July 13, 2023, was a foundational day in hospital price transparency. CMS released its CY 2024 OPPS Proposed Rule, which includes a section on modifying and improving the Hospital Final Rule. If finalized, the Proposed Rule serves as a bookend to the past few years’ worth of MRF assessments, compliance tracking, and industry-wide recommendations for improvements.
To fully appreciate that news, let’s rewind to November 27, 2019. CMS released its CY 2020 OPPS Final Rule, which included requirements for hospitals to make their standard charges public. That Final Rule ultimately laid the foundation for machine-readable files (MRFs), shoppable services, patient estimate tools (PETs), and a national conversation surrounding expectations that patients should know the cost of their care before that care occurs.
What exactly stands to change should the Proposed Rule become a Final Rule? To answer that, looking back on the Hospital Final Rule is helpful to see how far we’ve come.
2020 Hospital Final Rule
CMS wrote the Hospital Final Rule with an aspirational and sweeping goal – lowering the cost of healthcare.
To achieve that goal, the Final Rule specifically focused on defining the why, who, and what that could usher in hospital price transparency.
The Why
Paying for healthcare in America is often opaque, frustrating, and unexpectedly expensive. Patients and caregivers navigate a complicated web of cost-sharing calculations, explanations of benefits, and hospital and professional bills – often encountering conflicting information.
CMS identified the previously-secret hospital and insurance-negotiated rates as a starting point to empower patients to price shop and lower the cost of care.
From the Final Rule:
“We believe there is a direct connection between transparency in hospital standard charge information and having more affordable healthcare and lower healthcare coverage costs.”
CMS continued by laying out numerous barriers to a patient’s ability to understand their costs of care and forces that would lower those costs.
“Such barriers include the difficulty of predicting healthcare service needs in advance, a complex billing structure resulting in bills from multiple providers, the variety of insurance benefit structures, and concerns related to the public disclosure of rates negotiated between providers and third party payers.”
The Who
Given the sweeping nature of the requirements, one of the first questions providers asked CMS was precisely who met the requirements for posting files. The Final Rule codified the definition of a hospital as such:
“An institution in any State in which State or applicable local law provides for the licensing of hospitals and that is:
(1) Licensed as a hospital pursuant to such law; or
(2) approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing”
Federally-owned hospitals, such as VA hospitals or hospitals operated by the Indian Health Program or the US Department of Defense, were excluded. All other hospital types, including Critical Access Hospitals, Psychiatric or Rehabilitation hospitals, were required to publish standard charge and shoppable services info.
The What
The primary means through which the Final Rule aimed to accomplish its goals was through two specific requirements:
- The creation of an MRF that included five types of Standard Charges (gross charge, discounted cash price, payer-specific negotiated rate, and de-identified minimum and maximum negotiated charges)
- The publication of all core and ancillary charges associated with 300 shoppable services
- Hospitals with a functional PET that met specific components of the requirement were exempt from the publication of the shoppable services file
This is the meat of the Final Rule, and leading up to the enforcement date of 1/1/2021 is where hospitals and MRF vendors spent the bulk of their time and resources. Questions arose regarding how to best create compliant, accurate, and comprehensive files.
CMS expressly declined to require a standard schema within the Final Rule. The intent behind that freedom for hospitals to choose was to prevent additional burdens from stifling hospitals that knew their own systems and system interoperability best.
But hindsight is 20/20, and CMS may have misjudged how technically complex the creation of singular MRFs would be. Ultimately, the flexibility of allowing hospitals to create their own files as they saw fit created a world where automation of file downloading, parsing, and reviewing was functionally impossible.
The Final Rule was CMS’ way of telling hospitals to ‘get the rates out there’ without much additional direction. As a result, price transparency data is not yet readily in the hands of patients, and some in the industry have dismissed the MRF data as unusable and low impact. CMS touches on these mistakes in this new Proposed Rule.
2024 Proposed Rule
The Proposed Rule creates a functional framework to bolster the Final Rule. CMS gives prescriptive requirements and acknowledges its shortcomings in the Final Rule. The goals in the Proposed Rule build on the initial Final Rule and the reality of what has transpired in the years since 1/1/2021.
The Proposed Rule aims to:
“...improve our monitoring and enforcement capabilities by improving access to, and the usability of, hospital standard charge information; reducing the compliance burden on hospitals by providing CMS templates and technical guidance for display of hospital standard charge information; aligning, where feasible, certain hospital price transparency (HPT) requirements and processes with requirements and processes we have implemented in the Transparency in Coverage (TIC) initiative; and making other modifications to our monitoring and enforcement capabilities that will, among other things, increase its transparency to the public.“
New and Detailed Requirements
In the years following the Final Rule, the progress on collecting, consolidating, and comparing thousands of hospital MRFs has been slow-going. CMS acknowledged this in the Proposed Rule and mentioned both human and web crawler implications from the manual processing that’s currently required.
This manual intervention runs counter-intuitive to the Final Rule’s goal of lowering the cost of healthcare because there were very few components of MRFs that added immediate value to patients. In the Proposed Rule, CMS makes it clear that MRF data comprising thousands of one-off files cannot be usefully placed into the hands of patients. Instead, CMS ties the value of the data directly to industry users who create a better world for patients:
“Additionally, we believe such data can be used specifically by employers, researchers, and policy officials, and similar members of the public to help bring more value to healthcare.”
How can we accomplish these goals with the Proposed Rule? Turquoise Health CEO Chris Severn discusses ten significant points in the video below.
Compliance Assessment and Monitoring
After hospitals uploaded their MRFs and shoppable service files, many third parties, including Turquoise, looked for ways to assess the quality of the files. In 2022 and thus far in 2023, many reports from various resources have cited a wide array of statistics surrounding data completeness and compliance.
CMS addressed the range of reports earlier in 2023 with a Health Affairs article that shed light on their internal compliance tracking. In the Proposed Rule, CMS doubled down on their authority and addressed the difference between monitoring and assessing compliance. CMS used an example of cherry-picking a single component of the entire set of MRF requirements as a blanket compliant/noncompliant metric:
“We caution users of the files who choose to view MRFs in human-readable formats from concluding that a hospital is noncompliant solely based on blanks or the hospital’s use of “N/A” (or other indicator(s) specified by CMS in guidance).”
The Proposed Rule welcomes and encourages public monitoring of MRFs and shoppable service files; however, the Proposed Rule reminds us that only CMS has the governing authority to classify a hospital as noncompliant.
“The regulation text at § 180.70(a)(2) indicates that such methods are also used to ‘assess’ hospital compliance; however, we have found these methods to be more appropriate for monitoring, and not as appropriate or sufficient for assessing hospital compliance…We believe this distinction between monitoring and assessment activities is necessary because while monitoring activities can be used (by anyone, including CMS) to evaluate alleged noncompliance, only a formal CMS assessment can determine a hospital’s compliance with the HPT requirements.”
Conclusion
CMS is working to lower the cost of healthcare just as we at Turquoise are working to eliminate the financial complexity of healthcare. Changes of this magnitude do not happen overnight, yet we continue to witness intentional and timely steps in the right direction.
Earlier this year, Chris Severn noted that, “We [are] two years into a multi-year period of price transparency transformation.” The Proposed Rule brings on yet another dawn in this new era, and we have renewed reason to be optimistic and focused in our efforts to permanently raise the bar of optimal patient financial experience.
Curious to learn more about the Proposed Rule requirements? Check our MRF update page for additional details.