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New transparency initiatives will go into effect on January 1, 2025, building off previous actions by the Centers of Medicare and Medicaid Services.
On January 1, 2025, new hospital transparency requirements from the Centers of Medicare and Medicaid Services (CMS) will go into effect. These new rules follow previously enforced requirements that took effect on January 1, 2024, and July 1, 2024. As 2025 approaches, hospitals and their pharmacists should look to refresh themselves on the past requirements and on these upcoming guidelines to ensure a smooth and effective transition.
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Joe Wisniewski, head of platform growth at Turquoise Health, and Spencer Goodwin, head of compliance product at Turquoise Health, presented a webinar that went over what stakeholders should expect on January 1, 2025 and the best practices that should be implemented. They also discussed the hospital price transparency rules from CMS that are already on the books.
January 1, 2025 will see the introduction of additional required data elements to increase transparency. These will be an “estimated allowed amount,” “drug unit of measurement,” “drug type of measurement,” and “modifiers.” Estimated allowed amount (EAA) was described as the average dollar amount that the hospital has historically received for an item or service, which will now be a required inclusion on machine-readable files (MRFs).
Wisniewski and Goodwin said that hospital workers should ask themselves when algorithms to determine the EAA are necessary. They also note that CMS suggests using 12 months of historical data when calculating these estimated amounts. Further, if there is not sufficient historical claims history to calculate the EAA, CMS recommends hospitals encode “999999999” in the data element, and then update it when data becomes available.
Correspondingly, more detailed drug information is poised to be required, with the associated drug units and type of measurement having to be parsed into separate fields. The presenters suggested that hospitals locate required elements beforehand, as pharmacy details such as the unit or type of measurement or National Drug Code (NDC) may be stored separately from other standard charge information.
Hospitals should also look to crosswalk the drug type of measurement values to match the list of valid values that is published by CMS, which include GR, ME, ML, UN, F2, EA, and GM. Furthermore, Wisniewski and Goodwin made note of conditional formatting requirements; if the code type was “NDC,” then the corresponding drug unit of measure and drug type of measure would be mandated to be encoded.
Regarding modifiers, they must be encoded as a separate element when there is a reimbursement impact. Hospitals must be able to specify any relevant modifiers used to describe an established charge.
The presenters also gave an outline of previous requirements published by CMS. January 1, 2024 saw the introduction of numerous initiatives to improve access to MRFs. A “good faith effort” would be required for hospitals to ensure that data in their MRF is complete and accurate.
1. New hospital transparency rules from the Centers for Medicare and Medicaid services go into effect on January 1, 2025.
2. These new rules will require additional data elements such as an estimated allowed amount and modifiers.
3. New requirements build off previously issued guidance on January 1, 2024 and July 1, 2024.
Furthermore, a text file was mandated in the root folder of a hospital’s website that directs payers to a downloadable link of the MRF, while a link to the hospital’s resources regarding price transparency had to be implemented in the footer of each hospital’s home page. These efforts were implemented to further make transparent the hospital pricing process.
On July 1, 2024, additional data elements and format standardization were introduced. MRFs produced by hospitals were expected to conform to accepted file formats detailing how hospitals must encode their charges.
In addition, hospitals were required to provide a description of the contract provision they used to calculate each rate negotiated by a payer. And, when the payer-negotiated rate could not be listed as a dollar amount, a description of the pricing algorithm used must be provided.
Wisniewski and Goodwin noted several lessons that hospitals have learned since the July 1 requirements. They noted that CMS enforcement actions, after peaking 2023, lowered in 2024, signaling a gradual consensus regarding compliance. Recommendations included utilizing the CMS text file generator to check files and organizing hospital contracts to make it easy to pull as new requirements are introduced.
As January 1, 2025 approaches, hospitals and pharmacist should remain aware of these upcoming requirements and prepare to explain the transparency resources available to patients.
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