New Healthcare Price Transparency Requirements Are Complicated & Vary by State

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Healthcare law is ever changing, particularly with regard to price transparency. Key healthcare leaders and stakeholders have long argued for more stringent price transparency regulations in an effort to increase patient awareness regarding the cost of a hospital item or service prior to receiving the service. Such information is anticipated to enable patients to take more control over the healthcare services they elect to receive. With the addition of new regulations, states are now moving toward regulatory schemes that address these same concerns.

Federal Regulations

In November 2019, the U.S. Department of Health and Human Services (HHS) issued the Hospital Price Transparency Rule, which requires hospitals to publish their standard charges for certain items and services in accordance with the guidelines published by HHS. That same day, the U.S. Departments of Treasury, Labor, and Health and Human Services proposed another rule, the Transparency in Coverage Rule, applicable to health plans and health insurance issuers that would require such groups to publish pricing of healthcare items and services. Both rules require that pricing be made publicly available to patients.

Effective Jan. 1, 2021, the Hospital Price Transparency Rule requires hospitals to publish their pricing for certain items and services, or service packages that are provided by a hospital to an inpatient or outpatient for which the hospital has established a standard charge. The goal of the regulation is to allow patients to understand the cost of a hospital item or service before receiving it.

Having this information will make it easier for consumers to compare prices across hospitals and estimate the cost of care prior to receiving it.

The goal of the regulation is to allow patients to understand the cost of a hospital item or service before receiving it.

The report itself must include the hospital’s gross charges, payer-specific negotiated charges for a minimum of 300 shoppable services (i.e., services that patients can compare among multiple hospitals prior to receiving the services) associated with specific third-party payers and the associated plan, de-identified minimum and maximum negotiated charges, and discounted cash prices offered by the hospital. It must also include a description of each item, the service and service package, and any codes utilized by the hospital in connection with billing. This information must be made publicly available to the patient via the hospital’s website. The report must be written in plain language that can be easily understood by the patient, and must be updated at least annually.

Effective Jan. 1, 2022, the Transparency in Coverage Rule expands on existing price transparency requirements and mandates that employer health plans and insurance companies in the group and individual market disclose price and cost-sharing information to participants, beneficiaries and enrollees. The goal of the legislation is to bring greater competition to the private health care industry by giving patients the information they need to make informed healthcare decisions.

Among other things, the rule requires that patients be given access to cost-sharing information, including estimated out-of-pocket liability. Additionally, it requires that plans and issuers disclose on their websites their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, as well as the negotiated rate and historical net price for prescription drugs.

Practical Considerations

Although the federal price transparency rules establish a consistent regulatory framework for providers to abide by, compliance with the requirements is not simple and there are many requirements to abide by. To further complicate things, state price transparency regulations don’t follow the same federal reporting standards that healthcare providers and hospitals are familiar with. Rather, states have created new websites, forms and procedures that are often open to interpretation, and they routinely ask for data points that require input from multiple business departments.

Many states that don’t currently have price transparency laws are considering adopting new laws and regulations, and those that have adopted a framework are routinely clarifying and expanding their rules. Thus, the landscape seems to be changing month to month, leaving healthcare providers and hospitals in need of a definitive set of laws to abide by. With the addition of legal challenges to price transparency laws in several states, this complexity leaves healthcare providers and entities wondering if they need to report and, if they do, how to report.

Takeaways

Price transparency requirements are complicated and vary significantly by state. Reporting requirements are not simple to satisfy and may require information from multiple sources. To efficiently complete these reports and ensure they are submitted timely, providers and entities must understand each state’s requirements. Gathering the required information well in advance of applicable deadlines is critical to ensuring the report is on time. Providers employed by hospitals will have to work with hospital administrators to provide the information necessary to comply with the transparency reporting requirements.

Providers should regularly monitor the applicable regulations in the states in which you do business to avoid regulatory fines and penalties. Working with attorneys and other professionals knowledgeable in submitting these reports may reduce the risk of noncompliance and ensure timely filing.

Emily A. Johnson, JD, is a healthcare attorney with McDonald Hopkins LLC. Contact her at [email protected] or via https://www.mcdonaldhopkins.com.