On May 22, 2025 CMS released new price transparency information for health plans and hospitals, including guidance for the production of the hospital price transparency machine readable file (MRF). The information release was expected in response to the February 25, 2025 Executive Order which we previously discussed. While the release was expected, there are several things that remain confusing about the hospital MRF provisions. We summarize key elements and outstanding questions below.
First, this release was done through sub-regulatory guidance as opposed to previous rule making where CMS has proposed provisions and allowed public comment before codifying final rules. Inasmuch, it’s unclear how this new language translates to potential compliance issues, especially when some comments in the guidance contradict existing MRF codified language (more on that to come).
There are two main areas of guidance for the hospital MRF. The first relates to an expectation that CMS has that most contract scenarios can be expressed as a dollar amount via per diem, case rate, or fee schedule charge method. While we agree that in these situations a hospital would be required to provide the exact dollar amounts, we continue to believe that most-if not all-fall into an algorithm format that CMS accurately described in the CY24 OPPS Final Rule. For the moment, this first portion of guidance could be nothing more than a reminder to hospitals completing their MRF to appropriately use the charge method, dollar amount, and estimated allowed amount fields. In most contracts we see, the method is a combination of charge methods, including many that are not part of the three listed which leads us to use algorithm in order to accurately and compliantly express the payer specific negotiated charge.
The second area of guidance relates to calculating the estimated allowed amount which has a codified definition of “the average dollar amount a hospital has historically received from a third-party payer for a specific item or service.” CMS previously recommended hospitals encode nine 9s in its MRF where sufficient claims experience did not permit establishing a historical average. It also suggested hospitals consider HIPAA thresholds of less than eleven claim counts when deriving values. Now, CMS has observed more nine 9s in files than expected and is changing guidance. One such point asks a hospital to encode a value that would be expected for an encounter without claims experience. This, of course, contradicts the federal language that the estimated allowed amount be defined as the historic reimbursement average. CMS had considered a prospective or expected value in the CY24 OPPS Proposed Rule but changed to historic reimbursement for the final rule. It is unclear how a hospital would comply with that definition if no claims experience exists for the particular payer plan. CMS also instructs hospitals to encode a value when only 1 claim is present. Again, it is unclear how this would constitute an “average” as specified in the codified definition.
Finally, there is no clear timing indicated. It is unclear when or if a hospital should update its MRF. Previous rules have established dates for compliance and that information is not provided. As of today, we can see that CMS has modified the MRF validator to provide an “Alert” when nine 9s are present in a MRF but that is different than an “Error.” Errors have been provided to show where a hospital has not conformed to the current codified MRF data schema and elements. In those instances, we have seen hospitals receive compliance corrective action letters. Until CMS clarifies, we might assume these “Alerts” are not intended for compliance action but function like previous warnings in the validator prior to the January 1, 2025 requirements where CMS sought to draw attention to forthcoming requirements.
For the moment, we join others in the hospital industry seeking CMS clarity and will provide additional updates as they are known.