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2020 OPPS Proposed Rule: Further Price Transparency Requirements for Hospitals

In the recently released CY 2020 Outpatient Prospective Payment System (OPPS) proposed rule, the Centers for Medicare & Medicaid Services (CMS) introduced policies that, if finalized, would require hospitals to post a list of standard charges for items and services provided. This proposed rule updates the requirements set forth in the FY 2015 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) final rule, which aimed to improve the transparency of hospital prices by requiring either standard charges to be posted online or compliance with patient requests for same. This rule was finalized on August 2, 2018 and came into effect on January 1, 2019. HLP previously wrote about the FY 2015 IPPS/LTCH rule here.

Following a June 24, 2019 Executive Order and several listening sessions and CMS-solicited comments, CMS offered numerous updates to its policy in the 2020 OPPS proposed rule. These changes would include defining several standard terms used in the policy, requiring the posting of 300 “shoppable services” to the hospital’s website, asking for payer-specific information, and penalizing noncompliant hospitals.

In order to ensure every hospital operating in the U.S. and in U.S. territories complies, CMS seeks to broadly define “hospital” as an institution in any State in which State or applicable local law provides for the licensing of hospitals and is either: licensed as a hospital pursuant to such law or, approved, by the agency of such State or locality responsible for licensing hospitals as meeting the standards established for such licensing. CMS does note that the rule would not apply to ambulatory surgical centers or nonhospital sites offering laboratory or imaging services but does encourage these facilities to comply with the policy. Furthermore, the rule would not apply to federally owned or operated hospitals, such as the U.S. Department of Veterans Affairs or hospitals operated by an Indian Health Program.

“It’s unfortunate that the agency and the administration continue to push hospitals to do even more burdensome work around price transparency, going against its own Patients over Paperwork initiative, given provider comments over the past two years about how useless charge information from charge description masters (CDMs) is in helping patients make decisions about where to seek health care services or informing or reducing costs associated with health care,” says Jugna Shah, MPH, president of Nimitt Consulting, Inc.

In an attempt to clarify terms of uncertain meaning, CMS proposes the ways in which they will define relevant terms as related to the rule. These proposed definitions include:

  • Standard charges”: the hospital’s gross charge and payer-specific negotiated charge for an item or service;
  • Gross charge”: the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discount;
  • Payer-specific negotiated charge”: the charge that the hospital has negotiated with a third-party payer for an item or service;
  • Items and services”: all items and services (including individual items and services and service packages) 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 charge;
  • Service packages”: the aggregation of individual items and services into a single service with a single charge; and,
  • Shoppable services”: a service that can be scheduled by a health care consumer in advance.

However, as CMS acknowledges, the full effect of price transparency of payer-specific negotiated charges is largely unknown. Thus, the release of this amount of data may be ultimately proven to be a wasted effort for hospitals across the country.

“What is especially odd,” says Shah, “is that those in charge don’t seem to realize or accept that CDM charges and prices have practically nothing to do with what patients pay or how they seek healthcare services.”

The 2020 OPPS proposed rule suggests that noncompliant hospitals would first be notified of any deficiencies in their listing of their charges. The hospital would then be allowed to submit a corrective action plan before the agency moves to impose any civil monetary penalties (CMPs). The CMPs suggested for continued noncompliance with the 2020 OPPS rule includes a $300 per day penalty, capped at $100,000 per year. However, CMS is requesting comment on this proposed enforcement structure.

In response to the 2020 OPPS proposed rule, the Association of American Medical Colleges issued a joint statement with four other organizations (the American Hospital Association, America’s Essential Hospitals, the Children’s Hospital Association, and the Federation of American Hospitals) urging CMS not to finalize this policy. As noted in the letter, the organizations believe that “disclosing the negotiated rate between insurers and hospitals will not help patients make decisions about their care. Instead, this disclosure could harm patients by reducing patient access to care.”

CMS is seeking comment on the potential consequences of this proposed policy, announced July 29, 2019.

For further information regarding the 2020 OPPS proposed rule or price transparency requirements for hospitals, please contact Jessica L. Gustafson, Esq. at (248) 996-8510.

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