This post is part one of two in a series on new transparency requirements impacting both health plans and health care providers.

In an effort to assist patients in understanding the cost of hospital services, the Hospital Price Transparency rule at 45 C.F.R. § 180.10 et. seq., effective January 1, 2021, requires all hospitals to make public the following pricing information:

  1. A comprehensive machine-readable file containing the following:
    a. A description of each item or service provided by the hospital.
    b. The gross charge that applies to each individual item or service.
    c. Payer-specific negotiated rates that apply to each item or service for which a payer negotiated rate has been established. Each payer negotiated price must be clearly associated with the name of the applicable third-party payer and plan.
    d. De-identified minimum negotiated rates that apply to each item or service.
    e. De-identified maximum negotiated rates that apply to each item or service.
    f. Discounted cash prices that apply to each item or service.
    g. CPT, HCPCS or other billing codes used by the hospital for purposes of accounting or billing for the item or service.

Note that in the regulations, CMS uses the word “charges” rather than the word “rates” that we use above. The statutory provision which serves as the basis for these regulations require hospitals to post “a list of the hospital’s standard charges for items and services provided by the hospital…” However, CMS convinced the courts that affirmed the rule that the statutory use of “standard charges” included negotiated “rates” and consistent therewith, it used the phrase “negotiated charges” instead of “negotiated rates.” Herein, for ease of understanding, we use the more common term used by providers and payers —“negotiated rates” — in (c)-(e) above.

  1. A consumer-friendly list of standard rates for a limited set of “shoppable services.” Under this requirement, hospitals must publish their charges and the four types of rates listed in 1(c)-1(f) above for the hospital’s 300 most “shoppable services,” defined as “service[s] that can be scheduled by a healthcare consumer in advance.” CMS has specified 70 shoppable services that must be included in this list, but left it to each hospital to select the remaining 230 (or as many shoppable services as the hospital provides if the hospital does not provide 300 shoppable services).

Both lists must be updated on an annual basis. As noted, the regulations were effective on January 1. Numerous independent studies have shown generally limited compliance to date. CMS has stated that it is monitoring compliance with these requirements, but we are not aware of any investigations or other regulatory actions by CMS related to non-compliance. If a hospital is identified as noncompliant and fails to respond to or comply with CMS’ request to submit a corrective action plan, CMS may impose a civil monetary penalty of up to $300 per day (adjusted annually).

These requirements are extremely burdensome and costly for hospitals and critics have claimed, and there would appear little doubt, that CMS vastly underestimated the cost of compliance. The hospital industry challenged the rule, but their challenge has been rejected at the appeals level.

In part two of this series, we intend to provide a summary of the transparency rules implemented by the Consolidated Appropriations Act, 2021, which are effective on January 1, 2022 and impose additional requirements on health care plans and providers.

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Photo of Edward S. Kornreich Edward S. Kornreich

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied…

Past long-standing chair of Proskauer’s Health Care Department, Ed Kornreich is a recognized authority on the legal, regulatory and business issues related to health care services.

Ed works primarily on health care transactions, regulatory compliance, health care payment and governance issues for varied providers (both for-profit and not-for-profit), vendors, GPOs, distributors and entrepreneurs. His approach combines sensitivity to meeting regulatory business goals with a comprehensive and realistic assessment of the health care environment, and he is particularly experienced in dealing with the complex issues related to integrated health care systems.

After working for the Legal Aid Society, Ed entered private practice, where he helped represent a major public hospital corporation in a series of reimbursement disputes with the state and federal governments, and counseled New York area hospitals and nursing homes on reimbursement and operational issues. Thereafter, Ed served as General Counsel of St. Luke’s-Roosevelt Hospital Center, one of the largest teaching hospitals in New York. After leaving St. Luke’s-Roosevelt Hospital Center, Ed joined Proskauer as a Partner in 1990.

Ed frequently writes and lectures on Medicare and Medicaid reimbursement, health care integration, not-for-profit law and corporate governance issues, and the application of federal and state anti-kickback and “Stark” laws to health care transactions.

Photo of Elizabeth (Betsy) Rosen Siegel Elizabeth (Betsy) Rosen Siegel

Elizabeth (Betsy) Rosen Siegel is an associate in the Health Care Department. Her practice focuses on representing health care clients, including hospitals, hospital systems, academic medical centers, physician organizations and other care entities. Betsy provides legal advice on a wide range of regulatory…

Elizabeth (Betsy) Rosen Siegel is an associate in the Health Care Department. Her practice focuses on representing health care clients, including hospitals, hospital systems, academic medical centers, physician organizations and other care entities. Betsy provides legal advice on a wide range of regulatory, transactional and corporate matters, including Medicare/Medicaid reimbursement, fraud and abuse compliance, managed care contracting, HIPAA and data privacy, and general corporate and business planning.

In addition, Betsy maintains an active pro bono practice, which includes representing individuals in various immigration matters and representing not-for-profit organizations on a variety of matters. Betsy also serves on the Her Justice Junior Advisory Board.

Betsy earned her J.D. from The George Washington University Law School in 2013, while also earning her graduate certificate in health policy from The George Washington University School of Public Health and Health Services. While in law school, she worked as a health insurance counselor at the George Washington University Law Health Rights Law Clinic and was a member of the Public Contract Law Journal. Betsy also served as president of the Student Health Law Association and received the American Bar Association/Bureau of National Affairs Award given to the members of the graduating Juris Doctor class who have demonstrated excellence in the study of health law. Betsy received her B.S. in health care management and policy magna cum laude from Georgetown University in 2010.