A proposal by the Centers for Medicare & Medicaid Services to require full price transparency, including the disclosure of both list prices and payer-negotiated prices, is already receiving pushback.
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Rick Pollack, president and CEO of the American Hospital Association, said in a statement that “mandating disclosure of negotiated rates between insurers and hospitals is the wrong approach,” adding that 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.”
The requirement for hospital price transparency was posted online July 29 as part of the proposed annual update to the hospital outpatient prospective payment system (OPPS) for 2020. It is scheduled for publication in the Federal Register on Aug. 9.
CMS is proposing, beginning in calendar year 2020, that hospitals make publicly available their “standard charges,” defined as the gross – or list – price of for all services provided by the hospital, as well as payer-specific negotiated prices. To allow for price comparisons, prices would be posted on the Internet in a machine-readable file that includes common billing or accounting codes and a description of the item of service being delivered.
Additionally, hospitals must make payer-specific negotiated prices for “shoppable” services, defined as services that can be scheduled in advance – such as x-rays, outpatient visits, imaging and laboratory tests, or bundled services like a cesarean delivery with pre- and postdelivery care – in a consumer-friendly manner.
“As deductibles rise and with 29 million uninsured, patients have the right to know the price of health care services so they can shop around for the best deal,” CMS Administrator Seema Verma said during a July 29 press conference. “In fact, a recent poll showed that the majority of Americans have tried to get pricing information before getting care, but have found it challenging to find that information.”
She noted that patients may see prices that range from 150% of Medicare rates to more than 400% for the same service.
Hospitals will need to display at least 300 shoppable services, including 70 that are CMS selected and 230 that are hospital selected, according to a fact sheet outlining this and other proposed OPPS updates for 2020.
“If a hospital does not provide one or more of the 70 CMS selected shoppable services, the hospital must select additional shoppable services such that the total number of shoppable services is at least 300,” the fact sheet states.
Information on pricing will be required to be updated at least annually.
CMS is including enforcement tools as part of the proposal, including fines to hospitals for noncompliance.
“Price transparency creates a marketplace where providers compete on the basis of cost and quality that will lower cost,” Ms. Verma said.
However, that notion has been challenged by America’s Health Insurance Plans (AHIP).
Matt Eyles, president and CEO of AHIP said in a statement that “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.”
Mr. Pollack of the American Hospital Association agreed. “While we support transparency, [this] proposal misses the mark, exceeds the Administration’s legal authority, and should be abandoned.”
Ms. Verma said she believed the agency had legal authority to impose this requirement and is not worried about possible lawsuits that could challenge this provision.
“This administration is not afraid of those things,” she said. “We are not about protecting the status quo when it doesn’t work for patients.”