The price transparency legislative landscape is evolving quickly, leading to proposed and final rules that can be hard to keep track of. One recent point of confusion we’ve dug into is: do hospitals still have to publish their Medicare Advantage negotiated rates? Misleading headlines such as “CMS axes hospital price transparency mandate from 2022 inpatient payment rule” have fueled the confusion and motivated us to bust this myth.
The TL;DR response is: yes, hospitals do have to include their Medicare Advantage negotiated rates in their machine readable files to comply with the Hospital Price Transparency requirements. For the full background and explanation, read on.
Where did the confusion stem from? Every year, CMS publishes the Inpatient Prospective Payment System (IPPS) rule with updated Medicare rates for inpatient stays. Last year’s FY 2021 IPPS final rule required that hospitals include their median Medicare Advantage negotiated rates in cost reports to support the future rate-setting process.
Separately, the Hospital Price Transparency law’s requirement to report payer-specific negotiated rates in machine readable files also extends to Medicare Advantage organizations. This resulted in redundant regulations regarding hospitals’ disclosure of their Medicare Advantage negotiated rates.
This year’s IPPS rule (FY 2022) repeals the requirement to include Medicare Advantage rates in cost reports; however, this has no bearing on the Hospital Price Transparency law. Hospitals are still required to report all negotiated rates with third parties, which includes Medicare Advantage organizations, in their machine readable files.
Why did CMS make this policy change? In this year’s IPPS final rule (FY 2022), the authors explain that they removed the Medicare Advantage rate reporting requirement simply because this information would not be helpful in setting future rates after all. CMS already has the data it needs for this purpose.
Does this decision affect CMS’ commitment to price transparency? Some commenters were concerned that a repeal of this reporting requirement would send the wrong message about CMS’ commitment to price transparency. CMS is clear in its response to these concerns: because the goal of this particular requirement in the IPPS rule was simply to improve the rate-setting process and not to promote price transparency, its removal is unrelated to the administration’s price transparency efforts. On the contrary, the government is doubling down in this arena as demonstrated by President Biden’s recent executive order reiterating his administration’s support of hospital price transparency legislation, as well as the recent Outpatient Prospective Payment System (OPPS) rule that proposes increasing the penalty for non-compliance with transparency rules.
In short: The repeal of the IPPS requirement to report Medicare Advantage rates in cost reports does not impact price transparency legislation, neither in practice nor in spirit. Price transparency is here to stay.