New hospital price transparency requirements from the Centers for Medicare and Medicaid Services (CMS) are set to take effect on January 1, 2025. These new rules build upon previous requirements implemented on January 1, 2024, and July 1, 2024, and aim to further enhance transparency in hospital pricing. Hospitals and their pharmacy staff should familiarize themselves with these upcoming changes to ensure a smooth and efficient transition.
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Understanding the 2025 CMS Requirements
The 2025 requirements introduce several key data elements to increase price transparency, including “estimated allowed amount,” “drug unit of measurement,” “drug type of measurement,” and “modifiers.”
Estimated Allowed Amount (EAA)
The EAA represents the average payment a hospital has historically received for a given item or service. Hospitals will now be required to include this information in their machine-readable files (MRFs). Determining when algorithms are necessary for EAA calculation is crucial. CMS recommends using 12 months of historical data. If sufficient historical data is unavailable, hospitals should use the code “999999999” and update it when data becomes available.
Detailed Drug Information
More detailed drug information will also be required, with drug units and type of measurement listed in separate fields. Hospitals should identify the location of these elements within their systems, as pharmacy details like NDC, unit, or type of measurement may be stored separately from other charge information. Cross-referencing drug type of measurement values with the CMS-published list (GR, ME, ML, UN, F2, EA, and GM) is essential. Conditional formatting is also necessary; if the code type is “NDC,” the corresponding drug unit and type of measurement must be encoded.
Modifiers
Modifiers must be encoded separately when they impact reimbursement. Hospitals must specify all applicable modifiers used to describe a charge.
Review of Previous CMS Requirements
January 1, 2024 Requirements
The January 1, 2024, requirements focused on improving MRF accessibility. Hospitals were required to make a “good faith effort” to ensure MRF data completeness and accuracy. Additionally, a text file directing payers to a downloadable MRF link was mandated in the website’s root folder, along with a price transparency resource link in the website footer.
July 1, 2024 Requirements
The July 1, 2024, update introduced additional data elements and format standardization. Hospitals were required to adhere to specified file formats for encoding charges. They were also required to describe the contract provision used to calculate each payer-negotiated rate or, if a dollar amount couldn’t be listed, provide a description of the pricing algorithm. Experiences since the July 1, 2024, implementation suggest that CMS enforcement actions have decreased, indicating growing compliance. Recommendations include using the CMS text file generator for file verification and organizing contracts for easy access.
Preparing for 2025
As January 1, 2025 approaches, hospitals and pharmacists should stay informed about these requirements and be prepared to explain available transparency resources to patients.
Conclusion
Staying ahead of these evolving CMS requirements is essential for hospitals and pharmacy professionals. By understanding and implementing these changes, healthcare providers can contribute to greater transparency and empower patients to make informed decisions about their care. For personalized guidance, consult with a healthcare compliance expert.
References
Goodwin S, Wisniewski J. Webinar: Getting prepared for 2025 hospital price transparency rules. Turquoise Health. Published online September 5, 2024. Accessed September 6, 2024.
