Price Transparency Data in Healthcare

What is Price Transparency?

Price transparency helps consumers know the cost of a covered item or service before receiving medical care. The Centers for Medicare & Medicaid Services (CMS) has issued two price transparency mandates: one for Hospitals (Transparency in Care) and one for Health Plans (Transparency in Coverage):

1. Hospitals: Starting January 1, 2021, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways. As a comprehensive machine-readable file with all items and services. In a display of shoppable services in a consumer-friendly format. This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.
2. Payers: Beginning July 1, 2022, most group health plans and issuers of group or individual health insurance will begin posting pricing information for covered items and services. This pricing information can be used by third parties, such as researchers and app developers to help consumers better understand the costs associated with their health care. More requirements will go into effect starting on January 1, 2023, and January 1, 2024 which will provide additional access to pricing information and enhance consumers' ability to shop for the health care that best meet their needs.

Transparency in Care rules for Hospitals

Transparency for hospital pricing regulations implements section 2718(e) of the Public Health Service (PHS) Act, which requires each hospital operating within the United States, for each year, to establish, update, and make public a list of the hospital's standard charges for items and services provided by the hospital, including for diagnosis-related groups (DRGs). Hospital pricing information must be made public electronically via the internet.

The below data elements are required to be published for standard charges. The information described must be published in a single digital file that is in a machine-readable format.

1. Description of each item or service provided by the hospital.
2. Gross charge that applies to each individual item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
3. Payer-specific negotiated charge that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting. Each payer-specific negotiated charge must be clearly associated with the name of the third party payer and plan.
4. De-identified minimum negotiated charge that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
5. De-identified maximum negotiated charge that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
6. Discounted cash price that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
7. Any code used by the hospital for purposes of accounting or billing for the item or service, including, but not limited to, the Current Procedural Terminology (CPT) code, the Healthcare Common Procedure Coding System (HCPCS) code, the Diagnosis Related Group (DRG), the National Drug Code (NDC), or other common payer identifier.

In addition to the standard charges, hospitals are required to provide a pricing estimator tool in a consumer friendly format for at least 300 of the top shoppable services. The tool must allow healthcare consumers to, at the time they use the tool, obtain an estimate of the amount they will be obligated to pay the hospital for the shoppable service.  The below data elements are required to be displayed:

1. A plain-language description of each shoppable service.
2. An indicator when one or more of the CMS-specified shoppable services are not offered by the hospital.
3. The payer-specific negotiated charge that applies to each shoppable service (and to each ancillary service, as applicable). Each list of payer-specific negotiated charges must be clearly associated with the name of the third party payer and plan.
4. The discounted cash price that applies to each shoppable service (and corresponding ancillary services, as applicable). If the hospital does not offer a discounted cash price for one or more shoppable services (or corresponding ancillary services), the hospital must list its undiscounted gross charge for the shoppable service (and corresponding ancillary services, as applicable).
5. The de-identified minimum negotiated charge that applies to each shoppable service (and to each corresponding ancillary service, as applicable).
6. The de-identified maximum negotiated charge that applies to each shoppable service (and to each corresponding ancillary service, as applicable).
7. The location at which the shoppable service is provided, including whether the standard charges identified in paragraphs (b)(3) through (6) of this section for the shoppable service apply at that location to the provision of that shoppable service in the inpatient setting, the outpatient department setting, or both.
8. Any primary code used by the hospital for purposes of accounting or billing for the shoppable service, including, as applicable, the Current Procedural Terminology (CPT) code, the Healthcare Common Procedure Coding System (HCPCS) code, the Diagnosis Related Group (DRG), or other common service billing code.

Civil monetary penalties may be imposed on hospitals who do not comply after notification and response with corrective action plan.  The maximum daily dollar amount for a civil monetary penalty to which a hospital may be subject is $300.  Enforcement actions are publicly published by CMS here. 

Transparency in Coverage rules for Payers

By requiring the dissemination of price and benefit information directly to consumers and to the public, the transparency in coverage requirements will provide the following consumer benefits:

• Enables consumers to evaluate health care options and to make cost-conscious decisions;
• strengthens the support consumers receive from stakeholders that help protect and engage consumers;
• reduces potential surprises in relation to individual consumers' out-of-pocket costs for health care services;
• creates a competitive dynamic that may narrow price dispersion for the same items and services in the same health care markets; and
• puts downward pressure on prices which, in turn, potentially lowers overall health care costs

First, health plans must publish an in-network rate machine-readable file that includes the required information below for all covered items and services, except for prescription drugs that are subject to a fee-for-service reimbursement arrangement, which must be reported in the prescription drug machine-readable file.  The required information includes the following:

1. The name and the 14-digit Health Insurance Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier is not available, the 5-digit HIOS identifier, or if no HIOS identifier is available, the Employer Identification Number (EIN) for each coverage option.
2. A billing code, which in the case of prescription drugs must be an NDC, and a plain language description for each billing code.
3. All applicable rates, which may include one or more of the following: Negotiated rates, derived amounts, or fee schedule rates and a notation where a reimbursement arrangement other than a standard fee-for-service model (such as capitation or a bundled payment arrangement) applies.
4. Associated with the National Provider Identifier (NPI), Tax Identification Number (TIN), and Place of Service Code for each in-network provider.
5. The last date of the contract term for each provider-specific negotiated rate.

Second, health plans must also publish an out-of-network allowed amount machine-readable file with the below required information:

1. The name and the 14-digit Health Insurance Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier is not available, the 5-digit HIOS identifier, or if no HIOS identifier is available, the Employer Identification Number (EIN) for each coverage option.
2. A billing code, which in the case of prescription drugs must be an NDC, and a plain language description for each billing code.
3. Unique out-of-network allowed amounts and billed charges with respect to covered items or services furnished by out-of-network providers.
4. Associated with the National Provider Identifier (NPI), Tax Identification Number (TIN), and Place of Service Code for each in-network provider.

Finally, health plans must publish a prescription drug machine-readable file.

1. The name and the 14-digit Health Insurance Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier is not available, the 5-digit HIOS identifier, or if no HIOS identifier is available, the Employer Identification Number (EIN) for each coverage option.
2. The NDC, and the proprietary and nonproprietary name assigned to the NDC by the Food and Drug Administration (FDA), for each covered item or service that is a prescription drug.
3. The negotiated rates and historical rate with respect to the NDC and associated provider NPI, TIN and Place of Service code.
4. The last date of the contract term for each provider-specific negotiated rate.

A group health plan or health insurance issuer must update the machine-readable files and information monthly. Complaints about compliance by health plans to the Transparency in Coverage rules can by submitted here.