Unpacking CMS’ 2020 Proposed Expanded Rules for Hospital Price Transparency
On January 1, 2019 the Hospital Price Transparency Rule took effect mandating hospitals publish their price lists online in a machine-readable format. Hospitals complied by making their charge description master (CDM) available via download in CSV or similar format. The result fell far short of CMS’ goal of empowering patients to become “active healthcare consumers” and the agency on July 29, 2019, in response to the Trump administration Executive Order on Price and Quality Transparency, proposed expanded rules aimed at more “consumer friendly” transparency. The comment period for stakeholders to submit feedback to CMS on the proposed rules ended on September 27. Now, it’s a waiting game to see what the final rule will be.
We unpacked the 40-page proposal and have here the most important takeaways you need to know should the rules become mandate.
Standard Charges
The CMS proposed rules would require hospitals to make public all of their standard charges for hospital and employed physician and non-physician practitioners in a single machine-readable format. This requirement includes gross charges and payer-specific negotiated charges (rates or % of charges) Because many negotiated rates for non-private outpatient services involve “stop-loss,” “lesser of,” “carve-out,” and other exceptions combined with other complex formulas, the result may be as unhelpful to consumers as the CDM.
We believe that CMS’ proposed requirement to publish the charge and negotiated rates is an oversimplification of real-world experience where patients having the same primary procedure from the same primary payer can receive entirely different payer payments. This is true where differences in resource consumption and clinical status exist. In the proposed rule, these services, which often have bundled negotiated per-case rates, are defined as “Service Packages,” an aggregation of individual items. Panacea believes a more practical approach would be to show consumers the average payer payment but also the range of payments so that consumers understand that should they experience complications and or require additional resources that their out-of-pocket expense could be higher and to what extent.
We proposed to CMS that providing a low, median and high average gross charge as well as payment levels at the payer plan code level provides consumers with a better indication of their potential liability while also simplifying the manner in which the information is presented both in a file and on the website. We contend this alternative is more practically achieved by providers in what could be a short two-month window from the time a final rule is published. Consumers will be able to compare average primary payer payments for shoppable procedures, apples to apples, across hospitals. By focusing on averages instead of attempting to pinpoint exact prices that involve many complex variables, the patient has a clearer picture of how much a procedure will cost without getting lost, as they say, in how the sausage is made.
Shoppable Services
The proposed rules define shoppable services as a non-urgent service that can be shopped in advance. These commons services might include imaging, outpatient procedures, or “packaged” services such as labor and delivery. Seventy of the most common services would be mandated by CMS for publication with an additional 230 services to be provided by the hospital based on the facility’s most utilized services. Many of these seventy shoppable procedures are for private outpatient services such as CT scans, MRI procedures, lab tests, etc.
Under this rule, hospitals will be well advised to proactively leverage available technology to identify and then create charge and payment profiles for the 300 shoppable services they must publish and be prepared to publish actual rates online.
We continue to advise providers to leverage technology to structure their line item charges each year factoring the changes that occur each year in volume, case-mix, market data, unit cost, fee schedules, strategic and financial objective, payer contract terms and more. Furthermore, we advise that providers begin to align their physician prices to become rational and defensible.
Consumer-Friendly
A resounding point CMS has made in the proposed rules is that price transparency be more “consumer friendly.” This is, perhaps, in response to the decidedly unfriendly CDMs littering hospital websites with codes, abbreviations and undefendable prices that may vary by thousands of dollars from one facility to the next. As a result, the new rules if finalized, will require, most importantly, a plain language description, as well as primary billing code, the payer-specific negotiated charge, all ancillary charges, negotiated rate if applicable, and the hospital’s location.
Compliance
Notably, the 2019 CMS final rule lacked any penalties for non-compliance. The new proposed rule includes a $ 300-per-day penalty which equates to approximately $ 110,000 per year or for a ten-hospital health system. This would equate to more than $ 1 million in potential civil monetary penalties (CMP). The proposed rule does include a warning notice and an appeal process.
While providers are forced to take a wait-and-see attitude about the pending final rule, there are some issues that should be addressed now. Click to read Panacea’s Recommendations to Providers on Price Transparency Priorities to Address Now.
Written by: Fred Stodolak, Executive Vice President, Panacea Healthcare Solutions
About Panacea
Panacea is the nation’s leader in hospital, physician and pharmacy transparent pricing technology and services. Its Hospital Zero-Base Pricing and Physician Pricing system, and other CDM modules, for more than six years, has received the coveted Healthcare Financial Management Association Peer Review Status.
