The 2025 CMS Price Transparency Rules

What It Means for Patients, Providers & the Future of Healthcare

The Centers for Medicare & Medicaid Services (CMS) is set to enforce a new wave of price transparency regulations for hospitals, effective January 1, 2025. These rules aim to offer patients clearer, more comprehensive pricing data, enabling them to make better-informed decisions about their healthcare. However, like previous attempts at price transparency, healthcare experts remain divided on whether this will empower patients to shop for care. While these changes may not drastically alter the way patients interact with healthcare pricing, there’s hope that they will pave the way for innovative tech solutions that make navigating pricing simpler and more accessible.

​What Are the New CMS Price Transparency Rules?
The new CMS regulations set to go into effect in 2025 are part of a broader initiative to increase visibility into healthcare costs. Under the new rules, hospitals will be required to share more detailed pricing information. Some of the new data elements that must be included in publicly available price files are:

• Estimated Allowed Amount (EAA): The average amount a hospital has historically been reimbursed for a particular service or item.
• Drug Unit of Measurement and Type of Measurement: More granular data on drug pricing, breaking down measurements into clearly defined categories.
• Modifiers: Information required when specific circumstances impact reimbursement rates.

These changes are designed to improve transparency, allowing patients to compare costs before seeking care. The hope is that, by making pricing data more accessible, hospitals will face pressure to adopt more patient-friendly pricing models.
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A Step Toward Greater Transparency
Although the new rules may not immediately revolutionize how patients shop for care, experts agree that they represent a significant step forward in making healthcare pricing more accessible. Since CMS’s initial price transparency rule took effect in 2021, hospital compliance has steadily improved. Early on, fewer than 6% of hospitals were fully compliant, but now a significant majority meet the standards.

By 2023, many hospitals successfully adapted to new requirements, including using a CMS-mandated template for machine-readable files. While CMS began enforcing stricter compliance measures in 2023, about half of hospitals met these new standards within four to five months.

Moreover, the fact that more detailed pricing data will soon be available could lead to positive changes over time. While hospitals may struggle to translate this complex data into simple, patient-friendly formats, third-party tech companies are likely to bridge this gap. These companies can leverage the data to build user-friendly tools that simplify the process of understanding healthcare costs.

As consumer demand for transparent pricing rises, tools that reveal negotiated rates between health plans and providers are becoming a powerful part of the solution. At Perspecta, we offer a cutting-edge, compliant price transparency solution that meets regulatory requirements while addressing the demand for greater price clarity. By integrating members' benefit information and accumulators, our solution generates accurate out-of-pocket cost estimates for specific procedures.

The Future of Price Transparency
The increasing availability of pricing data has the potential to reshape the entire healthcare pricing landscape. The current fee-for-service model, where providers set prices based on internal costs and reimbursement rates, could eventually give way to a more market-driven approach. As patients and employers gain access to transparent pricing information, they may be able to compare costs and negotiate directly with hospitals for services.

With price transparency in place, hospitals and employers could easily establish more customized pricing agreements, potentially leading to lower rates than those offered through traditional insurance.
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Looking further ahead, price transparency could pave the way for direct contracts between hospitals, employers, and patients, bypassing insurers altogether. This could be facilitated by the clear data made available through these new rules, making it easier for all parties to negotiate fair prices.

Challenges Ahead
While the future of price transparency is promising, the shift toward a more transparent, consumer-driven model is still a long way off. The healthcare system is deeply entrenched in its existing structures, and transitioning to a more open, market-driven system will take time. But as technology platforms evolve and more data becomes accessible, we may see a gradual movement toward this new model.

As hospitals prepare for the January 2025 deadline, it's clear that while achieving meaningful price transparency will be complex, the potential for innovation and improvement in healthcare pricing remains high. While the road to meaningful price transparency may be slow and challenging, the changes that take effect in 2025 mark a crucial step toward a more competitive, open healthcare marketplace.

Learn more about Perspecta's Price Transparency Solution

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