CMS rule requires hospitals to make lists of standard charges public

AHA says proposal exceeds Trump administration’s legal authority and that it should be abandoned.

The Centers for Medicare and Medicaid Services on Monday released a proposed payment rule that would require hospitals to make pricing information publicly available and transparent.

“We are proposing to establish requirements for all hospitals in the United States for making hospital standard charges available to the public,” states the Calendar Year 2020 Medicare Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule, which would go into effect Jan. 1, 2020.

In the rule, CMS defines “standard charges” to include payer-specific negotiated rates—as well as gross charges—which are to be included in the list of standard charges for all items and services that hospitals are currently required to post online.

Further, the agency’s rule requires hospitals to publish the payer-specific negotiated charges for “common shoppable services” in a standardized, consumer-friendly manner.

“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,” according to CMS. “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.”

The agency also proposes new enforcement tools including monitoring, auditing, corrective action plans, as well as civil monetary penalties.

According to CMS, the rule has been proposed as a direct result of President Trump’s executive order on price and quality transparency issued last month.

Also See: Trump presidential order takes aim at price transparency

"All Americans have the right to know the price of their healthcare up front,” said CMS Administrator Seema Verma in a written statement. “Thanks to President Trump, healthcare prices won’t be a mystery, and consumers will be able to shop for healthcare just like they do for everything else they buy. This rule will finally expose hospital pricing practices, let hospitals compete on price and is a first step toward ending surprise billing practices.”

Nonetheless, the reaction to the CMS proposed rule from the American Hospital Association was swift and decidedly negative. While AHA said it supports price transparency, the industry group criticized the proposal for missing the mark, exceeding the Trump administration’s legal authority, and it called for the rule to be abandoned.

“America’s hospitals and health systems are dedicated to ensuring patients have the information they need to make informed health care decisions, particularly knowing what their expected out-of-pocket costs will be,” said AHA President and CEO Rick Pollack in a written statement. “However, mandating the disclosure of negotiated rates between insurers and hospitals is the wrong approach. 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.”

Asked during a call on Monday with members of the press whether the Trump administration is concerned about opposition to the rule from provider groups, who may take legal action to stop the publishing of prices under the rule, Verma replied that “this administration is not afraid of those things.”

The CMS chief added that consumers want to shop around for certain types of healthcare services and that the administration is “not about protecting the status quo when it doesn’t work for patients.”

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