By Angie Cameron Smith
and Sara Petermann
With changes in presidential administration often come seismic policy shifts, and policy with respect to healthcare is no exception. On May 22, the Centers for Medicare & Medicaid Services (“CMS”) announced its updated guidance policy regarding the use of the code “999999999” as a placeholder in hospital machine-readable files (“MRFs”).
According to the guidance, this update is consistent with Executive Order 14221 (“Order”), which was issued by the White House on February 25, 2025. The Order, titled “Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information,” reflects the current administration’s stance on transparency in hospitals’ pricing practices. The Order and subsequent guidance carries important implications for hospitals.
Background
Section 2718(e) of the Public Health Service Act mandates that hospitals provide to the public information on their standard pricing for items and services, and in 2021, these pricing requirements were implemented via the Hospital Price Transparency regulations, found in 45 CFR 180. Consequently, MRFs were required for hospital charges, including in-network provider rates, historical allowed amounts for out-of-network providers and any negotiated rates for prescription drugs. This information must be available in a consumer-friendly format on an internet website free of charge for public consumption. Previously, CMS instructed hospitals to encode “999999999” in lieu of an actual dollar amount when there was “insufficient historical claims data” to calculate a specific dollar value. However, CMS found that this practice was overused and undermined the purpose of the price transparency rules, which were intended to increase patient awareness with respect to hospital pricing by requiring more robust disclosures. As a result, CMS updated its policy regarding the use of code “999999999” as a placeholder in the MRFs.
So, what changed?
CMS now advises hospitals to encode a specific dollar amount in the MRF for all items and services offered. CMS acknowledges, however, that there may be situations where a hospital has limited historical claims to establish the estimated allowed amount. In these instances, rather than encoding “999999999” in the MRF, hospitals must instead encode “the average dollar amount the hospital has received for an item or service, derived from the electronic remittance advice transaction data using data from items or services rendered within the 12 months prior to posting the file.”
In other words, if an item or service was used at least once within the preceding 12-month period, hospitals are expected to take the average of those prior charges and encode that value into the MRF. If an item or service was not used at all within the preceding 12-month period, hospitals are instructed to encode a value that is their “expectation of what the charge would be for that item or service, and remark in the ‘notes’ data element that there were ‘zero instances of the items or service in the 12 months prior to posting the file.’”
Implications
The Trump administration states that increased price transparency will “support a more competitive, innovative, affordable, and higher quality healthcare system.” According to some, pricing disclosures for hospital services encourages free-market competition by allowing consumers to shop different hospitals for the best price.
Penalties for noncompliance by hospitals could range from civil penalties to public shaming, with CMS publicizing noncompliant hospitals on its website. We have seen a number of hospitals receive notification from CMS of non-compliance with the Hospital Price Transparency rules, as well as requests for Corrective Action Plans.
With respect to patients, providing complete and accurate information on hospital pricing allows for informed decisions and comparison of rates across hospitals.
Conclusion
While these regulations could bring positive changes to the healthcare field for patients, they may create challenges for hospitals. The use of placeholder values in MRFs has been standard practice, and the issuance of the new CMS guidelines necessitates a shift in hospital practices concerning publication of the MRFs.
Notably, there is no specific compliance deadline included in the guidance, but hospitals should begin compliance efforts as soon as possible. Additionally, CMS is seeking public comment on the impact of the price transparency rules through July 21, 2025. Information on submitting comments can be found at https://www.cms.gov/priorities/key-initiatives/hospital-price-transparency/accuracy-and-completeness-rfi.
Angie Smith is a partner in the Healthcare Practice Group at Burr & Forman. Her practice is focused on the defense of healthcare providers in medical malpractice as well as false claims litigation. She regularly counsels healthcare providers on compliance with federal and state regulations. Angie may be reached by phone at 205-458-5209 or by email at acsmith@burr.com.
Sara Petermann is a first year law school student at the University of Alabama School of Law. She spent a portion of her summer as a law clerk with Burr & Forman.
