"The wrong approach," "anticompetitive," "a radical experiment" — payers and providers had strong words for a CMS price transparency plan in comments filed on the proposed rule.
Since the agency first proposed forcing hospitals to disclose payer-specific negotiated rates with insurance companies in July, industry has lobbied fiercely against the idea. Payer and provider comments, due Friday, heightened the rhetoric around the debate.
They warned having to disclose the rates could distort healthcare markets, which could drive up prices and premiums for consumers. They also said the plan would be impossible to actually implement and exceeds CMS' statutory authority.
"To start, the regulation;s transparency mandate cannot be implemented, and HHS lacks the authority to even require these disclosures," Chip Kahn, CEO of the Federation of American Hospitals, said in a statement. "Beyond that, if carried out, the mandate would backfire, resulting in unnecessary patient confusion and misinformation while distorting the current competitive free market."
Won't provide meaningful insight into what patients pay
The widely criticized move requiring hospitals post list prices online in a machine-readable format is "a radical experiment that is unprecedented in the healthcare sector," FAH said.
The proposal requires the release of payer-specific negotiated rates for at least 300 "shoppable" services, which CMS says are those a patient could plan in advance. The hospital selects the majority of the services it will post prices for, but must also include 70 services outlined by the agency.
Many groups are restating previously expressed concerns the data will be useless for both insured and uninsured consumers because publishing list prices for medical services doesn't take into account a slew of other factors contributing to the final bill a patient gets, including health insurance coverage and cost-sharing arrangements through co-pays or co-insurance.
"Forcing disclosure of privately and competitively negotiated rates, as the proposed rule describes, will not provide consumers with information that is actionable or helpful. Instead, it will hamper competitive negotiations and push healthcare prices and premiums higher," Matt Eyles, CEO of America's Health Insurance Plans, said in a statement.
Providing the list prices won't give consumers meaningful insight into what they'd actually have to pay for a specific medical service, detractors say. Additionally, higher prices aren't correlated with higher quality, so providing the information won't give consumers a clear picture of a provider's value, they said.
They also won't allow consumers to directly shop across care delivery sites, as many health insurance apps do.
Many commenters said most payers already offer such cost estimator tools through secure member portals and mobile apps, although patients can get slammed with surprise medical bills anyway. An estimated 40% of patients were hit with an unexpected bill last year despite one in six Americans shopping around for care, according to the Kaiser Family Foundation.
In structuring the rule, CMS said hospitals will be able to extract data from accounting and billing systems and publish that information. But that logic relies on "erroneous assumptions," FAH said, as even sophisticated health systems can only know complete costs after the delivery of service.
And managed care agreements between payers and providers have providers calculate prices through algorithms, not fixed fee tables, experts said.
"This modeling capacity does not translate over to the ability to populate a matrix of tens of thousands of items and services and a second set of matrices of hundreds of 'shoppable' items and services plus hundreds of ancillary services provided at each hospital location in any rational or comprehensive manner," FAH said.
Additionally, hospitals must be able to print and supply the matrix of "shoppable" services within 72 hours of a consumer request, creating substantial printing costs and adding only nominal value for the patient, providers said.
The rule, if finalized, would put a huge amount of administrative overhead on health systems, not jibing with HHS' stated mission to cut down the amount of reporting and regulatory requirements on American providers, they argued.
And CMS plans to enforce the requirement by evaluating complaints and auditing hospital websites. Hospitals risk a fine of $300 for each day they fail to disclose the negotiated rates, creating a significant financial concern for already stressed providers if they fail to meet that 72-hour deadline.
Proposal could increase costs for consumers
Hospitals are already the biggest drivers of healthcare spending inflation, according to a February study in Health Affairs. Critics of the CMS plan worry publishing a hospital's list prices could put upward pressure on the market, increasing prices across the board.
According to the prevalent critique, if a hospital sees a geographic peer is charging higher prices for a medical service, it could increase its own costs to match, raising the floor on contracted pricing. According to AHIP, its payer members have raised the possibility that providers looking to get higher reimbursements from payers could use the data to increase their leverage in future price negotiations.
The Federal Trade Commission, Department of Justice and Congressional Budget Office have all expressed concern over the public disclosure of competitive, proprietary information in similar government initiatives, stating the disclosure could have unintended anticompetitive effects.
"Classifying plan-provider contracts as public data would offer little benefit but could pose substantial risk of reducing competition in healthcare markets," economists at the University of Minnesota said in a 2015 report.
