Health Law Alert: Hospital Pricing Transparency Rule to Go Into Effect On January 1, 2019

October 03, 2018

On August 2, 2018, the Centers for Medicare & Medicaid Services (CMS) issued its Final Rule regarding publishing a hospital’s standard charges for items and services provided. The Patient Protection and Affordable Care Act (ACA) amended Section 2718(e) of the Public Health Service Act to require that:

Standard Hospital Charges
Each hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under Section 1395ww(d)(4) of this title. 42 USC § 300gg-18.

Although this requirement for hospital charge transparency has technically been in effect since the passage of the ACA, CMS finalized its guidance on compliance with this requirement in the fiscal year 2019 Inpatient Prospective Payment System (IPPS) Final Rule published in the Federal Register on August 17, 2018. CMS states in the Final IPPS Rule that to improve public accessibility of hospital charge information, “Effective January 1, 2019, we announced the update to our guidelines to require 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. This could be in the form of the Chargemaster itself or another form of the hospital’s choice, as long as the information is in machine readable format.” CMS goes on to state that it is not “at this time” requiring payor‑specific information under the guidelines. According to CMS, a “machine readable format” is a format that the data can be read or processed by a computer.

Most hospitals will likely comply with these guidelines by posting their charges through a link on their hospital’s website. Hospitals should make these website links easy to identify so that patients can locate the link when surfing the hospital’s website. Hospitals also need to remember to update their charge information posted on their website at least annually in compliance with the guidelines.

CMS does not state in the Final IPPS Rule what penalties will be assessed against hospitals that fail to comply with the charge transparency posting requirements. CMS is seeking comment on possible sanctions against hospitals that fail to comply, such as:

  1. Posting the hospital’s name publicly.
  2. Making hospitals attest to compliance on their CMS 855‑A enrollment applications.
  3. Posting complaints against the hospital publicly.
  4. Imposing civil money penalties against hospitals.

Hospitals should take steps now to consider how they will comply with these charge transparency guidelines so that they are ready to post their charges by no later than the deadline of January 1, 2019. For a copy of the relevant portion of the Final IPPS Rule addressing the hospital pricing transparency guideline, please click here.