Hospital Price Transparency: CMS Pushes for Standardization

January 3, 2024

In an era of increasingly expensive care, price transparency initiatives have become a significant aspect of the U.S. healthcare system. From the Transparency in Coverage (“TIC”) requirements for health insurers1  to the Good Faith Estimate requirements of the No Surprises Act (“NSA”) for scheduled services,2  Congress and the Centers for Medicare and Medicaid Services (“CMS”) continue to attempt delivering more and clearer information to patients about anticipated healthcare costs.

Despite the existence of these initiatives, many Americans remain unaware of the availability of pricing information, including the requirement that hospitals proactively post a list of service prices online.  Known as the Hospital Price Transparency (“HPT”) rule, this was one of the first comprehensive initiatives to deliver price comparison information to patients not actively seeking services.3

Unfortunately, at the time the HPT rule was issued, CMS did not require any formatting standardization in how this information was to be presented; hospitals have since chosen a variety of different formats, resulting in patients receiving disparate and confusing information that has not proved useful. Additionally, the lack of standardization has also inadvertently resulted in hospitals not being fully compliant with the rule.

In order to better achieve the goals of price transparency, CMS recently updated the HPT rule to impose a level of standardization and uniformity on hospitals moving forward, and to help better advertise the existence of HPT to patients nationwide.4  Finally, this update will broadcast enforcement actions taken by CMS5  in an effort to compel hospitals to more quickly adopt these policies and alert patients to noncompliant hospitals.

Background on hospital price transparency

Effective January 1, 2021, the HPT rule was enacted to offer patients new insight on service pricing information. Hospitals are required to offer both a complete list of services in a machine-readable format (“MRF”) and an accessible, online list of at least 300 shoppable services.6  Services included in this manner had to identify five different types of standard charge information:

  • Gross charge (i.e., the charge for an item or service reflected in the hospital’s chargemaster, without any discounts);
  • Discounted cash price (i.e., the charge that applies to an individual who pays in cash for an item or service);
  • Payer-specific negotiated charge (the charge that a hospital has negotiated with a third-party payer for an item or service);
  • De-identified minimum negotiated charge (the lowest charge a hospital has negotiated with all third-party payers); and
  • De-identified maximum negotiated charge (the highest charge a hospital has negotiated with all third-party payers).

At the time these regulations were issued, hospitals were free to publicize this information in whichever manner they chose, so long as it complied with those requirements. Although CMS required hospitals to offer this information to patients in “a consumer-friendly format,” there was no required standard format. Without a standard HPT format, patients and others attempting to rely on the MRF have not been readily able to use the HPT information as intended. As the information being furnished has varied between hospitals, patients have had significant difficulty being able to accurately interpret prices within the MRF, let alone compare prices between different hospitals. In some cases, hospitals were not fully compliant with providing all standard charge information in the MRF due to differing understandings of the requirement, resulting in further patient confusion and hospital noncompliance with HPT rules.

New OPPS price transparency updates

In the FY 2024 Outpatient Prospective Payment System (“OPPS”) Proposed Rule, CMS finally proposed rulemaking to bring standardization, accessibility and enforcement updates to HPT.8  After receiving comments from a variety of industry stakeholders, CMS finalized its updates to HPT in November of 2023 largely as written, with a phased implementation deadline for compliance.

New Standardization Requirements
Starting July 1, 2024, CMS will require hospitals to display the standard charges using one of three CMS-approved templates rather than their own creation.9  While these resources have been around for some time, CMS has determined that their mandatory adoption is necessary to achieve the goals of HPT. By requiring hospitals to use one of these three templates, CMS’ goal is for patients to better understand the information presented. CMS has made these templates available online for the past year, allowing hospitals to use whichever template they prefer.

Hospitals will also be required to include expanded standardized data elements, including a data dictionary within the MRF based on updated regulatory definitions.9  CMS noted that much of this technical work has already been completed in the MRF templates, and the proposal received broad support from stakeholders. The data elements must be encoded between the phased deadlines of July 1, 2024, and January 1, 2025.

Public Accessibility Efforts
In addition to standard information formats, CMS is requiring hospitals to take additional steps to notify the public of the MRF and shoppable services list.10  Requirements include  a footer at the end of the hospital’s online homepage for “Price Transparency” with a link to the MRF list, and having the shoppable services list in a text file on the website where the hospital has posted its MRF; this text file must include a URL to both the MRF, the webpage that links to the MRF and a hospital point of contact. CMS anticipates that increasing the locations to can access the MRF, patients will become more aware of its existence and utilize the tool accordingly.11

Enforcement Updates
Under the updated rule, hospitals are required to have the “authorized hospital official” attest to the accuracy and completeness of the MRF and shoppable services list and provide CMS with additional documentation upon request.12  Critically however, CMS did not state which particular individuals or officials would or would not qualify as an “authorized hospital official” able to provide this affirmation. The R1 Regulatory Compliance team recommends that hospitals identify an individual with knowledge, ownership, and responsibility over a hospital’s chargemaster rates to make this attestation.

CMS is also updating its enforcement of HPT. In addition to levying a CMP upon noncompliant hospitals, CMS will now be able to publicize information relating to a hospital’s compliance with the HPT rule, including: (1) a hospital’s compliance status with the HPT rule; (2) compliance action(s) taken by CMS against the hospital, including updates and outcomes relating to investigations; and (3) any notifications sent to a hospital.

Upon receiving notice of an action or warning, hospitals must acknowledge receipt. CMS will work directly with health systems’ leadership to rectify any errors identified within that system.

Alignment with Other Price Transparency Initiatives
When the CY 2024 OPPS Proposed Rule was issued, CMS sought comments on how HPT can better align with existing transparency regulations, including TIC and NSA requirements, to increase consumer protection and accuracy of pricing information.13  While many commenters provided feedback, CMS deferred responding to them when the CY 2024 OPPS regulations were finalized. The R1 Regulatory Compliance team anticipates that these comments will serve future rulemaking as CMS continues to align and update its various price transparency initiatives.

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R1 compliance thoughts

The R1 Regulatory Compliance team is optimistic about CMS’ current and planned changes. We believe they will benefit the patient experience, allowing patients to navigate, identify and interpret pricing information on hospital MRFs more easily and ultimately serve patients with a better understanding of their likely out-of-pocket costs prior to receiving services. Further, we have seen evidence that these requirements will ultimately be beneficial for hospitals, as CMS finally provided both the necessary compliance guidance, templates and data elements to properly implement these requirements.

Price transparency continues to be a hot topic in government, and neither Congress nor CMS have shown any diminished interest in healthcare price transparency.14  As HPT rules continue to adapt and change, the R1 Regulatory Compliance team will continue to monitor for updates.

Key Takeaways

  • The HPT rule has been updated to better standardize the information hospitals are required to share, along with standardizing its presentation. These formatting requirements will be effective starting July 1, 2024, with a phased implementation date for some data elements.
  • Hospitals will also be required to better broadcast its HPT MRF, including a footer at the bottom of its webpage with a link to the MRF.
  • CMS will begin broadcasting and publicizing enforcement actions taken against hospitals that fail to properly follow HPT requirements. Hospitals should be aware that a designated official will now need to attest to MRF accuracy.
  • CMS received feedback and suggestions on future amendments to align HPT with other price transparency initiatives. CMS will consider these suggestions in future rulemaking, and the R1 Regulatory Compliance team will continue to review for updates as price transparency continues to evolve.


Author Bio: Regulatory Affairs & Regulatory Compliance Team

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