Is the Hospital Price Transparency Rule Delay A Good Sign?

November 11, 2019 - In July, CMS proposed in the Medicare Outpatient Prospective Payment System (OPPS) rule for calendar year (CY) 2020 to expand existing hospital price transparency requirements by mandating hospitals to disclose their privately negotiated rates for 300 shoppable services.

The proposal provoked the ire of hospitals and payers alike, with some arguing that CMS did not have the authority to implement such a requirement. Stakeholders agreed that the disclosure of privately negotiated rates would, in the least, harm competition, increase prices for healthcare services, and confuse consumers more. Furthermore, they complained about the administrative burden of complying with the proposed requirement, which CMS estimated to be 12 hours.

Hospitals have already spent more than 100 hours complying with a skinnier version of the hospital price transparency recruitment, the American Hospital Association reported.

Despite sparking a heated debate in the healthcare industry, a finalized requirement was nowhere to be seen in the CY 2020 Medicare OPPS final rule.

Buried deep in the 1,113-page final rule, CMS stated it is still parsing through over 1,400 comments on the proposed requirement and a final version of the hospital price transparency requirement will be in a “forthcoming final rule.”

READ MORE: Are Hospital Price Transparency Rules a Solution for Consumerism?

The release of the CY 2020 Medicare OPPS final rule may have been anticlimactic for stakeholders expecting a decision on the state of hospital price transparency. But the lack of a finalized policy may be a win for hospitals, says Matthew Fisher, a partner at Mirick O’Connell and chair of firm’s Health Law Group, who discussed price transparency at Xtelligent Healthcare Media’s most recent Value-Based Care Summit.

“Arguably, given the volume of comments received by CMS to the price transparency rule, it could be a good sign that a final rule is delayed. Optimistically, any time a large number of interested parties comment and a rule gets delayed, that could be that the rule is being reworked to become more practical and operationally feasible,” he said in a new interview.

But postponing a decision on the proposed hospital price transparency requirement leaves a lot of open questions, some of which CMS may not be ready to answer, states Lyndean Lenhoff Brick, JD.

“I found it somewhat surprising that in this 1,113-page document, only six to ten sentences were devoted to price transparency,” the founder and current president and CEO of the healthcare consulting firm Advis told RevCycleIntelligence.com. “That signals an issue to me. CMS was so overwhelmed with the industry’s concerns about this rule that they just took a back seat and kicked the can down the road because they cannot deal with it right now.”

The proposed hospital price transparency requirement is complex, especially in terms of implementation, she elaborated. For example, there are technical components of requiring the public disclosure of negotiated rates. Hospitals must also consider issues related to security and privacy, data collection, health IT systems, and contract management, on top of creating consumer-friendly access to the information.

READ MORE: Going Above and Beyond the CMS Hospital Price Transparency Rule

“Whether or not CMS is fully aware of the technical aspects of implementation remains a question to me,” she said. “One of the big things is how are hospitals going to handle these contracts with the payers and CMS doesn't address any of this.”

CMS may be determining just how to address the complexity and implementation of such a policy. However, hospitals should still be seeking ways to increase price transparency for their patients, says Rick Kes, partner and healthcare senior analyst at RSM.

“Most of our clients in the healthcare system are looking at what can they do to be in front of this instead of being a laggard,” he said in an interview. “They believe that as the prevalence of high-deductible plans and the growth of those deductibles continue to grow, people are making the decisions and asking questions about costs, which they've never asked before.”

Consumerism is also pushing for greater demand, he added. Consumers are frustrated with the lack of transparency and they are now realizing that when they demand change in an industry, disruption will come.

“Consumer preference and consumer expectations have changed,” he said. “Think about the entertainment industry and the shift that they experienced when Netflix started offering on-demand entertainment and how that really transformed Blockbuster. Blockbuster used to charge late fees, have only maybe four of the new releases and you had to bring it back in two days. All of those things that consumers were frustrated with, Netflix came in and disrupted.”

READ MORE: Healthcare Price Transparency, APMs Fail to Control Costs in MA

Hospitals should evaluate their current price transparency capabilities to not only prepare for future regulation, but also meet consumer demand, Brick advises.

“It's important to do a self-evaluation on where you're at,” she said. “What are your data capabilities? What changes would a finalized policy necessitate? Also, many providers already have elements of transparency within their systems. You want to evaluate how well those are working.”

Rationalizing prices should also be on the hospital’s to-do list to ensure prices are fair and competitive and make it easier for technology to deliver price transparency, Kes added.

“As hospitals are starting to look at this and say well, we need to really rationalize our pricing and make it easier for even the provider to understand,” he explained. “Hospitals are going to continue to make things more simplified for themselves, which will help the technology enable this price transparency on a real-time basis. So, it'll be both. It'll be a technology improvement and an improvement to the overall process with the way that they come up with their pricing.”

Hospitals may be stuck in limbo for the time being, as Fisher puts it. But he and other experts remain optimistic that the additional time CMS is taking to develop a final hospital price transparency requirement could play out in favor of hospitals.

“My biggest hope is that the industry gets to shape this requirement and that CMS doesn't propose a new rule in a vacuum because it's the industry that has to implement the rules and be accountable,” Brick said. “CMS can't just be issuing rules that really don't make sense in the context that we're dealing with today.”