CMS Issues Final Rule on Hospital Price Transparency, Pushes Effective Date to 2021

After months of feedback from payers and providers unhappy with a proposal to mandate price transparency in healthcare, the Trump administration unveiled its final rule on the topic.

Declaring "a major victory" for patient choice and affordable healthcare, President Donald Trump on Friday unveiled his administration's final rule on hospital price transparency.

"I don't know if the hospitals are going to like me too much anymore with this, but that's OK," Trump said at a White House event to announce the rule.  

"We're stopping American patients from just getting, pure and simple, two very simple words: ripped off. Because they've been ripped off for years, for a lot of years," he said.

The final rule—which takes effect on January 1, 2021, one year later than initially proposed—requires hospitals to provide patients with easily accessible information about standard changes for items and services offered.

This includes making all standard charges available in a single data file that can be read by other computer systems, as well as making "shoppable services" information available on their websites in a consumer-friendly manner. 

Additionally, hospitals must make information about shoppable services, which can be scheduled by patients in advance, available in a "prominent location online" and describe the information in plain language.

The Centers for Medicare & Medicaid Services also issued a separate proposed rule that would impose price transparency requirements on health insurers.

"I'm sure they'll be thrilled," Trump said of insurers. "This will allow you to see your out-of-pocket costs and other vital price information before you go in for treatment, so you're going to know what it's going to be and you're going to be able to have lots of choices, both in terms of doctors, hospitals, and price."

The final rule provides CMS with additional enforcement and auditing capabilities, including the ability to issue monetary fines of $300 per day for hospitals that don't comply. 

This announcement came less than four months after CMS released its proposed rule on hospital price transparency.

Related: Timeline of Trump's Push for Healthcare Price Transparency

Health and Human Services Secretary Alex Azar applauded the president for implementing "revolutionary change" to the healthcare system.

"Today's transparency announcement may be a more significant change to American healthcare markets than any other single thing we've done, by shining light on the costs of our shadowy system and finally putting the American patient in control," Azar said.

Hospitals Say They'll Sue

Not surprisingly, payer and provider stakeholders responded to the new final rule with a chorus of boos and promises of litigation.

In a joint statement, the American Hospital Association, Association of American Medical Colleges, Children's Hospital Association, and Federation of American Hospitals called the proposed rule "a setback in efforts to provide patients with the most relevant information they need to make informed decisions about their care."

"Instead of helping patients know their out-of-pocket costs, this rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery," the hospital groups said.

"Because the final rule does not achieve the goal of providing patients with out-of-pocket cost information, and instead threatens to confuse patients, our four organizations will soon join with member hospitals to file a legal challenge to the rule on grounds including that it exceeds the Administration's authority," the hospitals said.

Beth Feldpush, senior vice president of policy and advocacy at America's Essential Hospitals, said the final rule "would unfairly advantage health plans in negotiations with providers and threaten essential hospitals' ability to participate in networks and maintain access to services."

"Information without context—for example, how and why the cost of patient care varies among hospitals—is of little practical use to consumers," she said. "Essential hospitals typically have higher costs due to their commitment to complex services vital to communities, such as trauma and behavioral health care."

In addition, Feldpush said the final rule would create an administrative nightmare for hospitals that would hurt patient care and drive up costs.

"These policies undermine hospital'’ ability to negotiate equitable payments while giving consumers little actionable information with which to make informed care decisions," she said.

On the payer side, Matt Eyles, president and CEO of America's Health Insurance Plans, said price transparency "should aid and support patient decision-making, should not undermine competitive negotiations that lower patients' health care costs, and should put downward pressure on premiums for consumers and employers."

"Neither of these rules—together or separately—satisfies these principles," he said.

Related: Enforcing Hospital Price Transparency: Is $300 Max Daily Fine Big Enough?

Editor's note: Finance editor Jack O'Brien contributed to this report.