But proponents of the rule say this argument is groundless. In addition to empowering consumers to shop between sites of care, CMS maintains the rule will lower costs as providers, shamed by their high list prices, bring costs down to more sustainable levels.
Additionally, a 2017 paper published in the American Economic Journal found if patients had access to price data and were willing to shop, they could pay substantially less for everything from routine screenings to knee surgery.
Rallying around patient privacy
Patient privacy concerns were also cited as an issue with the proposal. A handful of commenters brought up unexpected interactions the rule could have with HHS' push toward interoperability, the free flow of healthcare data across the industry.
Sensitive health information released under the proposed interoperability rules could be combined with what health conditions or medical procedures a consumer searched for online and used to create a patient profile to sell to unrelated third parties, AHIP said.
"We are concerned that unknown entities will have open access to the data, with few restrictions on how they may use it," Eyles said. "Without clear consumer protections governing how that data can be used, patients' privacy will be put at risk — as health care information could be bought and sold in the open market and combined with other personal data by unknown actors and for unknown purposes."
Access versus privacy is perhaps the hottest debate raging around the interoperability rules today. Third parties often don't have business associate agreements with payers, so they're not covered under existing HIPAA liability provisions. As patients gain increased agency over their medical data and seek out apps to help them make sense of their health profile, malicious actors could license patients' data for marketing or advertising or sell aggregated personal information to other parties.
However, it's unclear whether hospitals releasing list prices for an array of common procedures would make the issue worse, as a majority of Americans already turn to the internet to learn more about their health. In total, 80% of internet users or about 93 million Americans have searched for a health-related topic online, according to the Pew Internet & American Life Project.
Alhough the Trump administration is bullish on price transparency, a majority of healthcare executives don't think the price transparency rule will go into effect, and it's almost certain to encounter a drawn-out legal challenge if finalized. Commenters urged CMS to scrap the rule entirely and consider a range of alternate policy proposals that could accomplish the same aim.
For self-pay consumers, CMS could work with the hospital community on a demonstration project to make discounted cash prices more easily accessible, AHIP suggested. This could take many forms, including a percent reduction off charges or broadened charity care initiatives.
CMS could also work with providers to release the unweighted average negotiated rate for commercial plans in the same area as a basic benchmark. That would mitigate the problem of potential anticompetitive effects, although it wouldn't provide consumers with actionable information.
Payer-based price estimator tools are becoming more common among insurers and employers, commenters noted. Such tools are likely the only way patients could get plan-specific information about coverage and its limitations, the scope of cost-sharing obligations such as out-of-pocket spending limits, deductibles, coinsurances and any reference-based pricing strategies, and estimates of the cost of a total episode of care.
But for insured patients, "only health insurance providers in partnership with healthcare providers can provide the information that really matters to consumers — timely, accurate, and customized cost-sharing estimates," AHIP wrote in its comments.
However, one in seven patients still receive a surprise bill after in-network hospital care, according to the Health Care Cost Institute. Even if a patient uses their payer's cost comparison tools and selects the cheapest facility, it's almost impossible to ensure their episode of care won't include an out-of-network specialist like an anesthesiologist or radiologist.
And as healthcare costs continue to rise, it's unlikely industry will police itself without government intervention as long as there's money to be made, patient advocates like Families USA say.
Other OPPS concerns
The price transparency rule was tucked into the 2020 Outpatient Prospective Payment System, and the rest of the rule wasn't immune from industry criticism.
Other aspects of OPPS also drew ire from payers and providers. In the rule, CMS proposed completing the phase-in of payment reductions for hospital outpatient clinic visits at specific facilities, continuing the current policy paying for separately payable drugs in the 340B drug savings program and implementing a prior authorization process for five categories of outpatient department services.
All policies could curtail care access, especially for vulnerable and rural populations, groups like the American Hospital Association and FAH said. They would also cut into the bottom lines of providers by reducing the price tag or volume of medical services.
CMS exceeded its statutory authority when it cut the payment rate for clinic services earlier this month, a federal court ruled earlier this month in a win for hospitals. AHA plans to sue if CMS moves forward with the proposed second phase of the payment cut in 2020.
CMS' push to expand prior authorization also met with provider disapproval.
The prior authorization rule is "contrary to law and arbitrary and capricious," AHA said, noting CMS hasn't determined whether the growing use of these services is unnecessary.
These proposals "run afoul of the law and rely on the most cursory of analyses and policy rationales," AHA wrote. "Taken together, these proposals would have a chilling effect on beneficiary access to care while also increasing regulatory burden."