Key takeaways from hospital price transparency updates

New dollar amount pricing requirements

Per the Calendar Year (CY) 2024 Outpatient Prospective Payment System (OPPS)/Ambulatory Surgical Center (ASC) final rule, hospitals must publish standard charges as they are established. This means if the hospital established charges as dollar amounts, then they must display the charges as such. However, if hospitals use estimates and averages for standard charges, they can post those in lieu of dollar amounts starting on Jan. 1, 2025.

A November 2024 report from PatientRightsAdvocate.org found that only 16.8% of hospitals reviewed were found to be sufficient in their disclosure of dollars-and-cents prices. The group and others have criticized the revised price transparency requirements in the CY 2024 OPPS/ASC final rule, arguing they obscured hospital pricing despite the ultimate goal of shedding light on healthcare spending.

The latest guidance will require more dollar-and-cents prices in MRFs if hospitals can calculate them. This includes prices for items and services negotiated by hospitals with healthcare payers, the base rate negotiated for a service package and a dollar amount if the standard charge is based on a percentage of a fee schedule.

CMS expects payer-specific negotiated charges to be posted as dollar amounts "for most contracting scenarios," the guidance stated.

If hospitals cannot express these charges as dollar amounts, then CMS said they must indicate that the negotiated charge is a percentage. Hospitals must also provide information about the type of fee schedule in the additional notes data element and encode an "estimated allowed amount."

Additionally, the guidance said that hospitals using "case rate" or "per diem" for the "standard charge methodology" data element must encode the dollar amount for the service package base rate, which can be coupled with a payer-specific negotiated charge algorithm and an estimated allowed amount.

Discontinuing the use of nine 9s

CMS previously allowed hospitals to encode nine 9s in the data element value of MRFs when there was insufficient claims data to calculate an estimated allowed amount. The agency anticipated very few scenarios in which a hospital would have a limited reimbursement history, such as when a hospital negotiates a contract with a new payer.

However, an internal review of sample MRFs from large acute care hospitals conducted in February 2025 revealed that hospitals were encoding nine 9s more frequently than CMS expected.

Cited in the guidance, the analysis of MRFs from 60 hospitals found that 63% encode one or more nine 9s for their estimated allowed amount data element values. Additionally, 38% of MRFs had nine 9s for over 90% of their estimated allowed amount data element values, leading to thousands of nine 9s instances.

The latest guidance prohibits the use of nine 9s in MRFs. To calculate the estimated allowed amount, CMS said hospitals should instead encode the average dollar amount the hospitals receive for an item or service based on electronic remittance advice (ERA) transaction data from the past 12 months.

Using this data, the three scenarios in which this applies are:

• If the currently negotiated percentage or algorithm was used for just a portion of the 12-month period, then the hospital should encode the average dollar amount for just that portion of time.
• If the item or service negotiated as a percentage or algorithm has been used or performed one or more times within the 12-month period, then hospitals should encode the average of those charges as the "estimated allowed amount" and put in the "notes" data element that there was “one or more instances of the item or service in the 12 months prior to posting the file.”
• If an item or service negotiated as a percentage or algorithm was not used within the previous 12 months, then the hospital should encode a dollar-and-cents value related to their expectation of what the charge would be for that item or service, with a saying there were "zero instances of the item or service in the 12 months prior to posting the file."

What the changes mean for hospital price transparency

The changes provided in the updated guidance on hospital price transparency requirements are more technical, explains Hal Andrews, CEO of Trilliant Health, a healthcare analytics and market research firm.

"From a technical perspective, the amount of 'noise' in the data should decrease substantially if the new guidelines are logical and clear," he said in an interview with RevCycle Management.

Cleaning hospital pricing data will benefit those who know a lot about medical billing, adds Joe Wisniewski, associate VP of channel partnerships and government affairs at Turquoise Health, which provides healthcare pricing solutions.

"Nine 9s, for example, don’t really mean anything to patients," he stated. "And they frequently caused confusion even among healthcare experts themselves, including revenue cycle experts within hospitals. So, there are new rules for when there are zero instances of the item being processed. That means a lot to healthcare experts, but to a patient, it is all still gibberish."

The issue at play, Andrews elaborates, "isn’t really that the existing framework is insufficient, but rather that interpreting the data is hard."

"Most of the stakeholders complaining about this simply lack the expertise to process and interpret the data," Andrews continued. "As a result, it is not clear that more regulations will increase price transparency, as noted above. Historically, what 'improves' the impact of regulation is enforcement, and it is unclear why CMS is so focused on making examples of individual hospitals rather than insurers, some of which continue to post files that are clearly non-compliant."

As CMS' RFI indicates, more hospital compliance enforcement is coming. The agency seeks public feedback on identifying challenges and improving compliance and enforcement processes to bring about more "complete, accurate, and meaningful" hospital pricing data.

Comments for the RFI are due by July 21, 2025, at 11:59 p.m. Eastern Time.

For Wisniewski, this updated guidance is ushering in a new phase of healthcare price transparency. He described the first phase as pouring the concrete and waiting for it to dry; healthcare needed the infrastructure to support transparent healthcare pricing data before building on more consumer-friendly processes.

The second phase will "get out of this era of nitpicking MRF details" to start focusing on real patients using pricing information to shop for care. A lot of that will center around improving transparency around payer pricing data and compliance. For example, CMS also seeks information on how to incorporate Medicare Part D prescription drug pricing information in healthcare price transparency efforts.

This phase will increase medical billing efficiency "to make the actual billing of healthcare faster."

"The hospital revenue cycle is weird," Wisniewski admitted. "Hospital care is the only thing you ever pay for where billing is the last step, not the first. So, I view phase two as fundamentally changing the revenue cycle by moving billing to the first step, at scheduling and starting to create an expectation from the consumer perspective."

Essentially, healthcare price transparency is being measured in inches, not miles, he explained. The updated guidance has promised more guidance and requirements to come as the healthcare industry and the government identify ways to achieve true healthcare price transparency.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.