CMS considers new price transparency requirements in FY 2021 IPPS proposed rule

May 13, 2020

Medicare Web

CMS is proposing that hospitals report inpatient payer-specific median negotiated rates with Medicare Advantage organizations and third-party payers on the hospital cost report, according to the fiscal year (FY) 2021 Inpatient Prospective Payment System (IPPS) proposed rule.

Specifically, the agency is proposing that hospitals report:

The median payer-specific negotiated charge by MS-DRG for all contracted Medicare Advantage plans
The median payer-specific negotiated charge by MS-DRG for all other contracted third-party payers

CMS’ rationale is that because previous rules already require hospitals to publicly report the information, the proposal will not create additional burden for hospitals. The agency also stated that the proposal will help move Medicare fee-for-service reimbursement to a market-based payment system.

According to the FY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements final rule, starting in 2021 hospitals will be required to make public payer-specific negotiated rates for standard charges in the chargemaster and for 300 shoppable services. The American Hospital Association, the Association of American Medical Colleges, the Children’s Hospital Association, and the Federation of American Hospitals, along with three individual hospitals, filed a lawsuit in December 2019 challenging the requirements.

A separate rule released in 2019, the Transparency in Coverage Proposed Rule, would require payers to make plan-specific, cost-sharing and negotiated rates public. That rule has not yet been finalized. It already faces strong opposition from industry stakeholders such as America’s Health Insurance Plans and would likely face legal challenges if finalized.

Organizations should carefully review the proposal in the FY 2021 IPPS proposed rule and consider how it would impact Medicare beneficiaries and whether it would create additional administrative burden. Comments on the proposed rule are due no later than 5 p.m. EST on July 10 as CMS is waiving the 60-day delay in the effective date of the final rule and replacing it with a 30-day delay.