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Medicare wants hospitals to disclose 'secret' prices, plus 2 other key takeaways from the 2020 HOPPS proposed rule

July 30, 2019

    Late yesterday, CMS released its proposed regulations for hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) in calendar year (CY) 2020.

    Rumors have been circulating for months as to how the Trump administration would approach several high-impact proposals related to price transparency, site-neutral payments, and 340B reimbursements—and the new proposal contains answers to all of those questions and more. We'll cover all of the details in our August 27th webconference.

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    In the meantime, here are three important takeaways based on our initial scan of the proposal.

    1. CMS is moving forward with plans to force hospitals to disclose insurer-negotiated prices—and it has an enforcement plan.

    HHS in March sought public comments on a proposal to require hospitals to publicly share prices they negotiate with insurers, and in June, President Trump issued an executive order that directed HHS to move forward with the plan. But there were many unknowns at the time the order was issued: How would HHS implement such a request? How would it require hospitals to post the data? How would it enforce the requirements, if at all?

    Yesterday, CMS answered many of those questions in its proposed rule.

    As proposed, CMS would require the nation's 6,002 hospitals (including both Medicare-enrolled and non-Medicare-enrolled institutions) to publish their gross charges and payer-specific negotiated charges for all items and services offered for an inpatient admission and outpatient visit. CMS would require those charges to be published online in a machine-readable file in order to provide usable data to developers of consumer-friendly price transparency tools.

    CMS also would require hospital websites to prominently display payer-specific negotiated charges for at least 300 "shoppable services"—a term CMS defines "as a service that can be scheduled by a health care consumer in advance." CMS would designate 70 of the service charges that must be included in the list, and the hospital would have to choose the remaining 230. Hospitals that did not comply with the regulations could face a monetary penalty of up to $300 per day until they are in compliance or provide a corrective action plan.

    This proposal is likely to ruffle some feathers. Last year's move to make charge detail public kicked off a debate as to what constitutes "meaningful" price transparency for the consumer. CMS has responded with a move that indicates it is not going to wait patiently for hospitals and health systems to drive greater transparency by forcing unprecedented public access to hospital-payer negotiated detail.

    Expect some fireworks during the comment period. Discussion around price transparency in prior years has suggested that provider-specific negotiated rates are proprietary and protected under federal law—perhaps indicating the potential for legal action down the road. AHA has already voiced its opposition, citing the likelihood that public payer negotiated charges could fuel anticompetitive behavior that works against the consumer and drives prices up. CMS has acknowledged that such unintended consequences are a possibility and has asked the public for alternative approaches to price transparency during the comment period. Much can change following a proposal, and we'll be watching developments closely on this one come final rule time.

    It's also important to note that the regulations clearly describe this as a "first step," meaning that if finalized as proposed, there's the potential for even more impactful mandates to come.

    2. CMS continues to phase-in site neutral payments.

    Medicare payments in the hospital outpatient setting have surged in recent years, effectively doubling between 2006 and 2016. To counteract this trend, CMS is seeking to reduce payment discrepancies between identical services performed at HOPDs and lower-cost settings.

    CMS took the first step in CY 2017, establishing a reduced payment rate for a small group of newer "non-excepted" off-campus HOPDs. However, in last year's final rule, CMS implemented a major update to the site-neutral policy. Specifically, CMS implemented a two-year plan to reimburse at the site-neutral rate—40% of HOPPS—for G0463, hospital outpatient clinic visits, across all HOPDs, even those that are otherwise exempt from site-neutral payments.

    To do so, CMS in CY 2019 implemented a 30% cut. Now, in 2020 CMS is proposing moving forward with an additional 30% cut. This will bring the national average payment rate will go down from $116 per visit to just $46.

    It's worth noting that CMS in the past has twice explored policies to require otherwise excepted sites to bill at the reduced site-neutral rate for expanded services. The agency did not include such proposals this time around, but it does suggest that there's room for CMS to go further with site-neutral payments in future rulemaking.

    3. CMS could shift more profitable procedures away from hospitals.

    CMS has also proposed changes to the Inpatient Only List and the Ambulatory Surgical Center Covered Procedure List that suggests the agency plans to continue a policy of shifting popular Medicare orthopedic procedures to outpatient settings.

    The most notable proposals this year would remove total hip arthroplasty (THA) from the Inpatient Only list, while total knee arthroplasty (TKA) would be added to the list of ambulatory surgical center (ASC) services eligible for Medicare reimbursement.

    These proposals continue a trend of regulatory changes over the last few years that are likely to move more profitable lower extremity joint replacement cases away from the hospital. Discussion in the proposal indicates the agency now believes these procedures can be safely performed outside of the hospital in certain situations. CMS addressed previous provider concerns about ASCs being sufficiently equipped to safely perform TKA procedures, citing data from Medicare Advantage on over 800 TKA cases as evidence that such eligibility was justified. Given the recent history of CMS' inclination toward opening access to lower-cost settings for orthopedic procedures, it’s not out of the realm of possibility that these two proposals make it into the final rule.

    Next steps: Get a detailed analysis of the 2020 proposed rule

    To learn more about the final rule, including its proposed changes for 340B, the wage index "rural floor" calculation, and more, register for our upcoming webconference on August 27.

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