

Although these regulations are currently part of a lawsuit filed by a group of healthcare entities including the American Hospital Association, the Association of American Medical Colleges, the Federation of American Hospitals and the National Association of Children’s Hospitals, the legislation is still on target for 2021 and has not been delayed as of the time of this writing. What should hospitals consider when preparing for these requirements?

Expanded Reporting Requirements

Hospitals are already required to post their chargemaster (a list of prices for tests and services billed for by a healthcare entity). Pricing transparency adds additional reporting requirements, broadening the scope to include:

  • Any self-pay discounted pricing;
  • The hospital’s lowest and highest negotiated prices according to contracts including unidentified payers and at least one payer-specific contracted rate schedule
  • Detailed pricing for “shoppable services.” Hospitals must report the details of the pricing for 70 CMS defined “shoppable services” such as a Colonoscopy or Hysterectomy, as well as 230 hospital-defined “shoppable services”.

The regulations outline specific requirements for the formatting of the reports, as well as where they are to be published – in a visible location online that does not require a password or for the consumer to identify themselves.

One thing to note is that, for this regulation, CMS included all Hospitals, even those “not paid under the Medicare Outpatient Prospective Payment System (OPPS) in the United States”. This broader definition of hospitals encompasses both Critical Access and Children’s Hospitals, which are sometimes excluded from such legislation. Another item of note is that the regulations require both reports to be updated at least annually, with the review date predominantly displayed.

Failure to comply with the rules can result in CMS requesting a Correction Action Plan (CAP) from the Hospital for noncompliance. Also, CMS can impose a Civil Money Penalty (CMP) on the hospital and publicize the penalty on the CMS website for failure to comply. The monetary penalties are currently set at $300 per day, due 60 days from the date of notification.

Preparation Considerations

It is prudent for hospitals to begin taking the necessary steps to comply with the Price Transparency Rule’s requirements. There are two aspects of preparedness a hospital should consider.

The first is reporting. A report of this complexity is something that will require careful creation by the hospitals and may require information from many sources, including not only the hospital’s chargemaster/billing files, but also coding, contract management, the data warehouse, and other sources. Also, the reporting content and web presentation format must comply with CMS requirements detailed here on a MedLearn Call hosted by CMS.

The second is the strategy. Providers must be prepared to communicate with patients regarding the data with the understanding that their consumer-decisions will be based on this information. Determining which shoppable services to include in the published list is a strategic decision based on how your organization wants to be viewed in the market. Making the information as consumer-friendly as possible is key to success.

Although it may seem counter-intuitive to begin preparing to adhere to the Price Transparency Rule in light of pending litigation, it is expected that the government will continue the push for increased transparency. Hospitals should begin making pragmatic decisions to ensure that the strategy and reporting processes are ready for when the rule goes into effect.

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