CMS Issues Updated Hospital Price Transparency Guidance and Related RFI

The Centers for Medicare & Medicaid Services (CMS) released new Updated Hospital Price Transparency Guidance (Guidance) to “strengthen the Hospital Price Transparency requirements, requiring hospitals to post the actual prices of items and services, not estimates.” The Guidance is meant “to ensure that hospitals provide meaningful, accurate information about their charges for health care items and services.” In conjunction with the Guidance, CMS also sent out a Request for Information (RFI) to solicit “input to identify challenges and improve compliance and enforcement processes related to the transparent reporting of complete, accurate, and meaningful pricing data by hospitals.” Comments on the RFI must be submitted by 11:59 p.m. EST on July 21, 2025.

In support of the Guidance, CMS Chief of Staff and Deputy Administrator Stephanie Carlton was quoted in a press release, as saying that “[t]ransparency in health care is essential, not optional.” She states that “Americans deserve to know exactly what they’re paying for and what they’re getting in return. We’re pulling back the curtain on pricing and ultimately value – because accountability is a foundation of a healthier nation.” 

These efforts align with President Trump’s Executive Order 14221 that was issued on February 25, 2025, and required the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to “take all necessary and appropriate action to rapidly implement and enforce the healthcare price transparency regulations,” and within 90 days:

• Require the disclosure of the actual prices of items and services, not estimates
• Issue updated guidance or proposed regulatory action ensuring pricing information is standardized and easily comparable across hospitals and health plans
• Issue guidance or proposed regulatory action updating enforcement policies designed to ensure compliance with the transparent reporting of complete, accurate, and meaningful data

The Guidance provides that in order to ensure the inclusion of a dollar amount in the hospital machine-readable files (MRF(s)) and to make hospital prices more transparent, hospitals must:

• Encode a standard charge dollar amount in the MRF if it can be calculated, including the amount negotiated for the item or service, the base rate negotiated for a service package, and a dollar amount if the standard charge is based on a percentage of a known fee schedule
• Discontinue encoding “999999999” (Nine 9s) in the estimated allowed amount data element within the MRF, and instead encode an actual dollar amount

Encoding Payer-Specific Standard Charge Dollar Amounts and Contract Methodologies

The Guidance emphasizes that “CMS expects that, for most contracting scenarios, hospitals’ payer-specific negotiated charges can be expressed as a dollar amount,” which includes items and services encoded in the MRF with a standard charge methodology of a known “case rate,” “fee schedule,” or “per diem.” In these situations, the dollar amount must be encoded in the “payer-specific negotiated charged: dollar amount” data element within the MRF.

If the standard charge methodology is a known “case rate” or “per diem,” the hospital must “encode the dollar amount for the service package base rate, which may be coupled with a payer-specific negotiated charge algorithm and an estimated allowed amount, if necessary.”

If the payer-specific negotiated charge is a percentage of a fee schedule that is not available to the hospital, then the hospital must indicate such and “provide additional information about the type of fee schedule in the appropriate additional notes data element, and encode an ‘estimated allowed amount.’”

CMS provided a link to examples of how to encode standard charge data.

Calculating the “Estimated Allowed Amount” and Discontinuing Use of Nine 9s

In accordance with prior CMS guidance, when “a hospital has limited historical claims to derive the ‘estimated allowed amount,’ such as when a hospital has just negotiated contracts with new payers,” the hospital would encode Nine 9s in the data element value to indicate such.  

CMS has, however, determined through observations, feedback and an analysis of a sample of MRF files from large acute care hospitals conducted in February 2025, that hospitals are encoding Nine 9s “much more frequently than expected.” As a result, the Guidance provides that hospitals should no longer encode Nine 9s. Instead, when calculating the “estimated allowed amount,” hospitals should encode the average dollar amount received for an item or service, derived from the electronic remittance advice transaction data from the previous 12 months. CMS outlined the following scenarios for encoding charges. Specifically, if the item or service is negotiated as a percentage or algorithm, and was:

• Only used for a “portion” of the previous 12 months, the hospital should encode the average dollar amount for the portion of time that the percentage or algorithm was used
• Only used “one or more times” within the previous 12 months, the hospital should encode the average dollar amountof those charges, and remark in the “notes” that there was “one or more instances of the item or service” in the previous 12 months
• Not used within the previous 12 months, the hospital should encode the expected dollar amount of what the charge would be for that item or service, and remark in the “notes” that there were “zero instances of the item or service” in the previous 12 months

The Health Law Observer will continue to monitor oversight and enforcement of federal price transparency laws, and the impact that such may have on hospitals and other healthcare organizations.