This year has cemented that healthcare is firmly in its price transparency era.

While 2022 was the year of proposed effective dates hitting the scene, 2023 was the first year we’ve seen CMS return to the original final rules and make substantial changes or finalize new rules designed to increase utility and innovation. From Part B and D drugs to machine-readable file (MRF) formatting, this year has been marked with commitments from the federal government to keep price transparency improvement, enforcement, and compliance a top priority.

Turquoise also continued to monitor hospital and payer MRFs. We’re closing out the year with 90.7% of hospitals having posted a file and 83.1% having posted substantial negotiated rates. The number of payers posting data has increased from an initial 67 to 200+.

What a pivotal year for price transparency!

Transparency in Coverage

In September of 2023, CMS announced that the deferred enforcement period for the prescription drug requirement will end, though a date has yet to be announced.

Transparency in Coverage was initially finalized with three MRF requirements:

  1. In-Network Rate File: rates for all covered items and services between the plan or issuer and in-network providers.
  2. Allowed Amount File: allowed amounts for, and billed charges from, out-of-network providers.
  3. Prescription Drugs File: negotiated rate and historical net price.

In August of 2021, CMS announced deferred enforcement of the Prescription Drugs File, which remained largely out of the spotlight until September. The revisit to this requirement confirms what the broader legislative landscape has been saying throughout the year: drug prices are opaque, complex, and causing a lot of anxiety, and the government is holding numerous stakeholders accountable for being part of the solution to bring about clarity and simplification.

The addition of a payer-created file specifically dedicated to prescription drugs furthers progress tenfold. Most importantly for patients, the lack of complete drug-negotiated rates has left a gap in accurate estimate creation. With the new drug data in hand, great strides can be made toward good faith estimates and advanced explanations of benefits, which will lead to increased education and decision-making abilities for consumers.

Where are we now?

The following diagram illustrates the current timeline of each rule and law.

Here's where we are in the legislation timeline.

Hospital Price Transparency Final Rules

In November, CMS released the 2024 OPPS Final Rule, which included a section bolstering hospital price transparency. Specifically, the Final Rule has a required schema for hospital MRFs and adds several new required fields and accountability parameters.

Momentum continues to build surrounding hospitals’ publication of MRFs. In addition to the original Hospital Final Rule that went into effect on 1/1/21, CMS released recommended schemas hospitals could utilize to templatize their MRFs early in 2023, finalizing those requirements with this new rule. The changes that go into effect in three phases, starting on 1/1/24, represent the most significant changes to the Hospital Price Transparency Rule since its initial effective date in January 2021.

Phase I

Effective 1/1/2024, hospitals will be required to add a footer link to their homepage directing users to price transparency resources. Furthermore, a text file must be added to the root folder of the site, pointing to a download link of the current MRF.

CMS is doubling down on making MRFs easier to find. Alongside the requirements, they’re committed to providing a technical framework for hospital IT departments to utilize and have done so through the publication of this tool. All this streamlining allows for more consistent and automated file review, assessment, and, where needed, enforcement actions by CMS.

Lastly, as of 1/1/24, compliance actions or assessments may now be publicized on the CMS website. Currently, CMS only posts a list of hospitals that received civil monetary penalties (CMPs). The Final Rule cited that nearly 1,000 warning notices had been issued to providers as of September 2023, while there are currently only 14 CMPs posted to the CMS website tracking enforcement actions.

Phase II

Set for enforcement as of 7/1/24, the second phase of updates is largely focused on MRF standardization and additional reported fields.

The schema templates and accompanying data dictionaries bring more specificity to payment methodologies, code types, and naming conventions that will assist us in pulling credible data from the files. It also provides flexibility to create a normalized (tall) or tabular (wide) file, such that hospitals can adopt a file architecture that is minimally burdensome. The schemas also benefit consumers and innovators because the new required fields bring much-needed clarity and context to the dollar values for each item and service. Alongside new file templates, CMS will refresh the detailed instructions and data dictionaries for each on the newly-minted Github repository to incorporate updates from the Final Rule.

New Data Elements

Payer-negotiated rates must be associated with their respective payer and plan as separate data elements.

CMS is working to prevent files from becoming overly bulky due to repetitive rates across numerous plans, and each payer-negotiated rate must now be accompanied by a description of the contract provision used to calculate the rate.

CMS suggested that including the methodology used will provide the necessary context to the published rates while matching a similar Transparency in Coverage requirement of the Payer MRFs. Otherwise, users cannot create an apples-to-apples comparison if they inadvertently compare a case rate to a per diem reimbursement. This change should bolster the overall ecosystem of price transparency data by removing a lot of guesswork required to add meaning to dollar values currently existing in hospital MRFs without a defined methodology.

