On November 15, 2019, the U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) announced final regulations implementing greater price transparency requirements for hospitals. Issued on the heels of a Trump Administration Executive Order directing HHS to propose regulations on increased price transparency, the new regulations modify and finalize CMS’ earlier guidance implementing section 2718(e) of the Public Health Service Act, to further expand price transparency requirements for hospitals. (See our previous analysis of the Executive Order here.) Effective January 1, 2021, the new regulations will be located at 45 C.F.R. 180.00 et. seq. and will require hospitals to make accessible specific “standard charge” pricing data for all “items and services” provided. Furthermore, the regulations include special requirements for posting pricing information about “shoppable services.” Key details are summarized below:

Important Definitions (45 CFR 180.20)

  • Hospital. The regulations apply to any institution licensed as a hospital under applicable state law.
  • Items and Services.The regulations require pricing data on all items and services “including individual items and services and service packages, that could be provided by a hospital to a patient in connection with an inpatient admission or an outpatient department visit for which the hospital has established a standard charge.”
  • Shoppable Service.The regulations define a “shoppable service” as a service that a consumer can schedule in advance.
  • Standard Charge.Hospitals must post the following five standard charges:
    1. Gross charge –The price on the hospital’s chargemaster with no discounts.
    2. Payer-specific negotiated charge – The charge negotiated with a third-party payer.
    3. De-identified minimum negotiated charge – The lowest charge the hospital has negotiated with all third-party payers for an item or service.
    4. De-identified maximum negotiated charge – The highest charge the hospital has negotiated with all third-party payers for an item or service.
    5. Discounted cash price – The charge for an individual who pays cash for an item or service.

Substantive Requirements (45 CFR 180.40-180.60)

All hospitals must now make public two items related to pricing: (a) a machine-readable file containing a list of all standard charges for all items and services, and (b) a consumer-friendly list of standard charges for a limited set of shoppable services. Each of these components are described in more detail below.

  • All Items and Services.Each hospital must establish a list of standard charges for all items and services it provides. This list must include a description of each item or service, the five standard charges (applicable to both inpatient and outpatient services), and any common identifier billing or accounting code used by the hospital. This information must be published on a publicly accessible website in a single searchable digital file without any barriers to access. The posting requirement will apply to each hospital location operating under the same license if the location has different standard charges.
  • Shoppable Services. Each hospital must establish a list of standard charges for 300 shoppable services. This list must include any of the 70 CMS-specified shoppable services the hospital provides, and as many additional shoppable services determined by the hospital as needed to reach the 300-service threshold (unless the hospital does not provide 300, in which case all must be published). The list must include a plain language description of the service, indicators of CMS shoppable services that are not offered, the standard charges – except for the gross charge – for all shoppable services (the gross charge only needs to be posted if the hospital does not offer a discounted cash price), the locations where the shoppable service is provided and any location-specific pricing, and any common identifier billing or accounting code used by the hospital. The hospital may choose the format of publication, but it must be on the internet, accessible without barriers, and prominently located. Compliance with this requirement can occur if a hospital maintains an internet-based price estimator tool for the relevant services.

Enforcement (45 CFR 180.70-180.90)

CMS will monitor compliance by fielding complaints about hospitals, reviewing individuals’ or entities’ analysis of noncompliance, and auditing hospital websites. If noncompliance is detected, CMS will have the authority to issue warning letters, request a corrective action plan, and potentially impose civil monetary penalties up to a maximum of $300 per day.

The regulations go into effect January 1, 2021, giving hospitals a little more than a year to develop a plan for compliance.

This post was co-authored by Michael Lisitano, legal intern at Robinson+Cole. Michael is not yet admitted to practice law.