A Compliance Continuum for the FY19 IPPS Final Rule

A Compliance Continuum for the FY19 IPPS Final Rule (CMS-1694-F) for Requirements for Hospitals to Make Public a List of Their Standard Charges via the Internet

**Updated October 2018 to reflect CMS responses to frequently asked questions

Provided by: Cleverley + Associates


The FY19 IPPS Final Rule contains a section for requirements for hospitals to make public a list of their standard charges via the internet. This section of the final rule revisits a reminder contained in the FY15 IPPS Proposed Rule and ultimately the initial calls for transparency in the Affordable Care Act (specifically, 2718(e) of the Public Health Service Act). That language required hospitals to “either make public a list of their standard charges (whether that be the chargemaster itself or in another form of their choice) or their policies for allowing the public to view a list of those charges in response to an inquiry.”

It is no surprise that the CMS is attempting to continue this national dialogue as many providers still struggle with how to effectively improve price transparency. In fact, our firm has conducted national provider surveys on how hospitals are approaching price transparency and the areas that tend to receive the most price inquiries from patients. The results of those surveys have been transferred into HFMA-related

publications. What we’ve found is that the vast majority of hospitals are complying with the ACA transparency language by providing a means for patients to request pricing information – but not – through public display of pricing information via a website or some other form.

As a result, the FY19 IPPS Final Rule indicates that: “as one step to further improve the public accessibility of charge information, effective January 1, 2019, we announced the update to our guidelines to require hospitals to make available a list of their current standard charges via the Internet
in a machine readable format and to update this information at least annually, or more often as appropriate. This could be in the form of the chargemaster itself or another form of the hospital’s choice, as long as the information is in machine readable format.”

At the end of September 2018, the CMS posted responses to frequently asked questions to its website to provide additional clarity to the new rule (https://www.cms.gov/Medicare/Medicare-Fee-for-Service- Payment/AcuteInpatientPPS/Downloads/FAQs-Req-Hospital-Public-List-Standard-Charges.pdf). Based these responses to the frequently asked questions, as well as the original language of the rule, we are attempting to provide our position on how hospitals can be in compliance.

We believe there are four keys to compliance:

  1. 1)  TYPE OF INFORMATION: A hospital must show standard charges via the chargemaster (CDM) oranother form of the hospital’s choosing – however – all items and services must be represented
  2. 2)  AVAILABILITY OF INFORMATION: Information must be made available on the internet – however –participation in a state online transparency initiative does not exempt a hospital from therequirement
  3. 3)  FORMAT OF INFORMATION: Data must be machine readable
  4. 4)  UPDATES OF INFORMATION: At least annually

If a hospital can check the above four boxes, then, given the language in the rule, the hospital should be in compliance. However, the CMS, likely intentionally, has allowed for significant room for interpretation to compliance. There would seem to be a variety of different approaches a hospital could take to be in compliance, so, we have presented a continuum to illustrate different options. Before we present the compliance options, though, there are a few key areas to consider.


Ultimately, there are two basic forms of providing price information – at the unit level and at the encounter level. While both have challenges to public disclosure, we have placed the encounter level comparisons higher on our usefulness scale because charges at that level will come closest to what the patient will be charged for the entire visit. The final rule states that the reporting form can be the CDM or another form of the hospital’s choice. It is our view that the CDM reporting level would be a “per unit” display of pricing, while encounter views would fall under “another form of the hospital’s choice.” A few notes to describe the benefits and challenges are below:

  1. 1)  Price per unit reporting level (Chargemaster, procedure code, etc pricing)
    Pricing at the unit level, whether that is a list of prices at the CDM code and/or procedure code would be the easiest for hospitals to provide – its major advantage. However, pricing comparison at this level is likely to be the most irrelevant for patients for the following two reasons:

    1. Per unit price comparison can be misleading because of varying degrees of bundling at different hospitals
      A goal of price transparency is the ability to compare prices across providers so that patients can make informed decisions. However, at the procedure code level, pricing across providers can include differing levels of associated services and supplies. One provider could charge individually for all items received in care while another could bundle some of those services and supplies into a packaged price. As a result, comparing prices at the procedure code level can be misleading to patients.
    2. Per unit pricing can be misleading because it is only one part of a patient’s total encounter chargesFor many patient encounters, the patient claim will consist of a variety of services. Those individual services will have established prices that will be consistently priced for all payers. However, the value of publicizing the prices for these individual services (at the chargemaster and/or procedure code level) is greatly diminished because the frequency of use for those services cannot be known until the patient’s care is delivered – uniquely for what that specific patient requires.
  2. 2)  Price per encounter reporting level (MSDRG, Primary APC, etc pricing)Ultimately, this level of charge information would be preferable for a patient because it would provide a better understanding of total charges for the patient’s encounter at the hospital. For this reason, we believe this reporting is preferable to per unit price displays. However, there are still obstacles to this level of price transparency:
    1. Significant charge variation can exist in “similar” patient encountersIf charges were grouped by MSDRG or primary APC there can still be significant variation in average charge levels across patients due to the different types of individual services provided and the frequency and duration of service. This could be mitigated somewhat with some statistical measures to help patients understand the magnitude of variation, but, is still a challenge.
    2. Patients rarely understand the encounter group their service will fall into prior to receiving treatment – and likely would not understand the group after
      Our industry has created groups of related cases for the purposes of payment. However, the naming conventions and different levels of service (“w/ CC” or “Level 3” as examples for inpatient and outpatient levels) are not patient friendly. So, the patient struggles to know what to select and to even understand what would be included in that economic grouping. Hospitals can try to mitigate this somewhat by creating search criteria to help patients understand where their prospective service will fall.


There has been some discussion around duplicity or contradictory reporting if the hospital is located in a state with pricing transparency requirements. While an initial comment and response in the final rule seemed to suggest that hospitals participating in a state initiative had no additional reporting burden, the CMS did provide clarity to this in its responses to frequently asked questions at the end of September 2018:

Question: Does participation in a state online price transparency initiative satisfy the federal requirements?Response: CMS is fully supportive of and encourages state price transparency initiatives. However, under the current guidelines, participation in an online state price transparency initiative does not exempt a hospital from the requirements.


The CMS also provided further definition of “machine readable” in its FAQ responses:

Question: What is the definition of “machine-readable” for purposes of the requirements?
Response: By definition, machine readable format is a digitally accessible document but more narrowly defined to include only formats that can be easily imported/read into a computer system (e.g., XML, CSV). A PDF, on the other hand, can be a digitally accessible document but cannot be easily imported/read into a computer system.


The rule’s language is specific to hospitals, however, the responses to frequently asked questions did note that ALL hospitals are required to comply – there are no hospital designations (CAH, as example) that would be exempt.


While not required in the final rule, some providers have questioned the value of also providing peer comparison data to facilitate benchmarking for patients. We have indicated in the continuum which options would permit the use of comparison data. Obviously, the inclusion of comparison data can present both risks and rewards as no hospital is likely to be lower charge for every code or encounter category. Still, if the hospital has, in general, a favorable position then the inclusion of this data could be of benefit. Typically, peer comparison data will come via publicly-available data that could be a different source year from the hospital’s data, so, this should be clearly noted in the display.


We’ve presented the continuum in order of increasing usefulness to the patient with regard to price and payment transparency. It’s important to note that any of the compliant options presented, we believe, are technically compliant on their own. Meaning, a hospital would not have to have a minimum CDM provided in order for the “Encounter Charges” option to be compliant. However, this is our interpretation of the rule and clearly a hospital’s own internal stakeholders and counsel may come to a different conclusion.

