- CMS would require hospitals to disclose payer-specific negotiated rates with insurance companies in an easy format for patients to compare among facilities in one of a series of proposed payment rules proposed Monday.
- Other proposals focused on modernizing and increasing payments for standard doctor visits, known as evaluation and management (E/M). CMS is adopting recommendations from the American Medical Association that increase payments for office and outpatient E/M visits.
- Hospitals and payers swiftly and fiercely condemned the price transparency proposal, calling it the wrong move that could harm patients and stifle competition.
Forcing hospitals to disclose negotiated rates between payers and providers would be a landmark change for America's healthcare system — notorious for its lack of transparency.
The proposal comes at a time when patients are shouldering a bigger burden of healthcare costs thanks to high deductibles that can sometimes reach into the tens of thousands for families.
"Patients have the right to know the price of healthcare services so they can shop around for the best deal," CMS Administrator Seema Verma said during a call with reporters Monday evening.
Last year, CMS required hospitals to post the list price, or the initial price before insurance negotiations, online in a machine-readable format. Many criticized the move and said the data was useless for consumers with insurance coverage.
This move goes a step beyond last year's action and requires the release of payer-specific negotiated rates for at least 300 "shoppable services," which CMS defines as 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 chosen by the agency.
A hospital risks a fine of $300 per day for not disclosing the negotiated rates. CMS said it would enforce the requirement by evaluating complaints and auditing hospital websites.
The groups representing insurance plans and hospitals strongly pushed back against the release of negotiated rates.
"Publicly disclosing competitively negotiated, proprietary rates will push prices and premiums higher — not lower — for consumers, patients, and taxpayers," Matt Eyles, president and CEO of America's Health Insurance Plans, said in a statement.
The American Hospital Association said the administration is going beyond its legal authority and should abandon the proposal. "It could seriously limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry," AHA CEO Rick Pollack said in a statement.
It's unclear whether this proposal will come to fruition given the intense backlash it will spark from industry. Verma said CMS is not afraid of a legal challenge.
A related proposal on price transparency was struck down in court earlier this month. The Trump administration had attempted to require drugmakers to post prices in TV ads.
"We expect legal challenges to emerge given concerns that this mandate, without legislative action, violates contractual non-disclosure agreements entered into by hospitals and [managed care organizations]," analysts with Jefferies said. They are expecting the courts to delay any implementation.
Larry Levitt, executive vice president of health policy for the Kaiser Family Foundation, was quick to point out that CMS is attempting to use its authority under the Affordable Care Act to implement this requirement while at the same time trying to strike down the entirety of the law. Its challenge to the ACA is now before the U.S. Fifth Circuit Court of Appeals.
Among the other proposals, CMS wants to expand the services available on an outpatient basis for Medicare beneficiaries, which its says would help lower costs.
For example, the agency wants to now make hip replacements for Medicare beneficiaries available on an outpatient basis, removing it from the inpatient only list.
Under this proposal, CMS would boost outpatient payments by 2.7%, which Jefferies analysts said was better than expected and a positive for major hospital chains like Tenet, HCA and Community Health Systems.
Congress has been busy working on its own proposals to tackle surprise billing and contain drug prices.
A sweeping draft bill in the Senate, sponsored by Sen. Lamar Alexander, R-Tenn., is expected to save the federal government $7.6 billion over the next 10 years, largely due to banning surprise bills. The bill is expected to be introduced on the floor after the August recess.
The rules drop comes as presidential contenders for 2020 are calling for a revamp to the country's healthcare system. Kamala Harris released her plan this week, walking back earlier claims that she would seek to rid the industry of private insurers.
Many Democratic presidential hopefuls support an expansion of Medicare, dubbed "Medicare for All," and some would do away with the private insurance industry entirely.