CMS Unveils Sweeping Proposed Mandates on Hospital Pricing Transparency

Under the proposed rule hospitals would have to make their 'real, negotiated prices known to patients.'

The Centers for Medicare & Medicaid Services on Monday unveiled proposed rules that mandate "consumer-friendly" price transparency for hospitals, a proposal that the Trump administration says will increase competition among hospitals and lower healthcare costs for consumers.

In a conference call with reporters on Monday, CMS Administrator Seema Verma said the enhanced rules on price disclosure apply "not just for Medicare patients, (but) for the entire healthcare system at large."

"What we are proposing is that the hospitals would be required to post this on the Internet in a searchable format, and they would be required to post their negotiated rates by payer and by plan," she said.

The Trump administration last year mandated that hospitals publish their charge masters, but Verma noted that the information provided in charge masters is often confusing for consumers.

"With the proposals announced today, starting January 1 of 2020, hospitals will have to publish price information organized in a standardized way so patients will be able to do an apples-to-apples comparison on the price of a procedure across hospitals," she said.

"Hospitals would also be required to post all of their payers specific negotiated rates, which are the prices actually paid by insurers, in that standard format to give patients more useful pricing information," Verma said, repeating the statement for emphasis.

The proposal was one of several initiatives unveiled Monday by CMS that include an extension of Medicare site-neutral payments, and the continuation of cuts to the 340B Drug Pricing Program.

The proposed pricing transparency rules, which would take effect on January 1, 2020, would require hospitals to:

• Make public their "standard charges" (gross charges and payer-specific negotiated charges) for all items and services.
   
• Make public standard charges on the Internet in a machine-readable file that includes information such as common billing or accounting codes used by the hospital, and a description of the item or service. This provides a common framework for comparing standard charges from hospital to hospital.
   
• Make public and "consumer friendly" payer-specific negotiated charges for common shoppable services, such as imaging, outpatient visits, and lab tests, and bundled services such as cesarean delivery. 

"Consumer-friendly means the hospital charge information must be made public in a prominent location online (or in written form upon request) that it is easily accessible, without barriers, and searchable," CMS said in a media release.

"It also means the service descriptions are in 'plain language' and the shoppable service charges are displayed and grouped with charges for any ancillary services the hospital customarily provides with the primary shoppable service," CMS said.  

Hospital stakeholders greeted the proposed rule with a chorus of boos.

American Hospital Association President and CEO Rick Pollack said the proposed rule "misses the mark, exceeds the administration's legal authority and should be abandoned."

"Mandating the disclosure of negotiated rates between insurers and hospitals is the wrong approach," Pollack said. "Instead, it could seriously limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry."

Bruce Siegel, MD, president and CEO of America's Essential Hospitals, said the proposed rule would "create a heavy administrative burden for hospitals and undermine their ability to negotiate equitable payment, while giving consumers little actionable information with which to make informed care decisions."

Payers panned the proposal as well.

Matt Eyles, president and CEO of America’s Health Insurance Plans says that most health plans already allow consumers to comparison shop for physicians, and 90% of plans can show consumers their out-of-pocket costs, such as co-pays, coinsurance and deductibles for specific procedures and services.

"We share the Administration's commitment to empowering patients with better information about the costs of their care and lowering costs," Eyles said. "However, multiple experts, including the  Federal Trade Commission, agree that disclosing privately negotiated rates will make it harder to bargain for lower rates, creating a floor – not a ceiling – for the prices that hospitals would be willing to accept."

"Publicly disclosing competitively negotiated, proprietary rates will push prices and premiums higher–not lower–for consumers, patients, and taxpayers," Eyles said.

Site-neutral payments
 

Hospitals also voiced their disapproval of the administrations plans to continue Medicare site-neutral payments that stakeholders say will cut by 60% the payments for outpatient clinic visits.

"By continuing payment cuts for hospital outpatient clinic visits, CMS has not only undermined clear congressional intent, but has threatened to impede access to care, especially in rural and other vulnerable communities," Pollack said.

"These cuts clearly exceed the administration’s legal authority, which is why the AHA has been working to overturn this rule through legal action and by working with the Congress," he said.

Siegel said CMS "puts care at risk for vulnerable people by maintaining its flawed policy of extending outpatient payment cuts to previously excepted clinics."

"These cuts fall hardest on hospitals that care for low-income patients and create barriers to expanding access to care in underserved communities," he said.

Continued Cuts to 340B Program
 

Siegel said CMS' plan  to continue cuts to the 340B Drug Pricing Program ignores a federal court's unequivocal and explicit finding that the agency acted unlawfully when it imposed deeply damaging cuts to hospitals that rely on the program.

"This is unacceptable," Seigel said. "This proposed rule needlessly prolongs the uncertainty, confusion, and harm CMS created with these Part B cuts, which went beyond its statutory authority and continue to threaten access to care in communities nationwide."

Pollack said continuing the 340B cuts "only exacerbates the strain placed on hospitals serving vulnerable communities."

"Now that the court has ruled that those cuts are illegal and exceeded the administration’s authority, we urge CMS to refrain from doing more damage to impacted hospitals with another year of illegal cuts," he said. "Instead, as a remedy, CMS should be offering a plan to promptly restore funds to those affected by the illegal cuts.

CMS also proposed changes to the Hospital Outpatient Quality Reporting and Ambulatory Surgical Center Quality Reporting Programs that CMS said would "further meaningful measurement and reporting for quality of care in the outpatient surgical setting while limiting burden."

The deadline for submitting comments on the proposed rule (CMS-1717-P) is September 27.