Shortly after the June issuance of President Trump’s Pricing and Quality Transparency Executive Order (EO), the Centers for Medicare & Medicaid Services (CMS) has taken bold actions to implement key elements of the EO. CMS is proposing historic changes on hospital price and quality. The rule proposes price transparency requirements that will increase competition among all hospitals by requiring them to make pricing information publically available to help patients shop for healthcare that meets their needs and budgets.

Proposed: Price Transparency

Proposals for calendar year 2020 would require hospitals to:

  • Make public their gross “standard” and payer-specific negotiated rates for all the hospitals’ items and services
  • Make public payer-specific negotiated rates for at least 300 common shoppable services in a consumer-friendly manner
    - “Shoppable” services are services that can be scheduled in advance by a consumer (e.g., x-rays/imaging, lab tests, bundled services such as cesarean delivery services)
    - Shoppable service charges must be displayed and grouped with charges for ancillary services the hospital customarily provides with the primary shoppable service
    - “Consumer-friendly” means that the charge information must be public in a prominent location online that is easily accessible and searchable

Enforcement

The rule proposes enforcement tools to ensure hospitals’ compliance, including:

  • Monitoring
  • Auditing
  • Corrective action plans
  • Civil monetary penalties of $300 per day

Impacts

The pricing transparency proposals, along with the Medicare Procedure Price Lookup tool for procedures performed in hospital outpatient departments (HOPDs) and ambulatory surgery centers (ASCs), would give beneficiaries the ability to compare out-of-pocket (OOP) costs across different settings, allowing patients with their clinicians to choose the setting that best meets patients’ needs.

Unintended consequences

This is a first step, and there has been much discussion around price transparency and the proprietary nature of provider-specific negotiated rates and protection under federal law. Disclosure could result in anti-competitive behavior and increasing prices for the consumer. CMS has acknowledged that such unintended consequences are a possibility and solicited public comments regarding alternative approaches to price transparency. This rule is in the proposal stage, and as changes and guidelines develop, Baker Tilly will communicate additional details.

Proposed: Quality Transparency

CMS is soliciting feedback on the best way to capture information on the quality of hospital inpatient care to ensure information is useful when comparing care options. Baker Tilly will be submitting comments/recommendations.

Proposed: Medicare OOP Changes

CMS is proposing policies that would give Medicare beneficiaries more choices that would lower their OOP costs. In CY 2020, CMS will complete the 2018 final rule removing the payment disparity between Medicare payments for clinic visits in certain HOPDs versus the physician office setting; this will lower copayments for Medicare beneficiaries. This policy is estimated to save $160 million for beneficiaries by lowering their copayments, and save the Medicare program an estimated $650 million in 2020.

CMS proposes to expand the number of procedures payable when furnished either in ASCs or HOPDs such as knee replacements and certain other coronary intervention procedures. These changes would give patients more choices regarding where to obtain care, improving beneficiary access and convenience, and lowering OOP expenses.

Connect with us to learn more about the proposed rules, how they may impact your healthcare organization, and what you can begin doing now to prepare for the Jan. 1, 2020 effective date.

Sources: https://www.cms.gov/newsroom/press-releases/cms-takes-bold-action-implement-key-elements-president-trumps-executive-order-empower-patients-price, and Advisory Board Daily Briefing: dailybriefing@advisory.com Medicare wants hospitals to disclose hospitals’ ‘secret’ prices, 7/20/19

David A. Gregory
Principal

States respond to the Tax Cuts and Jobs Act
Next up

State responses to The Tax Cuts and Jobs Act