In Medicare’s latest hospital-focused rule, CMS pushes new proposals for price and quality transparency

Medicare’s 2026 proposed rule for hospital outpatient care includes the Trump administration’s latest effort to augment price transparency requirements.

Two months after updated guidance featured a mandate to immediately start posting actual prices rather than estimates in machine-readable files (MRFs), among other directives, the proposed rule contains further steps in the name of specificity.

The earlier guidance also prohibits hospitals from using placeholders to indicate missing price data. And in the estimated allowed amount field for negotiated rates that are based on percentages or algorithms, averages must be based, whenever possible, on actual claims filed over the previous 12 months.

More new requirements

In the proposed rule that was released July 15, CMS sets additional parameters, which would take effect Jan. 1, 2026.

When payer-specific negotiated charges are based on a percentage or algorithm, hospitals would need to list the 10^th percentile, median and 90^th percentile of the allowed amount, and also disclose the number of entries used in calculating each percentile.

CMS wrote that those fields would provide “a better consumer benchmark than the estimated allowed amount and better enable price estimator tools to develop and estimate an individual’s personalized out-of-pocket cost, enabling MRF users to more easily compare such standard charges across hospitals.”

But Shawn Stack, director of perspectives and analysis with HFMA, said the additional requirements likely would not be worth the trouble.

“Even at first glance, the changes appear administratively burdensome, overly complex and likely to confuse rather than inform consumers, patients, employers and providers,” Stack said. “Adding four new rate field scenarios to an already dense machine-readable file format does not advance transparency — instead, it makes the data harder to interpret and use. Clarity and simplification should be the priority.”

Also applying to scenarios where charges are based on a percentage or algorithm, hospitals would need to use data from their 835 electronic remittance advice files to calculate and encode the allowed amount.

Shoring up enforcement

Formal attestation would be required as to the mandate to express payer-specific negotiated charges in dollars to the extent possible. For charges that cannot be expressed as such, the attestation would need to state that the hospital has provided all the available information necessary for the public to derive the dollar amount and has listed the name of the organization’s CEO or other senior official who oversees the encoding of accurate and complete data.

Another requirement for hospitals would be to encode their organization’s national provider identifier (NPI) as a means to allow for pricing comparisons between machine-readable files and other healthcare data sources, namely the Transparency in Coverage health plan price files.

The civil monetary penalty incurred by a hospital for noncompliance could be reduced by 35%, according to the proposed rule, if the hospital promptly agrees to CMS’s finding of noncompliance and waives the right to a hearing by an administrative law judge.

A conservative estimate?

In the proposed rule, CMS projected that the cost to hospitals of implementing the new price transparency requirements would be a one-time expenditure of less than $500, requiring five hours of work.

“We believe that, by now, hospitals have largely developed standardized processes and procedures for encoding the existing estimated allowed amount and general data elements, like hospital license number, in the MRF and that modifying their existing processes to include the four new data elements related to the proposed allowed amounts and hospital NPI would not entail a significant amount of additional work for hospitals,” CMS wrote.

Stack said the assessment likely misses the mark by a wide margin.

“Compliance will demand substantial staff time, technical effort and resources — pulling focus away from patient care,” he said.

New rules for star ratings

CMS also used the newly released rule to propose modifications to the hospital Star Rating program, a primary mechanism for quality measurement of hospitals serving Medicare beneficiaries.

The change would highlight the impact of the Safety of Care measure group, relative to the four other groups (Mortality, Readmission, Patient Experience, Timely and Effective Care).

In 2026, the change would entail capping hospitals at four stars if they are in the lowest quartile of the Safety of Care measure. The change would have a limited impact because of 695 hospitals that received an overall star rating and placed in the lowest quartile in Safety of Care last year, only 14 nonetheless received a five-star rating.

In subsequent years, hospitals in that quartile would incur a blanket one-star penalty (unless they already have an overall rating of one star).

Based on CMS’s review of 2024 data, out of 2,847 hospitals that received a star rating, 459 would incur a one-star deduction because of their performance in Safety of Care metrics. Hospitals more vulnerable to a penalty would include teaching hospitals, veterans’ hospitals, 100-plus-bed hospitals, urban hospitals and non-specialty hospitals, CMS said.

Both the 2026 and subsequent changes would apply only to hospitals that receive scores in at least three of the Safety of Care sub-measures.

“These changes will prioritize safety for both patients and healthcare workers and reflect CMS’s fundamental commitment to ensuring high-quality, safe care as a central component of health system performance,” CMS wrote in the rule.