Hospitals would publish negotiated prices for 300 services under proposed rule

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Ingrid Stiver Senior Manager, Health Research Institute, PwC US August 02, 2019

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Hospitals would have to publish prices negotiated with insurers for 300 “shoppable” services such as outpatient visits, psychotherapy sessions and prostate biopsies, according to a proposed CMS rule published this week. Hospitals also would be required to publish gross charges for all services under the proposed rule, which rapidly sparked concerned reactions from hospital trade groups and some insurer groups.

Under the proposed rule, hospitals would have to publish payer-specific negotiated charges for 70 services chosen by CMS and 230 chosen by the hospital (for CMS’ proposed list of 70 services, see table 37). The agency’s draft definition of a “shoppable” service is one that can be scheduled.

CMS has proposed requiring hospitals to publish charges for all items and services related to the 300 services, including supplies, procedures, room and board, use of the facility, services provided by employed physicians and non-physician practitioners, and any other items or services for which the hospital has an established charge.

Hospitals that fail to comply would receive a warning at first, and then civil fines of $300 a day, or up to $109,500 a year. The penalty is small compared to budgets at larger hospital systems, which can bring in billions of dollars in annual revenue, with net incomes in the hundreds of millions of dollars. Still, smaller hospitals working on very thin margins may find the penalty more daunting.

Federally-owned or -operated hospitals such as Veterans Affairs facilities, would be exempt from the proposed rule, along with ambulatory surgical centers and other non-hospital sites of care, such as freestanding imaging centers or laboratories not based in hospitals. All other hospitals would be subject to the requirements.

The proposed rule represents a leap toward price transparency for consumers after modest efforts by CMS requiring hospitals to post standard charges online. The proposal arrives a month after President Donald Trump signed his executive order on price and quality transparency in healthcare. Comments are being accepted until Sept. 27. 

HRI impact analysis

Hospital associations strongly oppose the rule. A joint statement by five national hospital associations says the proposal will not help patients make decisions about their care and could reduce access. The proposal could require hospitals to violate their insurer contracts.

Health insurance associations’ reactions have been more muted. In a statement, America’s Health Insurance Plans, the national trade and lobbyist organization for health plans, expressed concern that the policy would drive prices and premiums up.

The Alliance of Community Health Plans (ACHP), an organization representing nonprofit community-based health plans and provider organizations, issued a statement supporting the general direction and spirit of the proposed rule. ACHP pointed to examples of insurers offering members pricing information, but warned that the way this information is shared is critical. “[It’s] important to remember that these tools were developed in ways that are customized to the individual member—not a single data dump that leaves consumers doing the hard work of deciphering and translating the information,” the organization wrote. 

Employers and employer groups are more likely to support the proposed rule as some have been pushing for better price transparency. The rule also could give ambulatory surgical centers and other non-hospital sites of care an advantage. They could choose to advertise competitive prices for some services but withhold others.

It remains unclear how much knowing prices will prompt consumers to “shop around” for deals. However, employers and their employees, along with individual plan members, may be surprised to see how insurers negotiated for various services as comparisons between insurers within a facility will be possible. Will they see that another insurer got a better deal on CT scans than their own plan did? Will they find out their insurer negotiated a relatively low price on metabolic panels but seemed to do lousy on sleep study prices? These inter-hospital comparisons could prompt insurers and hospitals to change their pricing strategies for the public prices.

Contact us

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Alexander Gaffney

Senior Manager, Health Research Institute, PwC US

Tel: +1 (202) 836 1604

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

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