CMS Releases Final Rule for Hospital Outpatient Prospective Payment System (HOPPS) Price Transparency Requirements

On November 15, 2019, the Centers for Medicare and Medicaid Services (CMS) released the final rule for establishing price transparency requirements for hospitals subject to the Hospital Outpatient Prospective Payment System (HOPPS) System.

These proposals first appeared in the calendar year 2020 HOPPS proposed rule in July and builds upon the Trump Administration’s executive order on “Improving Price and Quality Transparency in American Healthcare to Put Patients First” that was released in June 2019.

Of note, CMS also released a proposed rule aimed at bringing increased transparency of health plan costs to consumers. The final rule will be effective on January 1, 2021.

In the final rule, CMS finalized the definitions of “hospital,” “standard charges” and “items and services.” CMS has defined hospital as an institution in any state in which state or applicable local law provides for the licensing of hospital that is licensed as a hospital pursuant to such law or is approved by the agency of a state or locality responsible for licensing hospitals, as meeting the standards established for such licensing.

CMS is finalizing the proposal to define hospital “items and services” to mean 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.

CMS is finalizing the definition of ‘standard charges’ to include the following:

• The gross charge (the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts)
• The discounted cash price (the charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service)
• The payer-specific negotiated charge (the charge that a hospital has negotiated with a third-party payer for an item or service)
• The de-identified minimum negotiated charges (the lowest charge that a hospital has negotiated with all third-party payers for an item or service)
• The de-identified maximum negotiated charges (the highest charge that a hospital has negotiated with all third-party payers for an item or service)

Final List of Radiology Specific Shoppable Services

CMS also finalized requirements for making public a machine-readable file online that includes all standard charges for all hospital items and services. Similarly, CMS finalized the requirement for hospitals to make public their standard charges for 300 shoppable services. CMS finalized that if a hospital does not provide the 300 shoppable services, the hospital must list as many shoppable services as they provide. Below is an excerpt from the final rule to show the radiology services that are included in the list of the shoppable services.

CMS will require hospitals to make public and update the standard charge information at least once annually.

Furthermore, CMS established monitoring for hospital noncompliance and actions to address hospital noncompliance that include issuing a warning notice, requesting a corrective action plan and imposing civil monetary penalties. Hospitals may be subject to $300 maximum daily civil monetary penalties for noncompliance. The amount will be adjusted yearly based on the multiplier determined by the Office of Management and Budget. The final rule also described the process hospitals may use to appeal such penalties.