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CMS Advocates for Price Transparency

The Centers for Medicare & Medicaid Services (CMS) is advocating for price transparency from hospitals. By working toward this goal, they hope to close the health care disparity gap in the United States.

Health care disparities are differences in access to health care services. These disadvantages are often based on race or ethnicity, gender, age, education, and socioeconomic status.

Now, the federal agency is on a mission to improve health care access, enhance patient care, and, most importantly, provide price transparency. Since CMS’s Price Transparency Rule went into effect, they began mailing warning letters to hospitals that fail to disclose payer-negotiated prices.

Hospitals receiving a letter are given 90 days to address the claim(s). Depending on the seriousness of the allegation, CMS may mail a second letter requesting a corrective plan.

Now, let’s discuss the Centers for Medicare & Medicaid Services’ Price Transparency Rule, why it’s important, and how it improves patient care.

Price Transparency Explained

When it comes to price transparency, CMS demands full financial disclosure from hospitals to their patients. The federal agency proposed hefty penalties for hospitals that break the Hospital Price Transparency Final Rule. This regulation orders hospitals around the nation to release a list of their five standard charges.

These penalty fines range depending on the violation. CMS has proposed a civil monetary penalty of a minimum of $300 per day. Under CMS’s proposal, hospitals could face a fine of at least $109,500 if not in compliance for a full calendar year, with a maximum amount of $2,007,500 per hospital.

Aside from health care costs, CMS wants customers to know prescription drug costs upfront. CMS requires a real-time prescription benefit tool that will calculate prices. Despite this mandate helping Medicare patients nationwide, the Price Transparency Rule will end this year.

Impact on Hospitals, Doctors, and Beneficiaries

The Centers for Medicare & Medicaid Services contends that its Price Transparency Rule is necessary. The Rule ensures Medicare beneficiaries get more accurate estimates for their out-of-pocket costs.

But health care professionals have voiced their doubts about the Rule’s validity and why they believe the new Rule hurts hospitals. The health care industry has expressed concern about the policy – with some stating that it’s not useful since negotiation for out-of-pocket costs often happens after a procedure occurs.

In response, CMS argues that while patients pay for a portion of negotiated prices, these prices lead to higher out-of-pocket costs.

Further, the industry worries the Rule is unfair because of complex algorithms for calculating prices. They say the Rule is unrealistic because it interferes with time to calculate prices in advance. The health care industry also contends that the Price Transparency Rule could confuse providers.

What is the Procedure Price Lookup Tool?

The Procedure Price Lookup Tool is an online resource CMS offers to beneficiaries. With this tool, users can research the national average prices of procedures they may receive in the outpatient department or ambulatory surgical center of a hospital. Thus, the Tool helps users make educated decisions about where to undergo Medicare-covered services based on cost.

The Centers for Medicare & Medicaid Services launched the tool to empower consumers with cost and quality information. It’s important to note that the Procedure Price Lookup Tool is only for Original Medicare.

Beneficiaries can use the tool for the following:

  • See a breakdown of the average for each procedure of what Medicare pays versus what the patient must pay
  • Compare costs for certain procedures and services at hospital outpatient facilities and ambulatory surgical centers
  • Identify the national average Medicare will cover for their services and procedures
  • Discover the national average for what the patient would pay at each facility

Now, Medicare beneficiaries and their loved ones are better equipped to make the best financial decisions, thanks to resources like the Procedure Price Lookup Tool and the new standard of accountability for hospitals.


What is the purpose of the Price Transparency Rule?
The Price Transparency Rule empowers patients with price and benefit information, according to the Centers for Medicare & Medicaid Services. The federal agency asserts that the regulation gives consumers the ability to make better decisions about their health care.
What charges are hospitals required to make public?
Hospitals must release a list of five standard charges: the gross charge, discounted cash price, payer-specific negotiated charge, de-identified minimum charge, and de-identified maximum negotiated charge.
How do patients benefit from the Price Transparency Rule?
The Price Transparency Rule gives patients information regarding cost estimates for treatment. From there, the patient will be able to determine what they can pay for services.

Lindsay Malzone

Lindsay Malzone is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.


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