CMS files proposed rule on hospital pricing

CMS filed a proposed rule on July 29 to increase transparency in hospital payment systems.

According to CMS’s newsroom, this proposed rule will increase visibility in health care pricing structures, which will allow consumers to make more informed choices when looking to health care services. This proposed rule follows President Trump’s,  Executive Order, signed June 24, 2019, on improving price and quality transparency in health care. The EO directed the rulemaking to require hospitals to disclose pricing in a way that public consumers can easily access and utilize.

 

Get the latest state-specific policy intelligence for the health care sector delivered to your inbox.

 

As stated in an HHS report from 2018 on health care market reform,

“We believe healthcare markets work more efficiently and provide consumers with higher-value healthcare if we promote policies that encourage choice and competition.”

The new rule makes more information public, specifically, hospital payer-negotiated charges for items and services. This includes what the rule refers to as “shoppable services.” Shoppable services are those that a consumer can schedule in advance. By releasing the negotiated prices, and not just industry standard pricing, the proposed rule aims to lower costs for consumers by increasing competition among providers.

America’s Health Insurance Plans (AHIP) and the American Hospital Association (AHA) oppose the proposed rule, stating that releasing negotiated prices will have the opposite effect on the market, driving all costs up. For example, if one hospital notices that another hospital is charging much more for a particular item or service, public price disclosure may lead that hospital to increase its prices.

Whether publicizing price negotiations will create a price ceiling, or a price floor, is still heavily contended. In a press release  issued by AHA, President Rick Pollack states the AHA’s opposition to the rule,

“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. 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.”

A joint statement from the National Hospital Associations, released on Monday, further criticized the rule. In regards to the proposed payment methodology for drugs purchased through the 340B program, Pollack further states,

“This proposed rule’s continuation of cuts in payments for 340B drugs only exacerbates the strain placed on hospitals serving vulnerable communities. The AHA, along with other hospital associations and member hospitals, successfully challenged the previous cuts to the 340B program in court. Now that the court has ruled that those cuts are illegal and exceeded the Administration’s authority, we urge CMS to refrain from doing more damage to impacted hospitals with another year of illegal cuts.”

Other features of the rule include expanding patient safety measures, while improving efficiencies in reporting metrics.

The proposed rule is scheduled to publish in the Federal Register on August 8, 2019. The public may submit comments until September 27, 2019.