In the next step of the Trump Administration’s effort to inject more transparency into the costs consumers pay for their healthcare services, the Centers for Medicare & Medicaid Services has pitched a rule to force hospitals to publish their negotiated charges for common procedures and products.
Under the proposal, providers would be required to make public their “standard charges” which include their chargemaster prices, as well as the payer-specific negotiated rates. The proposed rules, which apply to the roughly 6,000 hospitals that take Medicare, would go into effect in January 2020 if finalized.
“Hospitals would be required to post all their payer-specific negotiated rates, which are the prices actually paid by insurers,” CMS Administrator Seema Verma said on a conference call with reporters. “Hospital pricing has been a mystery, but thanks to the leadership of President Trump, those days are over.”
The administration is touting the proposal as part of its initiative to make purchasing healthcare a more consumer-friendly and shoppable experience.
By making payer-negotiated rates public with service descriptions in “plain language”, the idea is to provide more personalized and relevant information to patients for what CMS calls “shoppable services.”
These include procedures like x-rays, outpatient visits, imaging and lab tests or bundled services like a cesarean delivery with pre and post-natal care.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
In order to make quality measures available to help patients make purchasing decisions, CMS is collecting feedback on a way to collect and distribute data on the quality of hospital inpatient data.
Starting this year, hospitals were required to publish their standard prices online publicly in a “machine-readable” format, but some critics said that this move served to confuse individuals because the figures don’t accurately reflect what a majority of patients will pay for their care.
Additionally, some providers published their information in a a format that is incomprehensible to the average person, but still technically “machine-readable.”
To address this issue hospitals would also be required to make public standard charges public in a machine readable file that includes common billing or accounting codes and a description of the item or service, giving a common point of price comparison across different providers.
Another limitation of the rule previously was the lack of enforcement muscle or penalties behind the required disclosures.
CMS attempts to address that lack of teeth with new rules proposing enforcement tools including monitoring, auditing, corrective action plans and monetary penalties of $300 a day.
Hospitals and health plans have already started to attack the proposed price transparency rules, arguing that it exceeds the authority given to the federal agencies and could ironically raise prices by lowering competition in the marketplace.
“We’re trying to change the paradigm here,” Centers for Medicare & Medicaid Verma said. “We’re trying to ensure we have a competitive free market where providers can compete on cost and quality and patients have the information they need to seek high-quality providers.”
Outside of the new price transparency guidelines, CMS also laid out proposed policies intended to give Medicare patients more choice in where to seek care to lower their out-of-pocket costs by better equalizing reimbursement for clinical visits regardless of the site where they are conducted.
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