CMS doubles down on Medicare price transparency efforts

Seema Verma, administrator of the Centers for Medicare and Medicaid Services, wants healthcare providers to improve their cost transparency as patients need to know the price they will pay for their treatments.

“Can you imagine going to the grocery store, getting the groceries you need for a week, but never knowing the price of your items until a week later when the store sends you a bill?” Verma asked in a blog posting. “Sadly, that’s how healthcare works every day.”

On November 27, CMS proposed requiring Part D Medicare plans to adopt a real-time prescription benefit tool of their choosing by January 2020.

Also See: Lack of price transparency impeding informed care decisions

As part of the initiative, price information and formulary alternatives must be in insurers’ explanation of benefits and drug makers must post their list prices in television ads.

CMS is also requiring hospitals to have a list of current standard charges in a machine-readable format so consumers know the cost of treatment and can shop for the best price.

In addition, the agency has developed a new Procedure Price Lookup tool to compare Medicare payments and co-payments for certain procedures performed in hospital outpatient units and ambulatory surgical centers. The tool shows the national average copayment amount a member with no Medicare supplemental insurance would pay the provider.

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Seema Verma, administrator of the Centers for Medicare & Medicaid Services, speaks during a 'Conversations with the Women of America' event at the Eisenhower Executive Office Building in Washington, D.C., U.S., on Tuesday, Jan. 16, 2018. Republican leaders in Congress are angling for another short-term funding measure to avert a government shutdown at the end of this week while trying to keep a dispute over immigration separate from their attempts to get agreement on spending priorities. Photographer: Al Drago/Bloomberg

The tool is needed because the law requires Medicare to maintain multiple payment systems for different types of providers, which can result in CMS and patients paying very different amounts for the same service depending on the site of care.

“This is also a prime example of Medicare’s misaligned financial incentives under which providers can make more money if they treat patients at one location as opposed to another,” Verma added. “The case for price transparency throughout the healthcare system is clear and the need to shop is growing ever more compelling as high deductible plans become the norm.”

Additional information on the CMS effort to lower drug prices is available here.

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