Chapter 2 Update: Hospital Price Transparency

Imagine that you or a family member have medical insurance that covers inpatient and outpatient services at several hospitals. Suppose that those hospitals are equally well-regarded in all aspects of accreditation and reputation. How do you choose one over another? Perhaps they differ in costs of the same service and that is important to factor into your choice. Until now, it was very difficult to obtain accurate pricing information and be able to compare them. That has now changed due to very recent final regulations that require hospitals to disclose pricing information in a consistent consumer-friendly format that allows easy access and objective comparisons by the consumer.  Although the pricing information isn’t required to be available until early next year, some hospitals are already beginning to post some of their pricing.

The intent of these regulations is to both allow prospective patients the opportunity to compare hospital pricing for anticipated services and also to stimulate more price competition in the health sector. To this end, the Centers for Medicare & Medicaid Services (CMS)issued a final rule November 15, 2019 that requires hospitals to disclose the rates they negotiate with insurers beginning in January 2021 [1],[2]. The main elements are described in a Fact Sheet [CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements (CMS-1717-F2)][3]. The main elements include the following:

  • Definition of ‘Hospital’
  • Definition of ‘Standard Charges’
    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).
  • Definition of Hospital ‘Items and Services’
    Examples of these items and services would be supplies, procedures, room and board, use of the facility and other items (generally described as facilities fees), services of employed physicians and non-physician practitioners (generally reflected as professional charges), and any other items or services for which a hospital has established a standard charge.


  • Requirements for Making Public All Standard Charges for All Items and Services in a Machine-Readable Format
  • Requirements for Displaying Shoppable Services in a Consumer-Friendly Manner.
    Hospitals must make public standard charges for at least 300 “shoppable services” (including 70 CMS-specified and 230 hospital-selected) the hospital provides in a consumer‑friendly manner. We define ‘shoppable service’ to mean a service that can be scheduled by a health care consumer in advance. CMS believes these requirements will allow healthcare consumers to make apples-to-apples comparisons of payer-specific negotiated charges across healthcare settings. Specifically, hospitals must do the following:
    • Provide estimates for as many of the 70 CMS-specified shoppable services that are provided by the hospital, and as many additional hospital-selected shoppable services as is necessary for a combined total of at least 300 shoppable services.
    • Allow health care consumers to, at the time they use the tool, obtain an estimate of the amount they will be obligated to pay for the shoppable service by the hospital.
    • Information is prominently displayed on the hospital’s website and is accessible to the public without charge and without having to register or establish a user account or password.
  • Monitoring and Enforcement,

CMS may impose a civil monetary penalty on the hospital not in excess of $300 per day, and publicize the penalty on a CMS website.


  • Effective Date
    In response to comments, CMS is extending the effective date to January 1, 2021 to ensure hospital compliance with these regulations.

The health industry quickly challenged the Department of Health and Human Services (HHS)of which the CMSis a part. OnDecember 4, 2019 four leading healthcare associations and three hospitals filed a lawsuitagainst HHS over the recently finalized hospital price transparency requirement that mandates the disclosure of payer-specific negotiated rates. The plaintiffs arethe Federation of American Hospitals (FAH), American Hospital Association (AHA), Association of American Medical Colleges (AAMC), Children’s Hospital Association (CHA), and three individual hospitals. Their lawsuit says the rule compelling the hospitals to publish their negotiated rates with insurers violates the First Amendment and goes beyond the statutory intent of the Affordable Care Act.It claims that the requirement violates the First Amendment by mandating “speech in a manner that fails to directly advance a substantial government interest, let alone in a narrowly tailored way.” It also alleges that HHS does not have the statutory authority to force hospitals to publish anything other than standard charges.[4] A December 5thcompilation of news reports on the lawsuit is available from Kaiser Health News for further information.[5]






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