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Hospitals Continue to Struggle with Pricing Transparency Requirements

Complying with the federal pricing transparency requirements

By Adam Abramowitz, Senior Manager, Sales and Marketing

Hospitals must meet a Jan 1, 2021 deadline to comply with the Centers for Medicare and Medicaid Services’ (CMS) Final Rule for updated pricing transparency requirements.  The requirements mandate that hospitals must have both a machine-readable file of their pricing and negotiated rates and a collection of “Shoppable Services” with the same pricing and rate information to be made public on their websites by the deadline.  In working with clients to comply with the mandate, and attending numerous public information sessions on pricing transparency, CBIZ KA Consulting Services, LLC (CBIZ) has found that hospitals are struggling to assemble the required information to meet CMS’s deadline.

For different reasons, hospitals have had problems complying with both aspects of CMS’s mandate.  The Shoppable Services component requires hospitals to use a combination of CMS-specified services and their own high-volume elective services to arrive at compliance with this portion of the Pricing Transparency Rule.  Although hospitals may have contract management systems that allow their high-volume services to be tabulated easily, many have encountered difficulties with utilizing their systems.  In other cases, hospitals have assumed that their contract management systems provide certain data, but after additional investigation, they realized that they had to enlist external resources to help them comply with the Rule.  For hospitals that have had to implement manual aspects into their data collection for high-volume services, the process has led to a more arduous endeavor than anticipated.

Hospitals have also had challenges in complying with the machine readable file component.  To comply with this aspect of the Rule, a hospital must include all contractual pricing structures for each service.  For example, if a hospital has six different managed care contracts, the hospitals must present all reimbursement and pricing structures for a given service.  CMS also includes Managed Medicare and Medicaid payers with this reporting requirement, further complicating the scope of work.  Many hospitals have different prices for the same service and same payor depending on which subset of covered lives is part of a particular contract.  It’s not enough for hospitals to list their pricing by payer; they must publish all of the pricing structures for any code used for billing or accounting for an item or service, including HCPCS codes, DRG codes or other common payor identifiers.

Hospitals must submit standard pricing in five different categories to comply with the CMS Rule:

  • Gross Charge
  • Discounted Cash Price
  • Payor-Specific Negotiated Charge
  • De-identified Negotiated Minimum Charge
  • De-identified Negotiated Maximum Charge

Similar to the problems incurred with complying with other aspects of the Rule, some hospitals have had difficulty obtaining this information in their charge description masters and contract management systems.

Hospital Pricing Transparency

Standardizing the process to calculate the de-identified negotiated minimum/maximum charges will test a provider’s ability to link and identify like claims paid under alternate payment schemes.  For example, managed care companies use a variety of outpatient reimbursement methodologies.  To comply with the minimum/maximum comparison, providers will need to reprice claims based on disparate methodologies to fulfill the breadth of the comparison: case rates will need to be compared against APC methods, percent of charges, and fee schedule matrices.

Although professional associations and organizations continue to lobby and pursue legal challenges to delay the implementation of the new pricing transparency guidelines, all current indications are that the new Rule will go into effect on January 1, 2021. In June, yet another legal challenge to the Rule was struck down.

Working with clients to comply with the Rule, we know that this process can be time-consuming and requires a coordinated effort to obtain, validate and review all of the required information.  For hospitals that have yet to start with their compliance efforts, CBIZ recommends that you begin immediately.  Depending on the state of your contract management system and charge description master, compliance for the Rule may require a significant time and resource investment.  We would also recommend that you perform a thorough compliance audit prior to publishing your information publicly.  CBIZ has found that many hospitals have not listed a number of contractual payment structures and also have failed to comply with CMS’s Shoppable Services component prior to publishing their information.

For additional information about complying with CMS’s 2021 pricing transparency rule, please contact Adam Abramowitz at aabramowitz@cbiz.com or 609-220-5627.

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