National hospital advocates, executives, and industry advisers have identified early concerns with the proposed mandatory release of hospital-negotiated charges.
The Medicare Outpatient Prospective Payment System CY20 proposed rule would require all nonfederal hospitals to post online their gross charges and payer-specific negotiated charges.
Addressing Contractual Requirements
Lynda Mischel, a managing principal for Lumina Health Partners, described the proposed requirement to publicly disclose health plan-specific rates as “problematic,” due to contractual requirements that such negotiations remain private.
Small hospitals and rural facilities are likely to lack the resources or personnel to readily meet the disclosure requirements, Mischel said. Rates used in financial and billing systems are based on CPT codes and will need to be translated into plain English for patients.
“I don’t think it’s as easy as the federal government thinks it is,” Mischel said.
Another wrinkle is that well-funded hospitals may forgo compliance with the new requirement to avoid impacts on health plan negotiations and could consider the annual penalty of $109,500 just a cost of doing business, Mischel said. However, low-revenue hospitals will struggle to either meet the requirement or pay the penalty.
The Reality of Price Shopping
The Centers for Medicare and Medicaid Services (CMS) noted in the rule that it opted against exempting rural hospitals, but Mischel argued against that position since charge transparency provides little benefit in rural areas. Patients in those areas frequently have access to only one hospital, meaning price shopping is not possible.
CMS officials also raised the possibility that they may exempt hospitals from the charge disclosure requirement in cases when a hospital provides patients with price transparency tools for common procedures and services. But that option also likely would provide little benefit for low-income hospitals, which struggle to afford—and rarely offer—such price calculators, Mischel said.
Additionally, the cost of compliance is likely to far exceed the $1,017.24 annual cost per hospital as estimated by CMS.
“What they’re asking for is far more complicated than $1,000 would allow,” Mischel said.
Lynda Mischel is a managing principal for Lumina Health Partners.