Background
Hospital price transparency has emerged as one of the central issues in the ongoing effort to reform healthcare in the United States. As healthcare costs continue to rise and patients grapple with increasingly complex billing systems, policymakers have sought to make hospital pricing clearer and more accessible. The 2026 proposed rule (CMS-1834-P) on Hospital Price Transparency (HPT) represents the latest effort to ensure that patients, payers, and healthcare providers have access to meaningful information about the cost of care. One of the goals of the proposed changes to the HPT Requirements is to ensure consistency with Executive Order 14221, “Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information”. This document analyzes the proposed rule’s key provisions and explores its anticipated effects on patients and hospitals.
Median Allowed Amount & Percentiles
In CY2024 OPPS/ASC final rule §180.20 finalized a new data element “estimated allowed amount” to be used when a payer-specific negotiated charge is based on a percentage or algorithm for cases where a standard charge cannot be calculated. This amount is the average reimbursement in dollars that the hospital has received in the past. For CY2026 CMS §180.20 is proposing to eliminate the “estimated allowed amount” and replace it with a “median allowed amount”. “Median allowed amount” is defined as “the median of the total allowed amounts the hospital has historically received from a third-party payer for an item or service for a time period no longer than the 12 months prior to posting the machine-readable file (MRF).” Additionally, a hospital must calculate and include tenth (10th) and ninetieth (90th) percentile allowed amounts in dollars for an item or service to convey the potential range of values.
Additional Definitions and Requirements
“Tenth (10th) percentile allowed amount” is defined as “the 10th percentile of the total allowed amounts the hospital has historically received from a third-party payer for an item or service for a time period no longer than the 12 months prior to posting the machine-readable file (“MRF”).”
“Ninetieth (90th) percentile allowed amount” is defined as “the 90th percentile of the total allowed amounts the hospital has historically received from a third-party payer for an item or service for a time period no longer than the 12 months prior to posting the machine-readable file (“MRF”).”
When the calculated amounts for median, 10th percentile and 90th percentile fall between two observed allowed amounts, the allowed amount to be incorporated into the MRF must be the next highest observed value.
The median, 10th, and 90th percentile values would be calculated based on the total allowed amounts after all adjustments and payments for an item or service.
The median, 10th and 90th percentiles should be encoded for instances where a payer- specific negotiated charge is a percentage of a fee schedule that is not available to a hospital.
Currently when a payer-specific negotiated charge is based on a percentage or algorithm there must be a description of the percentage or algorithm contained in the MRF. This requirement does not change in accordance with the proposed rule.
EDI 835 ERA Transaction Data
Reported percentiles would be based on EDI 835 ERA transaction data and cannot be from longer than 12 months prior to posting the MRF. Per CMS, these requirements are to enhance the consistency of the data.
Lookback periods may not be the same for all payer plan combinations.
New services: if a negotiated percentage or algorithm was only used for a portion of the 12-month period, the hospital would calculate the values based on this time period.
New or renegotiated payer contracts: a hospital would apply the time period that the contract terms were applicable. Therefore, the time period could be different from other payer/plans.
Counts of Allowed Amounts
CMS has proposed a requirement to include the count of allowed amounts used to calculate the median allowed, 10th percentile, and 90th percentile amounts.
Zero-dollar claims should be excluded from the counts.
Items or services with a “0” count would encode a “0” for the count value leaving the median, 10th and 90th percentiles blank in the MRF. Additional notes would be required for these items explaining why there is insufficient claims history. A hospital would be required to include an additional note stating “new or recently revised payer contract” for items that meet these criteria.
CMS has also proposed reporting a range of allowed counts instead of the exact count where a hospital would use a range for an item such as 50-100 of allowed amounts.
Expanded Affirmation Requirements
Per §180.50(a)(3)(ii) in the 2024 Final Rule “each hospital must make a good faith effort to ensure that the standard charge information encoded in the MRF is true, accurate, and complete as the date indicated in the MRF.” The current language required to meet this standard states "To the best of its knowledge and belief, the hospital has included all applicable standard charge information in accordance with the requirements of 45 CFR §180.50, and the information encoded is true, accurate, and complete as of the date indicated." This was implemented to decrease public confusion regarding the accuracy and completeness in the file. Beginning January 1, 2026, CMS has proposed to strengthen this requirement with the following statement:
"The hospital has included all applicable standard charge information in accordance with the requirements of 45 CFR §180.50, and the information encoded is true, accurate, and complete as of the date in the file. The hospital has included all payer-specific negotiated charges in dollars that can be expressed as a dollar amount. For payer-specific negotiated charges that cannot be expressed as a dollar amount in the machine-readable file or not knowable in advance, the hospital attests that the payer-specific negotiated charge is based on a contractual algorithm, percentage of formula that precludes the provision of a dollar amount and has provided all necessary information available to the hospital for the public to be able to derive the dollar amount, including, but not limited to, the specific fee schedule or components referenced in such percentage, algorithm or formula."
Additional Hospital Information
CMS has proposed to add required data fields in the MRF to include the name and title of the chief executive officer, president, or senior hospital official and the hospital’s organizational national provider identifier. The intent of this requirement is to name a senior member to indicate the MRF was reviewed by hospital leadership. This requirement is separate and distinct from the hospital point of contact included in the txt file. The intent of the point of contact in the file is to identify an individual who can answer questions regarding the technical components of a hospital’s MRF.
Enforcement Updates
CMS has proposed the addition of a 35% Civil Monetary Penalty (CMP) reduction for hospitals that waive their rights to an Administrative Law Judge Hearing. To obtain this reduction, a hospital must submit to CMS a written notice requesting to waive its right to a hearing within 30 calendar days of the date of the notice. If a hospital waives its right to appeal a CMP and receives a 35 percent reduction the hospital would not be eligible to receive a 35% reduction for continuing violations and would waive its right to appeal CMPs for any continuing violations.
Obstacles and Challenges
Operational Challenges: Management of data is already burdensome for hospitals so hospitals may require additional resources, staff training, and data management systems to comply with the requirements. Smaller hospitals, especially those in rural areas, may face further resource constraints in meeting these standards.
Automation: Proposed changes add complexity to the requirements which make automation difficult. For example, the additional note required for the “0” count may not always be the same as there may be varied reasons for the counts. Also, the time period related to the median allowed amount, 10th percentile, and 90th percentile may differ, adding complexity to calculating values for this requirement.
Risk of Price Compression: As negotiated rates have become public with additional payer specific detail, there has been a risk of price compression. We note that insurers have been using this data to negotiate lower rates, potentially affecting hospital profitability.
Compliance and Regulatory Burden: Enhanced enforcement measures and stiffer penalties for noncompliance necessitate diligent adherence to rule requirements. Hospitals must allocate significant resources to ensure continuous compliance and avoid financial penalties.
Patient Access: The amount of data required is copious resulting in large files that are difficult to interpret. Enhanced statistical requirements will be more beneficial for innovators and insurers, with enhanced complexity making the files more difficult to navigate for the average patient.
Conclusion
Adherence to the Hospital Price Transparency regulations is becoming more important as requirements become more abundant and enforcement is enhanced. Hospitals increasingly rely on outside support to meet these complex requirements. SunStone has personal hands-on experience with assisting hospitals in all aspects of Price Transparency requirements, including in the development of Machine-Readable Files.
If you have any questions concerning the proposed 2026 Price Transparency rule, please contact:
Vonda Moon, Senior Principal at vondamoon@sunstoneconsulting.com
Kristie Bailey, Director at kristiebailey@sunstoneconsulting.com