  1. NO REPORTINGa. Status: Non-Compliant
    b. Price reporting level: N/A
    c. Notes: Some providers have questioned the value of reporting information to be incompliance given the risks of confusion it could cause for patients and additional administrative burden to post data and field questions. These hospitals could still be providing access to information to patients, consistent with the ACA language, but feel this new requirement is not worth the added resource costs of compliance. While these hospitals will not be in compliance, there are no penalties for failure to comply at this time.
  2.  MINIMUM CDMa. Status: Compliant
    b. Price reporting level: Per Unit
    c. Notes: In this option, the provider would simply post on their website a basic CDM withcharge code and current standard price (multiple columns or an average could be used if more than one fee schedule exists). While this information wouldn’t be useful to the patient as there wouldn’t be any identifying information (description, HCPCS, etc) it would technically satisfy the language of the rule. If taking this option – or any other for that matter, we believe the hospital should still provide contact information for additional details and questions should the patient need further assistance.
  3. TOP CONSUMER CODESa. Status: Non-Compliant
    b. Price reporting level: Per Unit
    c. Notes: In this option, the hospital would provide the current price (or multiple/average pricing if several fee schedules) by HCPCS, with description for frequently requested – or top consumer-oriented – services. This option is an improvement to the patient because it provides focus for top services where the majority of patient concerns and questions originate. However, while this option initially seemed compliant under the language in the final rule, the responses to FAQs posted by CMS at the end of September 2018 state that all items and services need to be represented in the reporting.
  1.  EXPANDED CDMa. Status: Compliant
    b. Price reporting level: Per Unit
    c. Notes: This option builds on the last as it would provide the entire CDM with identifiers (likeHCPCS and descriptions) for patients to view. While this would be more useful than the minimum CDM, it could be argued that this would be more challenging to navigate than the reduced list of top sensitive codes. It is worth noting that some states have requirements that hospitals post charges at the HCPCS level – either on their website or through some centralized portal for the entire state. If so, the responses to FAQs now state that state-level reporting is not sufficient for compliance – the hospital must post independently.
  2. ENCOUNTER CHARGESa. Status: Compliant
    b. Price reporting level: Per Encounter
    c. Notes: Average encounter charges have advantages for pricing transparency as they are a better representation of the patient’s usual charge for a specific type of service. In this option, the hospital would present the average charge – and potentially other statistical measures – by inpatient (MSDRG, as ex) and outpatient encounter (Primary APC, as ex). A hospital could even create groupings like those presented on Medicare’s Hospital Compare website that could facilitate comparison among other reported quality metrics. This option would be compliant as it represents a non-CDM display of standard charges that is “another form of the hospital’s choice.” However, based on the responses to FAQs, ALL inpatient and outpatient encounters would need to be displayed as “the current requirements apply to all items and services provided by the hospital.”
  3. b. Payment reporting level: Per Encounter
    c. Notes: Consider this the same reporting as “Encounter Charges” only that instead of grossprices being presented the hospital displayed average payment levels. These averages could be further broken down into generic payer groupings, such as government and commercial. However, specific payer payments by encounter would likely be met with legal resistance. Still, this level of reporting would be a step closer to providing patients with their ultimate concern: cost to them. While this option is preferable to patients, it would not satisfy the rule’s interpretation for “standard charges” – meaning, list or gross prices – not, reimbursement. The final rule states that nothing precludes hospitals from doing this, though – and – in fact, encourages greater transparency efforts to include this information.
  4. PATIENT-SPECIFIC PAYMENTSa. Status: Non-Compliant
    b. Payment reporting level: Per Encounter
    c. Notes: Ultimately, patients are interested in knowing what their service is going to costthem. For this reason, this option is at the end of our usefulness spectrum. Many insurers are already helping their members understand specific payment responsibilities based on their offerings, agreements with providers, and how the patient’s utilization of service with other providers would impact copayment and deductible amounts. However, there are a number of hospitals that are helping to provide this level of information to patients in advance, as well. While it’s likely that insurers are best positioned to provide this information as the agreements with their members – and their members’ utilization of other healthcare services – will change frequently to impact patient responsibility, this is an option providers have and can pursue. Unfortunately, this level of reporting would not satisfy the rule’s requirements for machine readable posting of charges (not payments).

In sum, we believe that hospitals have several available options to satisfy the FY19 IPPS Final Rule Requirements for Hospitals to Make Public a List of Their Standard Charges via the Internet. These options range from minimum levels of reporting that will satisfy the rule’s language to those that provide greater depth of detail to patients. Although there are drawbacks to all of the options, we believe hospitals will select a strategy that they believe will provide the most value to their patients in an evolving healthcare marketplace.

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