Algorithmic Rates

In July’s OPPS Proposed Rule, CMS suggested a requirement that hospitals must specify when detailed algorithms are utilized to calculate a negotiated rate within the MRF.

While the Final Rule slightly walks back this requirement such that hospitals must only “describe” the algorithm rather than specify it, this will still require providers to elaborate on how each rate was calculated while creating their MRFs. CMS committed to providing examples designed to help ensure providers are creating files that contain enough context about how the rate was calculated so understanding how to compare rates feels less like a black box.

Phase III

Effective 1/1/25, the final phase of requirements will include average expected allow amount rates and additional Part B drug reporting. We anticipate additional guidance and resources will be available as we get closer to the enforcement date.

Hospital MRFs

We have continued our quarterly processing of hospital MRFs and tracking the following data* points.

Number of hospitals posting data per month.
Hospital Price Transparency Scores | Blog on Assessments of Completeness
What's in all those files??

*All data as of 12/15/23

We’re pleased to see that, as 2023 comes to a close, 90.7% of hospitals required to post an MRF have done so. We also see that 83.1% have included a substantial amount of negotiated rates. The quality of MRFs has increased, with over 50% of hospitals scoring five stars.

When comparing 2023 to 2022, 562 new hospitals posted files. Most of these were individual hospitals, often with unique MRF formats! Parsing these files strengthened our scoring process and bolstered our team’s ability to standardize our data despite fluctuating inputs.

Payer MRF

Number of payers publishing data per month

Number of payers publishing data per month.

With over a year and a half’s worth of payer data, we’re thrilled that the number of payers posting data has increased from an initial 67 payers to over 200. As payers continue to post files, the quality and breadth of their files have also improved, as we can see above.

Lower Costs, More Transparency Act

One theme that emerged from the 2023 price transparency landscape is consolidation. Across the Hospital Final Rules, TiC, and the No Surprises Act, there are various requirements for patient estimate tools, shoppable services, and data publication. The federal government took note and hosted a series of subcommittee meetings on price transparency. Those subcommittee hearings included testimony from expert witnesses from payers, providers, pharmaceutical manufacturers, and our CEO, Chris Severn.

As a result, numerous price transparency bill drafts coalesced into the Lower Costs, More Transparency Act. The bill, which passed the House of Representatives on December 11, 2023, is expansive and stands to codify price transparency reporting for hospitals, payers, non-hospital entities, and pharmacy benefit managers into law. While we wait for Senate debate and additional voting, all three current rules and laws (Hospital Final Rules, TiC, and the NSA) remain in effect.

Part B and Part D Drugs

Both Part B (drugs administered by a physician in a clinical setting) and Part D (prescription) drugs have been in the price transparency spotlight this year. The Lower Costs, More Transparency Act would require Pharmacy Benefit Managers to begin creating their own MRFs as part of an initiative to lower drug costs and increase visibility to the amount of rebates and other discounts that occur before a drug is administered to a patient. We await further guidance on drug reporting and anticipate the conversation related to drug pricing will continue in 2024.

Asks for Government and Industry Leaders

This year has been marked with commitments from the federal government to keep price transparency improvement, enforcement, and compliance a top priority.

As recently as October 2023, The Ways and Means Committee hosted a bipartisan roundtable to continue digging into why the process for creating automated and accurate AEOBs has thus far remained elusive. CMS released numerous Proposed Rules to improve frustrating pain points with the IDR process to work toward fair QPA calculation and prompt payment to providers treating patients covered under the NSA.

More must be done on all fronts. From both state and federal governments, we ask:

  • Set enforcement dates for two key No Surprises Act elements: Good Faith Estimates that include charges from both convening and co-providers, and Advanced Explanation of Benefits. Both are essential to creating upfront, binding estimates for insured patients.
  • Establish a framework for assessing payer files and enforcing compliance with TiC.
  • Set an enforcement date for the prescription drug file as required within TiC. Digestible knowledge of drug costs and reimbursement greatly increases transparency in creating comprehensive patient estimates.

To industry leaders at providers and payers, we say:

  • The benefits of price transparency data can be made ubiquitous.
    Not years in the future, but today. Use data to feed guaranteed, up-front estimates that usher in the future of an elevated patient financial experience. Understand that providers and payers align on key goals: decreasing administrative costs, minimizing complexity, and fostering healthy consumerism.

Appendix

All hospital price transparency scores broken down by high-level MRF attributes: