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Patient Cost Estimate Regulations: What Healthcare Providers Need to Know

Team Fuse
Team Fuse

Healthcare pricing transparency is no longer optional. As of 2022, it's now federal law. The No Surprises Act and new hospital price transparency rules have reshaped how providers, practices and hospitals all share pricing information. Healthcare professionals are now legally obligated to provide patients with realistic cost estimates before rendering care.

With recent surveys showing that over 90 percent of Americans are in favor of that transparency, these regulations align with what patients want. It's up to providers to comply. Failing to do so could result in civil penalties, billing disputes, legal issues and patient dissatisfaction.

In this guide, we'll cover what's required and how providers can stay compliant, ensuring your practices meet the mark while also supporting patient expectations.

Understanding the No Surprises Act and Good Faith Estimates

The No Surprises Act (NSA) is a law designed to protect patients from unexpected medical bills. As the name implies, it helps prevent surprises while promoting greater patient cost transparency, especially concerning out-of-network or ancillary providers that patients typically do not choose. The federal law went into effect in 2022, now requiring healthcare organizations to clearly communicate potential charges before providing service, empowering patients to make informed financial and care decisions.

The NSA is complex and comprehensive, but there are a few key components providers need to be aware of. One example is the Good Faith Estimate (GFE) requirement. A Good Faith Estimate is a written, itemized cost estimate detailing all the expected charges the patient will need to cover. 

Who Must Provide Patient Cost Estimates?

  • Under the No Surprises Act, all healthcare providers and facilities that schedule services for uninsured or self-pay patients must provide a Good Faith Estimate. This includes hospitals, physician practices, labs, imaging centers, ambulatory surgery centers and more.
  • Keep in mind that Good Faith Estimates and general patient cost estimates are different. The former is required by law in certain instances. Meanwhile, general estimates for insured patients are generally not mandatory, as transparency obligations lie with health plans and insurers, not providers.
  • The GFE requirement applies when providers and facilities schedule service at least three days in advance. The provider that receives the initial request for a GFE becomes the "convening provider or facility." Therefore, it's their responsibility to deliver a timely estimate. When multiple service providers and facilities are involved in a patient's care, it's the convening provider that must obtain cost data from all parties involved and include it on a single GFE.
  • There are exceptions for emergency care and unscheduled visits. Because emergency care happens so quickly, providers are exempt from GFE requirements.
  • Now, the rules surrounding pricing transparency and Good Faith Estimates are federal law. The NSA is the baseline, but several states impose additional or slightly different requirements. For example, California, New York and Massachusetts all have distinct regulatory requirements that interact with, or sometimes overlap with or exceed, the NSA.
  • Providers must check with their respective state legislature for any specific rules that augment those federal requirements.

Good Faith Estimate Requirements for Uninsured Patients

Good Faith Estimates are required for uninsured patients or patients who choose to self-pay. It doesn't matter if a patient has active insurance or not. If they decide not to use it, opting to pay out of pocket, they're within their right to request a GFE.

The NSA requires hospitals and providers to supply an accurate and easily understandable GFE at least one business day before a patient's scheduled appointment. It must include all reasonably expected charges. That includes everything, not just provider fees. It must detail costs associated with the facility, laboratory work, supplies, equipment and other relevant expenses.

For accessibility, GFEs must also be clear and understandable. These Good Faith estimate requirements ensure that documents don't contain complicated legal or financial jargon that the average patient wouldn't understand. GFEs are there to support patients, not confuse them.

Of course, accuracy is vital. If a patient's final bill is $400 or more above the original estimate, they have the right to file a payment dispute through the Patient-Provider Dispute Resolution process.

Cost Transparency Rules for Self-Pay Patients

As mentioned earlier, self-pay patients have the same rights as uninsured patients, regardless of whether they have active coverage. There are many reasons why someone might choose to pay out of pocket rather than use their insurance coverage. Some examples include high deductibles, privacy concerns or out-of-network care. Whatever the case, self-pay patients are entitled to a GFE.

Providers also can't assume insurance coverage. When a patient indicates they want to pay out of pocket and not utilize insurance, providers must offer a GFE.

Hospital Price Transparency Requirements

The Hospital Pricing Transparency rule is another piece of legislation that's changed the game for patients. It's similar to the NSA, aiming to help prevent surprises that could have significant financial implications for patients. This rule took effect in 2021 and requires all hospitals operating within the U.S. to publicly share their pricing.

Pricing must be available in two formats:

Machine-Readable File: Machine-readable files are massive documents that contain comprehensive pricing data for all services and items the hospital might bill. These files allow technology developers, insurers and researchers to analyze pricing data at scale. Patients can also access these files to search for specific data points.

Consumer-Friendly Display: These consumer-facing displays must highlight at least 300 "shoppable services." These include standard procedures or tests. As the name suggests, this format aims to be accessible to everyone. Usually, these displays are available on hospital websites.

Compliance and Enforcement of Healthcare Pricing Transparency

There's no way out of hospital price transparency. Failing to comply with this rule can result in serious legal and civil consequences. The Centers for Medicare & Medicaid Services is responsible for enforcing transparency rules. 

Penalties can vary based on the size of the hospital. Facilities with fewer than 30 beds will receive a penalty of up to $300 per day of non-compliance. Meanwhile, larger hospitals may incur a penalty per bed, up to $5,500 per day. Annually, non-compliance penalties can reach millions of dollars!

Enforcement and subsequent penalties vary. States can impose additional rules and have stricter requirements that hospitals must follow. Hospitals can receive penalties at both the state and federal levels. 

Furthermore, patient disputes and non-compliance lawsuits can add further financial burden. Failing to comply can cost your organization more than you might realize, and there is a real risk of experiencing penalties, even if you haven't yet. 

Compliance isn't universal. Many hospitals have yet to fully comply with hospital price transparency rules. One study found that as of 2024, just over 21 percent of hospitals in the country are compliant.

Key Components of Compliant Patient Cost Estimates

To meet federal standards, patient cost estimates must include several key elements:

Format: Patients must receive precise, readable estimates in a format that's easy to access, including printed paper or electronically delivered documents.

Timing: Providers must deliver estimates at least 24 hours before a scheduled service.

Comprehensiveness: Estimates must be comprehensive, detailing all relevant costs. This includes provider fees, facility fees, lab work, imaging, supplies, equipment and other related expenses.

List of Providers: Estimates need to identify all providers associated with a patient's care, as well as fees paid to them.

Service and Diagnosis Codes: When available, providers must record CPT codes related to a patient's care.

Disclaimers: Every estimate needs a disclaimer that states the estimate isn't a final bill, and that the total may change based on unforeseen circumstances.

Accuracy is vital. Cost estimate regulations require that prices must reflect reasonable expectations. Providers can't lowball estimates to make services appear more affordable than they are.

Timing and Delivery of Good Faith Estimates

The timing of the estimate delivery matters, and what's required all depends on how far ahead a patient's service is scheduled.

For appointments scheduled three days or more in advance, providers must supply a GFE at least one business day before their visit. Services scheduled less than three days in advance require delivery of the GFE at the time of, or just before, the service.

Any patient who requests an estimate must receive it within three business days, regardless of whether they're uninsured, self-pay or fully insured.

As mentioned earlier, providers can supply a physical copy of the estimate, delivering it in person. Alternatively, patients can receive it electronically. Either way, patients must acknowledge receipt of the estimate.

Common Challenges Healthcare Providers Face with Cost Estimate Regulations

Providing Good Faith Estimates and pricing transparency is legally required, but that doesn't mean it's easy. There are many challenges involved. Practices must face changing contracted rates from payers, difficulties in chasing down data from multiple providers involved in a single patient's care, and uncertain patient needs.

Healthcare can change rapidly, and it's sometimes difficult to forecast what tests or procedures a patient will need.

Additionally, GFEs and price estimates can place an administrative burden on healthcare providers and their staff. Technical limitations often make creating accurate estimates a time-consuming and labor-intensive process.

Unfortunately, these are all challenges that providers have no choice but to navigate. Accurate estimates and complete transparency are now legally required, and patients want it. Failing to comply could result in penalties and eroded patient trust.

Streamline Cost Estimate Compliance with Automation

Fortunately, there are ways to get around those challenges. Automation is helping hospitals and providers create Good Faith Estimates quickly and easily, all without the worry of human error. Automated systems like Fuse can pull real-time data to calculate patient responsibilities in seconds.

With Fuse, you can reduce staff workloads, improve accuracy and make your practice audit-ready. Fuse can transform your organization for the better, help you earn your patients' trust, and ensure compliance with all applicable laws.

Schedule your Fuse demo today to learn more and discover how easy it is to create price cost estimates that your patients will appreciate.

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