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On November 15^th, the Trump administration announced historic price transparency requirements to increase competition and lower healthcare costs for all Americans.  In response to President Trump’s Executive Order signed in July 2019, the Department of Health and Human Services took action to advance the Trump administration’s commitment to increasing price transparency in the health care industry and promote public access to hospital standard charges.[1] The announcement focuses on a final rule and a proposed rule.

The final rule requires hospitals to display their secret, negotiated rates to patients starting in January 2021. Hospitals will be required to make public all “standard charges” online in a single data file that can be read by other computers. “Standard charges” include gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient, and minimum and maximum negotiated charges.[2] Other items and services that must be disclosed include supplies, facility fees, and professional charges for employed physicians and other practitioners. This information and format will be most useful for employers, providers, and tool developers when designing consumer-friendly price transparency tools in the future.

Hospitals also need to make public the standard charges for at least 300 common “shoppable services” and describe this information in plain language. “Shoppable services” include x-rays, outpatient visits, imaging and laboratory tests.[3] This information must be easily accessible, in a searchable format, and be updated annually.[4] The goal of this requirement is to ensure that healthcare consumers can compare services between different hospitals and mitigate cost surprises. [5] Of the 300 shoppable services, the rule specifies 70 services that must be included (see table below for the required 70 services). The other 230 services will be chosen by the hospital. In order to ensure compliance with the final rule, the Centers of Medicare & Medicaid Services (“CMS”) has the authority to impose fines on the hospital up to $300 per day and $109,500 for the entire year. Some critics of the final rule argue this monetary penalty will be an insufficient enforcement tool given the relatively insignificant amount a hospital will be forced to pay.[6] Other enforcement tools include monitoring hospital compliance, evaluating complaints made by individuals and entities sent to CMS, and auditing hospital websites.[7]

The second rule discussed in the announcement is a proposal that would require insurance companies to show patients their expected out-of-pocket costs instantly through an online tool or in paper form, if requested. If finalized, the Transparency in Coverage proposed rule would also require health insurance companies and group health plans that cover employees to disclose on a public website their negotiated rates for in-network providers and allowed amounts for out-of-network providers.[8] Insurers would need to explain how much a service would cost, the amount an insurance plan would pay, and how much the consumer would owe before the service is rendered.[9] This requirement is intended to promote informed and price-conscious decision making and drive competition in the healthcare industry.[10] The proposed rule is subject to a 60-day public comment period. Comments are due by 5 p.m. on January 14, 2020 and may be submitted online at https://www.regulations.gov/ or by mail to the Centers for Medicare & Medicaid Services.

Summary:

These rules are a historic step toward price transparency across the health care industry and are in furtherance of the Trump administration’s goal of empowering healthcare consumers. The finalized rule and the proposed rule strive to make pricing information more available to healthcare consumers so they can make informed health care decisions. Through price transparency, consumers should expect to see a reduction in healthcare costs in the future. In order to provide hospitals enough time for compliance with the new requirements, the effective date of the finalized rule is January 1, 2021. The comment period for the proposed rule is open until January 14, 2020.

Please contact a BMD healthcare attorney if you have any questions on the new price transparency rule or would like to submit written comments for the proposed rule, if you have any questions on how these rules may affect your practice, or if you have any other healthcare related questions in general. 

[1] CMS-1717-F2

[2] U.S. Dept. of Health & Human Serv., Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans (Nov. 15, 2019), https://www.hhs.gov/about/news/2019/11/15/trump-administration-announces-historic-price-transparency-and-lower-healthcare-costs-for-all-americans.html

[3] Id.

[4] Id.

[5] Id.

[6] Steven Porter, Enforcing Hospital Price Transparency: Is $300 max daily fine big enough? HealthLeaders (Nov. 15, 2019), https://www.healthleadersmedia.com/finance/enforcing-hospital-price-transparency-300-max-daily-fine-big-enough

[7] CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements (CMS-1717-F2), Centers for Medicare & Medicaid Services (Nov. 15, 2019), https://www.cms.gov/newsroom/fact-sheets/cy-2020-hospital-outpatient-prospective-payment-system-opps-policy-changes-hospital-price

 [8] U.S. Dept. of Health & Human Serv., Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans (Nov. 15, 2019), https://www.hhs.gov/about/news/2019/11/15/trump-administration-announces-historic-price-transparency-and-lower-healthcare-costs-for-all-americans.html

[9] Selena Simmons-Duffin, Trump Wants Insurers and Hospitals To Show Real Prices To Patients, NPR (Nov. 15, 2019), https://www.npr.org/sections/health-shots/2019/11/15/779707609/trump-wants-insurers-and-hospitals-to-show-real-prices-to-patients

[10] U.S. Dept. of Health & Human Serv., Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans (Nov. 15, 2019), https://www.hhs.gov/about/news/2019/11/15/trump-administration-announces-historic-price-transparency-and-lower-healthcare-costs-for-all-americans.html

[11] CMS-1717-F2, https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf