Price Transparency: A Regulatory Priority
March 6, 2025 – The Trump administration is beginning to lay out its regulatory (and deregulatory) priorities, and on February 25, 2025, the administration spotlighted one of those priorities in an executive order on price transparency. While the executive order mainly focuses on enforcing current price transparency requirements, it also hints at changing or even expanding them, which would require rulemaking to accomplish. To help me describe this executive order and potential changes to existing price transparency requirements, I’m bringing in my colleague Leigh Feldman.
Before diving into topic at hand, we want to note that we are assessing the impact of the policy statement that the US Department of Health and Human Services (HHS) issued on February 28, 2025, announcing HHS’s intention to refrain from rulemaking in certain situations. As background, the Administrative Procedure Act exempts certain rules from formal notice-and-comment rulemaking, including rules regarding “public property, loans, grants, benefits, or contracts.” Despite this exemption, past guidance known as the Richardson Waiver encouraged greater public participation and directed government agencies to use the more formal rulemaking process for this category of rules. HHS’s February 28 policy statement rescinds the Richardson Waiver. The scope of the regs that could be impacted is not easily defined, as other statutes and legal requirements may still require notice-and-comment rulemaking – such as for annual Medicare payment updates and policy changes. In all, the Trump administration will still likely carry out some policy priorities, such as promoting price transparency, through rulemaking.
With that important context, we now move on to the issue of the day. In the first Trump administration, the Centers for Medicare and Medicaid Services (CMS) established price transparency requirements for hospitals and health plans. Since January 1, 2021, hospitals have been required to make public:
- A machine-readable file containing a list of all standard charges for all items and services.
- A consumer-friendly list of standard charges for 300 “shoppable” services. (A hospital that maintains an internet-based, prominently displayed, free-to-use price estimator tool is deemed to have met this requirement.)
Under the hospital price transparency regs, a hospital’s “standard charges” include gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.
Health plans are required to:
- Make detailed pricing information available to the public, including negotiated rates services between the plan and in-network providers, historical payments to and billed charges from out-of-network providers, and in-network negotiated rates and historical net prices for all covered prescription drugs. This requirement became effective on January 1, 2022.
- Offer an online shopping tool that will allow consumers to see the rate negotiated by their provider and plan and an estimate of their out-of-pocket cost for 500 of the most shoppable items and services. This requirement became effective on January 1, 2023. Since January 1, 2024, health plans have been required to offer online shopping tools showing costs for remaining procedures, drugs, durable medical equipment, and other services.
As these requirements went into effect, stakeholders raised concerns regarding compliance among hospitals. In response, CMS underwent rulemaking in the CY 2022 and 2024 outpatient prospective payment system (OPPS) final regs to beef up penalties for noncompliance and lay out steps it would take to make sure that hospitals were complying.
The recent price transparency executive order indicates that the Trump administration believes that even more direct action needs to be taken. The president states that “progress on price transparency at the Federal level has stalled since the end of my first term. Hospitals and health plans were not adequately held to account when their price transparency data was incomplete or not even posted at all.” In order to make “more meaningful price information available to patients to support a more competitive, innovative, affordable, and higher quality healthcare system,” the executive order calls on the HHS secretary, working in conjunction with the secretaries of the US Departments of Labor and the Treasury, to take the following actions within 90 days:
- Require the disclosure of the actual prices of items and services, not estimates.
- Issue updated guidance or proposed regulatory action ensuring that 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.
One question to consider is what additional steps the departments need to take to comply with the directive. Put simply, what’s new here that would require new regs to effectuate? Hospitals and health plans already must comply with definitive reporting requirements, and CMS has already issued guidance on the requirements and taken enforcement actions. However, it is apparent that the Trump administrative wants to do more, including issuing more regulations.
Immediately after the executive order was issued, CMS stated in an email to stakeholders that it is planning a “more systematic monitoring and enforcement approach.” We could also see changes, through rulemaking, to the requirements themselves and to the enforcement policies. These changes could be included in the Medicare payment regs affecting hospitals – either the fiscal year 2026 inpatient prospective payment system proposed reg (potentially to be released in April 2025, which would meet the executive order’s call for action within 90 days) or the CY 2026 OPPS reg. The proposed OPPS reg could be released in June or July 2025; this reg is where CMS has addressed hospital price transparency changes in the past. For either of these regs, the public, including hospitals, would have 60 days to provide feedback on the feasibility of implementing these changes.
With respect to the price transparency requirements, the first action required by the executive order (mandating “the disclosure of the actual prices of items and services, not estimates”) suggests a potentially substantial regulatory change. Currently, hospitals are permitted to include in their machine-readable files formulas for their negotiated rates that are a percentage of their gross charges (i.e., estimates). In the CY 2024 OPPS final reg, CMS clarified that:
- It is generally appropriate for a hospital to display a payer-specific negotiated charge as a standard algorithm, to the extent a standard algorithm is the manner in which the hospital establishes its standard charges with third-party payers.
- The hospital must include a description of that algorithm in its machine-readable file.
- As of January 1, 2025, if a hospital’s standard charge is based on a percentage or algorithm, its machine-readable file must also specify the estimated allowed amount for that item or service.
The executive order seems to signal that the Trump administration believes these requirements are insufficient and that it plans to require that actual dollar amounts be listed.
Regarding enforcement, CMS increased the penalty for noncompliance with the hospital price transparency requirements in the CY 2022 OPPS final rule. In the CY 2024 OPPS final rule, CMS changed its methods for assessing hospital compliance and gave itself permission to publicize information about its assessments and any compliance actions taken against a hospital. The recent executive order indicates that the current administration may go even further to increase enforcement. For clues about what policies the administration may pursue, it may be instructive to look to the Lower Costs, More Transparency Act (LCMT), which passed the US House of Representatives last Congress. In addition to codifying then-current hospital price transparency regulatory requirements, LCMT would have required CMS to monitor each hospital’s compliance at least every three years and would have substantially increased the maximum penalties for noncompliance. LCMT also would have required (rather than simply permitting) CMS to publish information about its compliance assessments and enforcement actions taken against specific hospitals.
Even beyond the price transparency requirements themselves, another possible action the Trump administration could take (in the spirit of price transparency) would be the implementation of the No Surprises Act’s advanced explanation of benefit (AEOB) requirement. The law requires health plans to send enrollees an AEOB notification for certain services that includes:
(1) the network status of the provider or facility; (2) the contracted rate for the service, or if the provider or facility is not a participating provider or facility, a description of how the individual can obtain information on providers and facilities that are participating; (3) a good faith estimate received from the provider; (4) a good faith estimate of the amount the plan or coverage is responsible for paying, and the amount of any cost-sharing for which the individual would be responsible for paying with respect to the good faith estimate received from the provider; and (5) disclaimers indicating whether coverage is subject to any medical management techniques.
The AEOB requirement was supposed to go into effect on January 1, 2022, but has not yet been implemented. HHS and the Departments of Labor and the Treasury issued a request for information on September 16, 2022, that sought comments from interested parties on operational issues related to implementation. On April 23, 2024, the departments issued an update on implementation noting difficulties involved in sharing good-faith estimate information between providers, and between providers and health plans. The departments stated their intention to test industry-wide standards for data sharing, and stated that they were reviewing comments on the RFI and would work on a proposed reg to implement the AEOB requirement in the future. The departments issued another update on December 3, 2024, noting that they were making progress on developing and testing data-sharing standards, but did not indicate when the rulemaking process to implement the requirement might start.
Since the goal of the AEOB requirement is to tell patients what a service will cost before they receive it, the Trump administration could link this requirement to its overall efforts to improve price transparency. The executive order did not mention the AEOB requirement, however, so it remains to be seen when or if the Trump administration will implement that requirement.
Price transparency is a clear priority under the Trump administration, as it doesn’t go without notice that it was one of the first health policy priorities that the administration announced. Given the president’s directive in the executive order, we could see concrete regulatory action sometime within the next few months. We will keep you posted!
Until next week, this is Jeffrey (and Leigh) saying, enjoy reading regs with your eggs.