The Centers for Medicare and Medicaid Services (CMS) recently issued updated guidance on price transparency, introducing a more rigorous framework for how hospitals disclose charges for healthcare services. Released under Executive Order 14221, this directive raises the bar for compliance and accuracy, posing significant challenges to hospital revenue cycle operations, while also posing opportunities for improved patient trust and regulatory alignment.
Background: A Shift Toward Real Price Transparency
Price transparency in U.S. healthcare has been a long-standing legislative objective, originally embedded in the Affordable Care Act under Section 2718(e) of the Public Health Service Act, which requires hospitals to annually publish standard charges for items and services. The following have further built on this foundation:
- The Trump Administration’s 2020 OPPS Final Rule established two major requirements: hospitals had to publish standard charges in a machine-readable format and provide pricing data in a consumer-friendly presentation.
- The Biden Administration’s 2022 OPPS Final Rule ramped up enforcement—eliminating preliminary warnings and initiating public disclosures of noncompliant hospitals, along with civil monetary penalties.
- Executive Order 14221 further advances these goals, reflecting frustration over slow progress and calling for immediate action by federal departments to strictly enforce transparency regulations.
Despite these efforts, CMS found that placeholder codes like “999999999” (used when hospitals lacked reimbursement data) severely undercut the intent of transparency, leaving patients confused and unable to make informed decisions.
New Requirements Emphasize Precision, Not Placeholders
Updated CMS guidance introduces two key requirements meant to eliminate ambiguity in price reporting. These requirements are meant to motivate hospitals to be more transparent and methodical in how they report charges, therefore delivering pricing data that is more useful to patients and stakeholders. They are as follows:
- Mandatory Use of Actual Dollar Values – Hospitals must now report real dollar amounts for all standard charges, including those based on case rates, fee schedules or payer-specific percentages. If the negotiated rate is calculated as a percentage of a fee schedule, that fee schedule must be disclosed with sufficient detail. Hospitals must use historical claims and remittance data to support estimated charges. Also, unsupported or poorly documented estimates risk being labeled noncompliant by CMS.
- Ban on Placeholder Pricing – The use of placeholder codes, such as “999999999,” is now prohibited. Instead, hospitals must use the average allowed amount from the last 12 months of remittance advice data. If the rate was only in effect for part of that period, then they must base the average on that specific amount of time. If no usage data exists, they must then estimate the charge based on internal methodology and disclose that the service was not performed in the prior year.
Key Challenges Ahead for Revenue Cycle Teams
For hospital revenue cycle teams, these requirements introduce some significant operational complexities.
- Data Infrastructure and System Overhauls – Hospitals must make sure their pricing data systems can: calculate and display average allowed amounts from past remittance data; store, document and present detailed fee schedules and pricing methodology; and integrate estimation capabilities where historical data is unavailable. For many revenue cycle teams, this will necessitate technological upgrades, revised workflows and enhanced reporting tools.
- Compliance and Documentation Burdens – Meeting CMS’s new standards will require ongoing effort to validate pricing estimates with verifiable data, maintain extensive documentation for each disclosed charge and maintain alignment with federal interpretation of “meaningful and accurate” disclosure. Failure to do so could result in public listings of noncompliance and financial penalties.
- Cross-Departmental Coordination – Accurate transparency requires collaboration across departments like IT, finance, compliance and patient access. Hospitals may need to invest in staff training and cross-functional alignment to prevent potential reporting inconsistencies.
Strategies for Successful Implementation
Hospital revenue cycle teams have several initiative-taking measures at their disposal for successful implementation of the new requirements:
- Audit Existing Transparency Disclosures – Review all current pricing data to identify placeholders, incomplete estimates, or unsupported methodology. Flag areas where fee schedules or historical claims data are lacking.
- Enhance Internal Data Capabilities – Invest in tools and platforms that can aggregate remittance data across payers, perform dynamic pricing estimates as well as store and retrieve fee schedules with metadata for disclosure.
- Strengthen Documentation and Governance – Establish protocols for pricing estimation, including detailed documentation standards, version control on fee schedules and internal compliance checks before public updates.
- Educate and Train Stakeholders – All relevant personnel, from billing managers to patient access teams, should undergo training to understand the new CMS expectations, how estimates must be justified, when exceptions may apply and how those exceptions must be reported.
Let Windham Brannon Help Your Revenue Cycle Team
The CMS’s latest price transparency guidance signifies a decisive move toward accountability, clarity and standardization in healthcare pricing. The shift can mean undeniable challenges for revenue cycle leaders and their teams who are responsible for data accuracy and regulatory compliance. Windham Brannon’s Healthcare Consulting Practice can help you implement the right systems and processes for team alignment, putting you on the path to stronger patient engagement, reduced regulatory risk and increased transparency. For questions or more information, contact your Windham Brannon advisor today, or reach out to Greg Brazzel.
