Knowledge Base Article

In the 2020 Outpatient Prospective Payment System (OPPS) Proposed Rule, CMS puts forth new proposed requirements for hospitals to make public a list of their standard charges. The basic requirement from the Public Health Services Act “requires each hospital operating within the United States for each year to establish (and update) and make public a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups.” The 2019 OPPS Final Rule required “hospitals to make available a list of their current standard charges via the Internet in a machine-readable format and to update this information at least annually, or more often as appropriate.”

I encourage those who will be dealing with the implementation of whatever requirements become final to read the proposed rule because understanding the reasoning and considerations behind the decisions is often beneficial. The discussion in the 2020 proposed rule includes the details and all the whys and wherefores of the proposals, but let’s start with some of the facts. The basics of the new proposal is an expansion of hospital charge display requirements to include charges and information based on negotiated rates and for common shoppable items and services, in a manner that is consumer-friendly.

Definitions

CMS includes numerous definitions throughout their discussion for additional clarity to the requirements. Some of these include:

• Hospital – an institution licensed as a hospital or approved as meeting licensing standards pursuant to State/local law.
• This includes critical access hospitals (CAHs), inpatient psychiatric facilities (IPFs), sole community hospitals (SCHs), and inpatient rehabilitation facilities (IRFs).
• It does not include entities such as ambulatory surgical centers (ASCs) or other non-hospital sites-of-care from which consumers may seek health care items and services. CMS encourages such sites to make their charges public, but it is not required.
• It also does not apply to federally-owned or operated hospitals, such as VA hospitals, because these facilities do not provide services to the general public and the established payment rates for services are not subject to negotiation.
• Items and Services – 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.
• This includes supplies, procedures, room and board, use of the facility and other items (generally described as facility fees), services of employed physicians and non-physician practitioners (generally reflected as professional charges), and any other items or services for which a hospital has established a charge.
• It does not include physicians and nonphysician practitioners who are not employed by the hospital because they are practicing independently, establish their own charges for services, and receive the payment for their services.
• Chargemaster – the list of all individual items and services maintained by a hospital for which the hospital has established a standard charge.
• Standard charges mean “gross charges” and “payer-specific negotiated charges.”
• Gross charges are the charges for individual items or services that are reflected on a hospital’s chargemaster.
• A “payer-specific negotiated charge” is the charge the hospital has negotiated with a third-party payer for an item or service. Payer negotiated charges would include those charges negotiated with Medicare Advantage plans, but would not include Medicare Fee-for-Service rates since they are not negotiated.

Requirements for Standard Charges

The Proposed Rule is prescriptive about the type of information that should be displayed online in a single digital file that is machine readable to ensure uniformity.

• The file should include the item, service, or service package description; applicable codes, such as CPT, HCPCS, DRG, or NDC codes; revenue codes; the gross charge; and all payer-specific negotiated charges for that item/service linked with the name of the third-party payer.
• Examples of machine-readable formats include, but are not limited to, .XML, JSON and .CSV formats. A PDF is not an acceptable format.
• Hospitals can choose where to post the file as long as it is on a publicly-available webpage, is prominently displayed and clearly identifies the hospital location. The charge data must be easily accessible and digitally searchable. The proposed rule further defines some of these terms.
• The files must be updated at least annually and hospitals should indicate the date of the last update.

Requirements for “Shoppable Services” Charges

In addition to the posting of Standard Charges in a machine-readable format as described above, CMS is also proposing that hospitals post their payer-specific negotiated rates for a set of common “shoppable services.” Shoppable services are defined as a service package that can be scheduled by a patient in advance. The “service package” includes charges for the primary service plus charges for ancillary items and services that are customarily provided with the primary service, such as labs, x-rays, drugs, room charges, therapy, employed professional services, etc. The posting of these shoppable services must be in easily-understandable language and searchable by service, code, or payer.

CMS would require hospitals to post a listing of 300 shoppable services. Those must include services selected by CMS if those services are performed by the hospital. These 70 CMS-selected services are listed in the proposed rule. The hospital will select the remaining shoppable services up to the total of 300 services. In addition to the plain-language description, code, and payer charge, the hospital must include a list of the associated ancillary services with payer charges, and the location where the service is provided (such as the clinic name, if applicable). The hospital must also have a paper copy of this information for shoppable services, like a brochure or booklet, that can be provided to patients within 72 hours of the patient’s request.

Monitoring, Penalties, and Appeals

Finally, CMS is proposing to establish a mechanism for monitoring and the application of penalties for noncompliance. CMS will rely mainly on complaints and consumer reports of non-compliance for now, but may consider audits in the future. For hospitals that are non-compliant, CMS would issue a written warning and request a corrective action plan (CAP) from the hospital. “If the hospital fails to respond to CMS’ request to submit a CAP or comply with the requirements of a CAP, CMS may impose a CMP (up to $300 per day) on the hospital and publicize the penalty on a CMS website.” Hospitals will have the right to appeal CMS’s decision to impose penalties.

Those are the facts, but what is the reality of these proposals? If you have read any articles about this topic, you are aware there are many concerns about CMS’s requirements and even their understanding of the whole process of hospital charges and negotiated rates. For example, one sentence from the Proposed Rule states, “The hospital’s billing and accounting systems maintain the negotiated charges for service packages which are commonly identified in the hospital’s billing system by recognized industry standards and codes.” That statement is not usually true. Hospitals generally negotiate payment rates, not charges. The claims that go out to payers contain the standard charges from the chargemaster. The payer then pays based on negotiated payment rates. Hospitals often do not even know what the payer will be paying until the remittance. This is especially true for payers that pay based on service packages, such as DRGs or other groupings.

Other concerns with CMS’s proposals are legal concerns regarding publishing negotiated prices, the effect of published rates on hospital price decisions, the large volume of different negotiated rates and the fact that associated services are likely to vary from patient to patient based on the patient’s condition and needs. The hospital charge and payment system is complicated. I am no fonder of the current system than many others, but maybe we need to address the system itself first before we try to publicize something that is basically too complicated to communicate.

CMS is accepting comments on the Proposed Rule until 5 p.m. EST on September 27, 2019. I encourage those with concerns about the price transparency proposal to submit their comments.