Identify if consumers can actually use the information providedto shop.

Coordinate with relevant stakeholders, such as revenue integrity,to determine a compliance strategy.

Determine a timeline for compliance at your organization andidentify common pitfalls and challenges.

Postulate if you should complete the project in-house oroutsource to an external vendor.

These conversations might uncover the need to evaluate the validity of your chargemaster, prepare for negative externalities, or advance your broader patient financial experience strategy.

CMS has been pushing providers towards price transparency for several years. In 2019, CMS made their boldest move to-date and finalized the new hospital price transparency rule as part of the hospital outpatient prospective payment system, or HOPPS, for CY 2020. The final rule requires all licensed hospitals to publish payer-specific negotiated rates for services by January 1, 2021.

Immediately after the rule was released, it faced a flurry of opposition from payers and providers. The American Hospital Association (AHA) sued on the grounds that the rule surpassed the authority granted to the Department of Health and Human Services’ (HHS). The rule has since been upheld in a decision by United States District Court for the District of Columbia, Judge Carl Nichols, but it was subsequently appealed by the AHA.

The rule’s effective date of January 1, 2021, has also been challenged as hospitals and health systems argue that requiring these new measures amid a pandemic would result in undue burden. It’s unclear if HHS will grant an extension considering the urgency of the public health emergency.

The health care industry is confronting an affordability crisis. Consider almost any metric and there has been an increase in unsustainable costs. From a CMS standpoint, this rule is a necessary first step to improve affordability and transparency.

In our view, the rule could have significant implications across two major industry segments - providers and payers. The release of privately negotiated reimbursement rates will create winners and losers on both sides. Rarely do we see these industry stakeholders band together in opposition to a policy; it is indicative of just how disruptive the regulation could be.

Public price disclosures could put providers and payers on the defense.Providers may be forced to justify steep price variation, or face downward pricing pressure. Payers might be compelled to explain high-priced organizations in their networks. CMS could face scrutiny about inflated reimbursement for Medicare claims.

Providers may be forced to defend the cross-subsidy model. Few organizations can explain steep variation in price beyond market leverage. In the absence of superior quality, experience, or access, providers may be forced to accept lower rates. Substantially lower rates are likely to undermine existing revenue because of the cross-subsidy of private to public payers.

Market forces could create winners and losers, on both sides. Larger systems that leverage scale to negotiate higher rates could see their prices challenged. Smaller providers could use price data to negotiate higher rates, leading prices to spike in some markets. Regional markets may tilt toward dominant hospitals and health systems with a strong market position to withstand diminished pricing power.

The final rule requires hospitals to disclose five types of “standard charges”: gross charges, payer-specific negotiated charges, discounted cash prices, de-identified minimum, and de-identified maximum negotiated charges.

Hospitals will be required to publish charges in two formats. First, a machine-readable file that includes all standard charges for all items and services by physicians and non-physician practitioners employed by the hospital. This includes bundles delivered during an inpatient admission or outpatient visit.

The second format is a “consumer-friendly” display of all standard charges, except gross charges - for at least 300 ‘shoppable’ services, which CMS defines as any service that can be scheduled by a health care consumer in advance. 70 of these services will be determined by CMS, while the additional 230+ will be selected by each hospital.

Hospitals that offer an online price estimator tool may be exempt from the requirement to publish a consumer-friendly list of shoppable services. This provision is a modification to the original proposal and we believe it illustrates CMS’ willingness to work with providers that demonstrate a good faith effort to promote transparency.

CMS has also finalized monitoring and enforcement provisions. Hospitals that are non-compliant will receive a written warning notice, are required to submit a corrective action plan, and are subject to civil monetary penalties of $300 per day and per facility.