In a decisive move to enhance healthcare price transparency, this week the President directed the Department of Health and Human Services (HHS), the Department of Labor, and the Department of Treasury to "rapidly implement and enforce" regulations. This directive underscores the urgency of providing patients with clear and accessible pricing information to make informed healthcare decisions. While the Centers for Medicare & Medicaid Services (CMS) has established guidelines on data format and structure, there remains a critical gap: regulating the actual content of pricing data.

The Challenge of Pricing Transparency in Healthcare

To comply with the Price Transparency rule, providers and payers are required to publish their standard charges which are defined as hospital charges and payer contractual rates. These standard charges (pricing) may vary significantly based on the type of service and the complexity of care provided to each patient.

For outpatient services (e.g., Imaging services and Laboratory tests), typically defined by Healthcare Common Procedure Coding System (HCPCS) codes, pricing is relatively straightforward. However, for more complex services, such as inpatient Diagnosis-Related Groups (DRGs) and outpatient Surgical Procedures, pricing is less predictable. The final cost of these services depends on various factors, including patient-specific needs and payer contractual terms. Additionally, high-cost items such as implantable supplies and biologicals are often reimbursed separately under carve-out payment terms, which are frequently omitted from published rates. Since patients undergoing the same procedure may require different implants or biologicals, their final costs can vary widely. As a result, published rates that exclude carve-out payments provide an incomplete picture of expected expenses.

The Need for Comprehensive Pricing Content Regulation

To address these gaps, HHS and the Departments of Labor and Treasury should prioritize improving guidance for the content of Machine-Readable Files (MRFs) published by providers and payers. The goal is to ensure that pricing information reflects both contracted rates and historical payment trends, offering a more accurate estimate of costs for consumers.

Proposed Changes for More Meaningful Transparency

1. Single HCPCS Code Services:

  - Standard charges should be reported as the hospital's published charges in the charge description master (CDM).

  - Each payer plan’s contractual rate should be clearly documented to ensure price comparisons.

2. Multiple-Charge Services (e.g., Inpatient DRGs, Outpatient Surgical Procedures):

  - Contracted Rates by Payer Plan: Providers should report the negotiated rates for each payer plan.

  - Estimated Rates Based on Historical Data: To account for carve-out payments, historical patient claims data from the most current past 12 months can be used to calculate median standard charges. This approach ensures that estimated rates better reflect the actual costs patients may incur.

3. Modifier Reporting:

  - Report modifiers only when they impact final rates, as many modifiers do not alter the actual payment amount.

Moving Toward a Transparent Future

The administration’s directive is a necessary step toward true price transparency, but meaningful reform requires clear and consistent pricing content regulation. By refining MRF content standards and ensuring the inclusion of comprehensive pricing data, regulators can help providers and payers present information in a way that truly benefits patients. Enhanced transparency will empower consumers to make informed decisions, foster competition, and drive accountability within the healthcare industry.