Price Transparency Requirements

On Jan. 1, 2019, new price transparency requirements for hospitals went into effect. Under these new requirements, hospitals must publish online a list of their standard charges, based on their chargemasters, in a machine-readable format, and update this information at least annually.

Chargemaster Requirements

These price transparency requirements were included in the Centers for Medicare & Medicaid Services’ (CMS) fiscal year 2019 inpatient prospective payment system finalized in August 2018 and are in line with a provision of the Affordable Care Act that was not previously enforced. The new rule applies to all hospitals operating in the U.S.; there are no exemptions. Charges for all items and services provided by the hospital, including drugs and biologicals, must be published.

DRG Requirements

Under the rule, hospitals reimbursed under the Medicare inpatient prospective payment system (IPPS) also must post their charges for diagnosis-related groups (DRGs). DRGs are the classification system utilized by the federal government to establish reimbursement for the inpatient treatment of Medicare beneficiaries. Some hospitals are exempt from the IPPS, and therefore also from the requirement for posting DRG information. These include psychiatric hospitals, rehabilitation hospitals, children’s hospitals, long-term acute care hospitals, and certain cancer hospitals.

2019 vs 2015

While hospitals had previously been required to make charge information available based on a 2015 rule, these new price transparency requirements are more prescriptive, specifically mandating that charges be made available on hospital websites and that they must be in a format that is machine readable. Also new in 2019 are the requirements related to DRG charges.

While the 2019 rule does not include means for enforcement or penalties for noncompliance, CMS has suggested this could be addressed in future rulemaking.