CMS Proposed 2020 Medicare Hospital Payment System Rule Includes: Total Price Transparency
The Trump administration is continuing the push for hospitals to disclose to patients how much they charge for all supplies, tests and procedures. In the proposed 2020 Medicare hospital outpatient prospective payment system (OPPS) rule, Medicare stated its intent to make it easier for patients to shop around for the best price by forcing hospitals to disclose what are often secret rates negotiated with insurance companies. Under the policy, hospitals would be required to post online all charges for all items and services provided by the hospital beginning Jan. 1, 2020. Hospitals that fail to disclose that information could be fined, but the fines would be limited to only $300 a day up to $109,500 per year. Comments on the proposal are due September 27. You can write CMS here.
Impact and Response
In the proposed rule text, CMS estimates the annual burden for hospitals to review and post standard charges will be 12 hours per hospital, at a total burden amount of 72,024 across the 6002 hospitals impacted. The total cost is estimated at $6,105,474 across all impacted hospitals. This number may be low and it will be interesting to see, if finalized, what hospitals report as the actual burden on their facilities.
Not surprisingly, the country’s largest hospital group, the American Hospital Association (AHA), also slammed the proposal. “While we support transparency, today’s proposal misses the mark, exceeds the Administration’s legal authority and should be abandoned,” AHA President and CEO Rick Pollack said in a statement, noting the plan could “seriously limit the choices available to patients” and “fuel anticompetitive behavior among commercial health insurers.”
The outcry was swift from other insurance trade associations, who argue that patients do not need to see those negotiated rates because they are interested only in an estimate of out-of-pocket costs, which some hospitals are already providing to patients through online cost transparency tools. Hospital lobbying groups and insurers—who are expected to sue to stop the requirement—warned that exposing the rates could undermine their ability to negotiate with each other.
One hospital executive told us that they believe this proposed rule violates privacy provisions in most, if not all of their payer contracts. The administrative and fee burden would be especially hard on smaller hospitals and health systems and may contribute to additional rural and intercity hospital closures. The proposed timeline is not even close to workable.
As reported by Modern Healthcare, some experts think it will be challenging for hospitals to comply. “It’s going to be nearly impossible for hospitals to comply with this even if there are stiff penalties,” Paul Shorrosh, CEO of revenue-cycle vendor AccuReg, which has created price-estimator tools for hospitals like Mosaic Life Care. “Each of those (insurance) contracts has multiple payment methodologies depending on whether it’s inpatient or outpatient. The only way to do that is computerize it. There’s no other way. If they publish contracted rates, it’s not going to make sense to anybody.”
Additionally, as noted in the Modern Healthcare article, evidence has shown that many people don’t shop for healthcare, often because they have trouble finding price information, according to Dr. Ateev Mehrotra, an associate professor at Harvard Medical School who has studied price transparency. He agreed with the hospitals that patients care about out-of-pocket costs, not negotiated rates.
But will it lower prices? In one example, when the Danish government required concrete manufacturers to disclose negotiated prices, they went up, according to a study promoted by skeptics of the price transparency approach.