August 22, 2019

Diving into the Regs: Proposed Price Transparency Requirements for Hospitals

In my last blog, I discussed the major highlights of the Calendar Year (CY) 2020 Medicare Physician Fee Schedule (PFS) and Quality Payment Program (QPP) Proposed Rule from the Centers for Medicare & Medicaid Services (CMS). While that proposed reg has the largest impact on you as an emergency physician, today I want to discuss a potentially transformative proposal in the CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule—the rule that affects payments for hospital outpatient services. It is important that you know about this proposal as it could have rippling effects across the health care system if it is finalized.

I’ve previously described the Trump Administration’s commitment to advancing price transparency in health care. Members of the Administration have repeatedly argued that that if you give patients better access to information about prices, they will make smarter and more informed decisions about their health care. In the CY 2020 OPPS Proposed Rule, CMS is doubling down on this priority.

While hospitals are already required to make their charges publicly available in a “machine-readable format,” CMS proposes two new requirements for hospitals:

  1. Post “payer-specific negotiated charges” for all items and services (including emergency services) provided by a hospital in a machine-readable format; and
  2. Make available payer-specific negotiated charges for a limited set of “shoppable” services in a consumer-friendly format.

So, let’s break down what this means, and how it may impact you. The first new requirement would force hospitals to post the rates they negotiate with each individual insurer online. CMS includes physician services only in cases where physicians are employed by the hospital in its definition of “all items and services provided a hospital.” Thus, if you are part of an independent group that contracts with a hospital, your payer-specific negotiated charges won’t be posted. However, if you are employed by the hospital, they will be.

It is unclear whether this first proposed requirement (which would include posting prices for emergency services) raises any red flags with respect to the federal Emergency Medical Treatment and Labor Act (EMTALA). The question we’re investigating is whether posting prices online would impact a patient’s decision about whether to seek care in a potentially emergency situation. What may mitigate any potential EMTALA concern is the fact that hospitals are only required to make this information available in a machine-readable format— meaning all they have to do is release a massive spreadsheet. Therefore, it will be nearly impossible for consumers to interpret the data, and the information may only actually be useful to researchers and others with the capability of analyzing thousands of lines on a table.

The second proposed requirement is more targeted and focused on consumers. Under that proposal, hospitals would be required to post payer-specific negotiated charges for at least 300 shoppable services in a “consumer friendly format.” Shoppable services DO NOT include emergency services.

It is important to emphasize that these are only proposed requirements—CMS will decide whether or not to finalize them when the agency releases the final OPPS reg in November. However, the proposals are already creating quite a buzz around the health care community since they would fundamentally change how negotiations are currently conducted between hospitals and insurers. If every hospital and insurer in a particular area knew what rates were being negotiated in that market for every service, hospitals and insurers would be forced to “show their hands” before any new negotiations or re-negotiations even occurred. Many hospitals and insurers believe that payer-specific information is proprietary and if publicly posted could undermine their competitive advantage. Some are threatening to sue CMS if the proposals are finalized.

 What do you think? Should payer-specific negotiated rates be made public? Does the first proposed requirement raise any potential EMTALA or other patient-safety concerns? Please send me your thoughts. I’d love to hear from you.

Until next week, this is Jeffrey saying, enjoy reading regs with your eggs!

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