As part of the 2019 Medicare annual inpatient prospective payment system (PPS) fee schedule update, CMS has added a “rule” requiring hospitals to publish a list of standard charges beginning January 2019.
CMS explained this initiative under the “Transparency” and “Request for Information” topics in the following link: https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2019-medicare-hospital-inpatient-prospective-payment-system-ipps-and-long-term-acute-0
CMS subsequently issued two sets of Frequently Asked Questions (FAQs) regarding this rule.
Essentially, the guidance states as follows:
- Hospitals are free to choose whatever format they prefer as long as the information represents the hospitals’ current standard charges as reflected in their charge masters in a machine readable format.
- The transparency requirements apply to all items and services provided by the hospitals, including medical services, drugs, biologicals, etc.
- The transparency requirements do not transplant, replace or restrict hospitals from posting any other quality information or additional price transparency information on their websites.
- Although CMS is fully supportive of all state online price transparency initiatives, those initiatives do not satisfy the federal requirement and do not exempt hospitals from the CMS requirements.
It is not difficult to envision why just a list of the charges might not be all that helpful. The “charge master” is just a collection of the hospital’s list prices or fee schedule, which is what is charged for any service or product and has little relation to what the hospital actually collects from insured individuals. Any person who has received an explanation of benefits (EOB) from a health insurance carrier indicating that the hospital or physician charges were some astronomical amount but the payment was just a fraction thereof, knows the difference between the list prices and the actual prices. This has traditionally been a significant problem for self-pay or uninsured individuals, since the hospitals’ standard position has been that the charges, or the list price, is the appropriate fee.
One step that will make this more meaningful is disclosure of the typical Medicare payments for those services. CMS has released an online tool called “Procedure Price Lookup” which may provide some useful price comparisons. https://www.cms.gov/newsroom/press-releases/new-online-tool-displays-cost-differences-certain-surgical-procedures