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Get a Clear View of the Healthcare Price Transparency Rule

The new healthcare price transparency rule is shaping up to be one of the biggest upcoming challenges hospitals will face as it will be a requirement by January 2021.

However, hospitals working to sustain operations, and most importantly, continue to provide their communities with quality care at the best value, need to start preparing now.

Why is Price Transparency Required in Healthcare?

The price transparency rule should come as no surprise to healthcare providers and their leadership. Consumer driven concepts like “nothing about me without me” and value-based care have been permeating the industry for the past decade. Price transparency is just another knot in a string of government regulations (MU 3, Promoting Interoperability, 21st Century Cures, etc.) designed to motivate providers to become more patient-centric.

Other non-regulatory elements, like the rise in high-deductible healthcare plans and a new generation of selective, internet savvy healthcare consumers, have also helped push the need for more transparency in healthcare costs.

Who Does the Rule Apply To?

The price transparency rules apply to hospitals defined by CMS as:

“…an institution in any State in which State or applicable local law provides for the licensing of hospitals, that is licensed as a hospital pursuant to such law, or is approved by the agency of such State or locality responsible for licensing hospitals…”

In non-legalese, the rule applies to any healthcare organization licensed as a hospital, including Medicare-enrolled as well as non-Medicare enrolled institutions.

The exceptions to the rule include federally owned and operated hospitals as well as ambulatory facilities. Hospitals will also not be required to list charges for emergency procedures, but those prices will be included in the gross charge requirements.

Four Healthcare Price Transparency Updates

1. Prices must be updated on an annual or real-time basis.

CMS has stated that prices must be updated on an annual basis, or as appropriate. As appropriate can be interpreted to mean when updating prices for a significant portion of shoppable events, these updates should post in real-time, which may be in addition to an annual posting. Pricing updates must also include the dates these changes took place.

Hospitals who are not price transparency compliant, according to the standards set by CMS, will face a fine of up to $300/day. In addition, noncompliance can contribute to a poor patient experience for those expecting to know the costs of procedures upfront.

Noncompliance with the regular updates could also harm the reputation of the hospital. People might conclude that these providers are hiding something, or they don’t respect the rights of patient-consumers.

2. Four standard charges must be provided in a machine-readable format.

As defined by a hospital’s chargemaster, the four standard charges include:

  • Gross charge
  • Discounted cash prices
  • Payer-specific negotiated
  • De-identified minimum/maximum negotiated charges

To create a machine-readable file of standard charges, hospitals will likely need to perform lengthy cleanups of their chargemasters.

“A hospital’s chargemaster often includes services or items that may no longer be relevant. That is one area a hospital will need to cleanup. The other has to do with listing out ancillary charges that are often bundled into a single more extensive procedure like a knee replacement,” says MEDHOST Director of Product Compliance, Shawn Wiese.

Cleaning out old charges and adding an additional layer of detail to chargemasters can create a lot of work for a hospital.

3. Hospitals must create a consumer-friendly list of shoppable services.

Hospitals will be required to post a consumer-friendly list of standard charges for at least 300 shoppable services. CMS defines shoppable services as “a service that can be scheduled by a healthcare consumer in advance.” These services must be posted in a public place—like a hospital’s website—and be easily searchable.

Of the 300 shoppable services, CMS has also specified 70 required services.

“Shoppable services is another area that hospitals may need to bring on additional resources,” says Wiese. “They will need to educate members of their community on how to properly utilize these lists—something like a case manager or services coach.”

4. Share maximum/minimum negotiated insurance reimbursement rates.

As an additional way to help consumers compare costs, the rule states that hospitals must share both the high and low reimbursement rates for specified services without identifying payors. By giving patients a better understanding of their financial responsibility, this portion of the rule may help healthcare consumers make smarter care decisions.

The negotiated rates portion of the rule may give hospitals an opportunity to take a closer look at how often those rates are being honored. In this instance, outsourcing contract management services may not only help them with price transparency compliance, but also help hospitals recover full payments.

Price Transparency Next Steps

It is expected to take a lot of time and resources for most providers to achieve price transparency compliance by the beginning of January 2021. Another key challenge for these hospitals will be making sure they are meeting these requirements in the most appropriate way without creating too much additional overhead.

With the government announcing the finalizing of this newest healthcare regulation, MEDHOST is already working on ways we can make the road to compliance easier. Check back often to find out how we can help guide your hospital to success in this new era of transparency. Please email us at with any questions.

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