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Hospitals to CMS: Publishing Our Prices Not a Win for Consumers

WASHINGTON — Requiring hospitals to publish their negotiated prices won’t help consumers, several provider groups told the Centers for Medicare & Medicaid Services (CMS).

“Patients and their families need actionable information to make their health care decisions,” Chip Kahn, president and CEO of the Federation of American Hospitals, which represents for-profit institutions, said in a statement. “The CMS proposed regulation on negotiated price transparency wholly misses the mark on providing financial information Americans can actually use.”

“To start, the regulation’s transparency mandate cannot be implemented, and HHS [the Department of Health and Human Services] lacks the authority to even require these disclosures,” Kahn said. “Beyond that, if carried out, the mandate would backfire, resulting in unnecessary patient confusion and misinformation while distorting the current competitive free market.”

A proposed rule issued by CMS at the end of July would require that each hospital operating within the U.S. establish and make public a yearly list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups (DRGs). It also allows for CMS to monitor hospitals to make sure they are complying with these rules, and to impose a penalty of up to $300 per day for non-compliance. The comment period on the rule ended last Friday.

The American Hospital Association (AHA) also had some issues with the proposed rule. “CMS’s proposal mandating the disclosure of negotiated charges between health plans and hospitals is the wrong approach,” the AHA said in its comment letter. “Instead of helping patients estimate their out-of-pocket obligations, it would introduce confusion and fuel anticompetitive behavior among commercial health insurers in an already highly-concentrated insurance industry, seriously limiting the choices available to patients. In addition, the proposed approach would impose substantial burden on hospitals without a corresponding benefit for patients.”

“While we support increased transparency for patients around their out-of-pocket cost expectations, this proposal misses the mark, exceeds the administration’s legal authority, and should be abandoned,” the organization added. “Rather, we urge CMS to work cooperatively with providers, health plans, patients, and other stakeholders to identify approaches that can better meet patient needs.”

But not everyone was opposed to the price-sharing provisions. “The premise of greater transparency, knowledge, and consumer empowerment is integral to healthcare sharing because the members of our ministry have a vested interest in understanding the true costs of care so they can obtain services that are of the highest quality and lowest cost,” wrote Bradley Hahn, CEO of Solidarity HealthShare, an 8,300-member healthcare “sharing ministry” in which members voluntarily send in donations to pay other members’ bills.

“As cash-pay patients, sharing ministry members are incented to be good stewards of our ministry’s resources. Every day I hear stories of our members who are frustrated by opaque and inflated healthcare bills that are far above fair and reasonable charges, often several hundred times greater than what Medicare would typically pay for the same service or procedure,” Hahn continued. “The lack of transparency today means most of our members have to expend significant amounts of time and effort to obtain pricing data, information that is readily accessible in any other marketplace. The end result is that ministry members and self-pay consumers more broadly are often forced to pay inflated prices because of these opaque schemes.”

The Health Care Cost Institute, a research organization, also liked the idea. “Requiring hospitals to disclose meaningful price information about all the items and services they provide can be an important step in increasing understanding of trends in price and utilization that lead to higher health care costs in the U.S. healthcare system,” the institute wrote. “We support the principle of putting into the public domain broad, meaningful price information. We support the proposal to have hospitals disclose meaningful information on the items and services they provide.”

Commenters also discussed a provision in the proposed rule that would implement the second phase of a “site-neutral” payment policy, paying for services performed in hospital outpatient departments (HOPDs) at the same rate as services performed in an independent physician’s office. “The Alliance strongly supports CMS’ proposal to equalize payment rates between HOPDs and freestanding physician practices for E&M [evaluation and management] visits,” the Alliance for Site Neutral Payment Reform, a coalition of patient advocates, employers, providers, and payers, wrote in its comment. “This proposal is a step toward ensuring patients receive the right care in the right setting, and will result in an estimated $810 million in savings for the Medicare program and taxpayers in 2020 alone.”

One group which dissented from that view was Northern Light Health, a system of eight hospitals and other healthcare providers in rural Maine. “To ensure access to primary care and specialty services in Maine, nearly every physician in our state is employed by a hospital, healthcare system or federally qualified health care center,” the organization explained in its comment. “For primary care providers, employment approaches 100% statewide.” In addition, “Maine citizens are among the oldest in the country with a high incidence of chronic disease, many of which are dually eligible for Medicare and Medicaid.”

As a result, “Maine is particularly vulnerable and access to care is at risk when hospital outpatient department provider-based payment policies are changed,” the comment letter continued. “For Northern Light Health the proposed phase two reduction results in a nearly $9 million dollar cut in 2020, expanding to a $132 million-dollar payment reduction over 10 years.”

“We also note that the recent court decision found that CMS did not have the authority to implement the payment reduction as Congress was clear in the 2015 law regarding payment to existing and new off campus hospital-based provider payments,” the letter said, referring to a provision in the 2015 law that grandfathered in existing HOPDs to protect them from payment reductions. “We ask that CMS reject the proposed reduction in hospital off-campus HOPD payments.”