CMS transparency update effective immediately

Sub-regulatory hospital price transparency guidance CMS issued May 22 was effective immediately, according to a June 16 email from the agency.

The May 22 guidance made a technical but significant change to price transparency reporting when it barred the use of nine 9s as placeholder amounts in the machine-readable files (MRFs) hospitals are required to publicly post on their websites. Previous CMS guidance had allowed hospitals to use nine 9s as the “estimated allowed amount” in certain circumstance, such as when there was insufficient reimbursement history to derive that figure.

However, the latest guidance initially did not include an effective date, after which violations would expose hospitals to enforcement actions from CMS. The agency’s recent email clarified enforcement based on the change could begin on the May 22 issuance date.

The use of nine 9s “was for fields where it would be difficult to come up with an accurate estimate for the amount because there was a whole bunch of variables in play,” said Chad Mulvany, a director for Forvis Mazars. The newly required figures “will be an average with a significant standard deviation.”

What it means

The change in the guidance could affect many hospitals and require them to scramble to achieve costly and time-consuming compliance with it.

For instance, the CMS guidance said the agency sampled MRF files of 68 large acute care hospitals and found:

• 63% of the 68 MRFs used one or more nine 9s for their estimated allowed amount data element values
• 38% of the 68 MRFs sampled used nine 9s for more than 90% of their estimated allowed amount data element values

Alicia Faust, a principal for Forvis Mazars, questioned whether the small CMS sample mirrored all hospitals but said her organization has seen a wide range of nine 9 use in hospitals’ MRF files.

“We’re advising our clients that they should go ahead and try to make the updates as best they can,” Faust said. CMS is “now saying they don’t want to see [nine 9s] in the file, at all. So, you now have to go back and try to calculate what these estimated amounts are.”

The guidance included three approaches to replacing the nine 9s in the MRF files:

• Use the average dollar amount from the electronic remittance advice transactions for only the portion of time that the negotiated percentage or algorithm was used within the previous 12 months
• Use the average of charges negotiated as a percentage or algorithm derived from electronic remittance advice transaction data as the “estimated allowed amount,” and include a note
• Encode a value in dollars and cents related to their expectation of what the charge would be for that item or service, if an item or service that is negotiated as a percentage or algorithm was not used in the previous 12 months, and include a note

The complexity of the second option will likely present the biggest challenge for most organizations to meet, Faust said.

To date, CMS audits of the files have been confined to whether they are following the template it outlined. And it has not yet audited the accuracy of any of the hospitals’ posted files.

Some hospital leaders have raised concerns that CMS may compare the estimated amounts back to patient out-of-pocket data required by the No Surprises Act and punish them for any differences.

“Those are apples to oranges — the patient portion versus the overall reimbursement amount,” said Faust. “I could see that they would try to reconcile those two data sets. And that’s one of the concerns across many organizations right now.”

Enforcement update

The latest transparency rule changes come as CMS continues to pursue fines for hospitals it finds non-compliant.

The latest of the 27 hospitals fined, so far, was a May 13 fine of $93,000 against 38-bed Community Care Hospital in New Orleans. One-third of the hospitals fined for not meeting transparency rules, to date, are those with 30 or fewer beds.

The enforcement picture for hospitals is further complicated by the growing number of states that have enacted their own laws to mirror CMS rules and add their own enforcement and fines.

Faust warned that hospitals should track results from an outstanding CMS request for information (RFI), which may result in more changes to the price transparency requirements this year. Responses to the RFI are due July 21.