CMS Price Transparency Rule – What You Need to Know

August 17, 2020 By: Ken Magness

Price transparency has always been a persistent issue in healthcare. When patients don’t understand what they are being charged and what they will owe it leads to financial stress on the patient and the possibility of not being able to pay their medical bills.

On November 15, 2019, CMS finalized policies requiring hospitals to disclose standard charges for items and services in an attempt to create market competition and drive prices down. As we are in the middle of a global pandemic, many hospitals thought CMS would delay this ruling. However, last month a federal judge dismissed a challenge by hospital groups claiming the rule would force them to disclose private negotiations with insurers, undermine competition and violate their First Amendment Rights.

Although the American Hospital Association is filing a rapid repeal and 34 state hospital associations have asked for a delay, time is running out to be compliant by January 21, 2021.

The Final Rule

Hospitals must make public their standard charges in two ways:

  1. Comprehensive Machine-Readable File

    • A single machine-readable rile that contains all five types of standard charges for all of the items and services provided by the hospital.
    • Based on public comment, CMS believes this information and format is most directly useful for employers, providers and tool developers who could use these data in consumer-friendly price transparency tools or who may integrate the data into electronic medical records and shared decision making tools at the point of care.
  2. Consumer-Friendly Shoppable Services 

    • A consumer-friendly list of some types of standard charges for a limited set of “shoppable services” (including 70 CMS-specified and 230 hospital-selected) provided by the hospital. A shoppable service is a service that can be scheduled by a health care consumer in advance.

This rule applies to all hospitals and must be easily accessible and updated annually. Failure to comply means a daily $300 penalty.

The Impact on Hospitals

Meeting the deadline and maintaining compliance with this rule will not be a small task. CMS estimates that each hospital will spend an average of 150 hours and nearly $12,000 to review and post their standard charges for 2021 and some experts think that projection is low.

If hospitals haven’t started preparing for this rule, they may not be able to meet the deadline without help from external resources.

How to Prepare

  1. Assemble a task force.
    Complying with this rule will be a large undertaking and involve members from all revenue cycle departments as well as legal, IT and compliance. All members of the task force should fully understand the final rule and how everyone plays a role in meeting the requirements.

  2. Locate and organize payer contracts.
    The next step is to conduct a comprehensive review of all payer contracts and how the five standard charges break down for each item or service. The five standard charges are: 
        • gross charges
        • payer-specific negotiated charges
        • discounted cash prices
        • de-identified minimum negotiated charges
        • de-identified maximum negotiated charges

These charges, which include everything from supplies and facility fees to room and board, need to be updated annually. Bring your task force together to build a payer grid that matches key contract terms to revenue and usage.

To meet the shoppable services requirement, your task force should execute claim analysis for the most common services, including any primary and ancillary services that accompany a given shoppable service. This file should also include standard charges (with the exception of gross charges) and be prominently displayed on your website. 

Meeting both parts of the mandate begins with good data. Collaborate with other stakeholders to retrieve and review CDM data, revenue and usage data by payer, lists of scheduled encounters, contract payer grids, and remit data. 

3. Consider a price estimation tool.
Offering an online estimation tool that is consumer-friendly, free and prominently displayed on your website and accessible without having to create an account or password, will put your hospital in compliance with the shoppable services requirement.

Quadax is here to help. Our configurable Patient Access Management software and automated workflow ensure successful outcomes at each patient touch point: insurance verification, patient pay estimates, medical necessity and propensity to pay, while merging front and back end functions, leveraging data and collecting payments upfront.

Let’s take on the revenue cycle together!

Ken MagnessKen Magness is a focused healthcare professional with more than a decade of experience in helping clients understand the true value of automation in the revenue cycle management process. As the Strategic Initiatives Leader at Quadax, Ken and his team are passionate about connecting with healthcare providers to help them create and leverage the appropriate technology solutions to optimize the revenue cycle process and improve the experience of their patients and staff.

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