Hospital Pricing Transparency on the Horizon

The new rule mandates that hospitals disclose their prices.

Most providers already know that effective Jan. 1, 2021, the Centers for Medicare & Medicaid Services (CMS) is requiring that hospitals nationwide post all of their negotiated third-party rates in a machine-readable file on their website, and without barriers.

Additionally, CMS will require that hospitals select 300 of their top shoppable items and services, based on revenue or volume, including 70 from a pre-defined list provided by CMS, which includes MS-DRGs, private outpatient services, and same-day surgery services. For these items, providers must create a consumer display of the negotiated rates, or provide a system online that provides the corresponding patient out-of-pocket estimates.

For the purposes of this consumer display, consumers must be able to easily (and “without barriers”) search based on description, billing code, and payor. Location of each service should also be included.

We at Panacea have been telling hospitals since March that the process of pulling the data together for the machine-readable file will be an onerous task that will take four months, especially for health systems with more than 50 or 100 payor contracts, when those contracts have complex multi-provisional terms and rates.

Hospitals or health systems just starting now, at this late date, only have only two and a half months to post the machine-readable file on their website, along with the consumer display or estimation system. Accordingly, I would encourage them to start immediately. It is likely that providers starting now may be able to post a machine-readable file online and a consumer display sometime in January, but they may need an update in February or March to improve the quality or completeness of the data.

Hospitals that are not compliant, aside from surely enduring a public relations and public advocate backlash, will be subject to a $300 daily penalty, which for a 10-hospital health system would amount to more than $1 million per year. There is an appeal process, and noncompliant hospitals will first receive a letter and be given the opportunity to submit a corrective action plan.

So the takeaway here is for providers to take heed and start immediately, if they haven’t done so already.