Federal executive agencies recently published two rules, one final and one proposed, aimed at publicizing the various costs associated with health care. A final rule, promulgated by the Department of Health and Human Services (HHS) via the Centers for Medicare & Medicaid Services (CMS), requires hospitals to establish, update, and publish online a list of standard charges for health care items and services. The proposed rule, issued jointly by the Departments of Health and Human Services, Labor, and the Treasury, would impose disclosure requirements on health insurers and group health plans.
Final Rule: Price Transparency
The CMS final rule, Price Transparency Requirements for Hospitals to Make Standard Charges Public, takes effect January 1, 2021. Specifics on the rule follow.
The final rule requires hospitals to publish five types of “standard charges.”
- Gross charges—“the charge for an individual item or service that is reflected on a hospital’s chargemaster, absent any discounts”
- Discounted cash prices—“the charge that applies to an individual who pays cash, or cash equivalent, for a hospital item or service”
- Payer-specific negotiated charges—“the charge that a hospital has negotiated with a third-party payer for an item or service”
- De-identified minimum negotiated charges—“the lowest charge that a hospital has negotiated with all third-party payers for an item or service”
- De-identified maximum negotiated charges—“the highest charge that a hospital has negotiated with all third-party payers for an item or service”
CMS broadly defines “hospital” to mean “an institution in any State in which State or applicable local law provides for the licensing of hospitals, that is licensed as a hospital pursuant to such law, or is approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing.” As such, the agency expects to impact approximately 6,000 hospitals.
Hospitals must publish standard charges for “all items and services.” Applicable items and services include all “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.”
In addition, a hospital must publish standard charges for “shoppable services” (and related ancillary services, as deemed applicable by each hospital). Shoppable services are services “that can be scheduled by a health care consumer in advance.” Hospitals must publish standard charges for 70 CMS-specified shoppable services in addition to at least 230 hospital-selected shoppable services. Each hospital must determine whether ancillary services customarily accompany a shoppable service and, if so, how best to display charges.
For “all items and services” as well as “shoppable services,” hospitals must, generally, publish a description of each applicable item or service; certain required sets of standard charges for each; and any code used by the hospital for purposes of accounting or billing (including, but not limited to, the CPT code, HCPCS code, DRG, NDC, and other common payer identifiers). Information subject to this rule must be published online. The rule requires annual updates to this information. Penalties for noncompliance include Corrective Action Plans and Civil Monetary Penalties up to $300 per day (adjusted annually).
Proposed Rule: Transparency in Coverage
The proposed rule aims to equip those who purchase health insurance or enroll in a group health plan (collectively known as “members”) with adequate information about the amounts that will be covered and amounts they will need to pay to allow them to make informed health care choices, and to effectively shop for competitively priced health care items and services.
Disclosure on Request
The proposed rule requires insurance and group health plans to provide cost information regarding specific health care items and services to members on request. It is expected that the information will be provided in a form similar to an Explanation of Benefits (EOB). The information must include the following seven elements to the extent they affect a member’s cost-sharing liability.
- Estimated Cost-Sharing LiabilityEstimated Cost-Sharing Liability encompasses all applicable forms of cost-sharing for a particular covered service, including deductibles, coinsurance, and copayments. However, it does not include premiums, balance-billing for out-of-network providers, or non-covered services.
- Accumulated AmountsThese are amounts credited to the member toward reaching certain limits at the time of the request. The limits include deductibles, maximum out-of-pocket amounts, and limits on the number of covered items or visits in a defined time period. Where a member is enrolled in a family plan, the accumulated amounts include the amount the member has incurred toward meeting individual and family deductibles or out-of-pocket limits.
- Negotiated RateThis is the amount the plan, insurer, or third-party administrator has contractually agreed to pay an in-network provider for a covered item or service.
- Out-of-Network Allowed AmountThis is the maximum amount a plan or insurer would pay for a covered item or service furnished by an out-of-network provider without taking a member’s Estimated Cost-Sharing Liability into account.
- Items and Services Content ListThis element applies only to bundled payment arrangements, where a number of different items and services are bundled together under a single charge. This list includes each covered item or service included in the bundled payment arrangement. The Estimated Cost-Sharing Liability would be given only for the bundled arrangement as a whole and not each item or service.
- Notice of Prerequisites to CoveragePrerequisites are certain medical management techniques that require action by the member before a plan or issuer will pay, including concurrent review, prior authorization, and step therapy (or fail-first protocols). They do not include medical necessity, generally.
- Disclosure NoticeThis notice must inform members that:
- Out-of-network providers may balance-bill and that the Cost-Sharing Liability Estimates do not account for the balance-billed amount;
- The actual charges may differ from those in the estimates depending on which items or services are received at the point of care; and
- Estimates do not guarantee that coverage will be provided for a particular covered item or service.
The notice may include other appropriate disclosures or information.
Required General Disclosures
Under the proposed rule, plans and insurers would be required to post cost-sharing information where members could access it using an internet-based, self-service tool. Plans and insurers would also need to publish two machine-readable files: one with information regarding rates negotiated with in-network providers, and the other with historical data showing allowed amounts for covered items and services furnished by out-of-network providers.
Special Rule to Prevent Duplication
To the extent that a plan consists of insured group health coverage, the plan would meet its disclosure requirements if it enters into a written agreement with the insurer that requires the insurer to provide the information specified in the regulation. The insurer would then be solely liable for any failure.
Medical Loss Ratio (MLR) Program
The rule proposes amendments to MLR rules to allow issuers offering group or individual health insurance coverage to receive credit in their MLR calculations for savings that result from the members’ shopping for and receiving care from lower-cost, higher-value providers. The agencies are accepting comments on the proposed rule.