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October 1, 2019

Hospitals question legality of CMS' price transparency proposal

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    CMS' public comment period for the 2020 Hospital Outpatient Perspective Payment System proposed rule ended Friday, and the rule's more controversial proposals spurred hundreds of comments from hospital groups, insurance groups, and other industry stakeholders.

    Nov. 13 webinar: Get a detailed analysis of the 2020 HOPPS final rule

    CMS must now review the comments before releasing a final rule, which is expected to be published in November.

    Hospital and insurer groups take aim at price transparency proposal

    Many hospital and insurer groups pushed back against CMS' proposal that all hospitals post their payer-negotiated rates for certain hospital services beginning Jan. 1, 2020.

    Under the proposed rule, the nation's 6,002 hospitals (including both Medicare-enrolled and non-Medicare-enrolled institutions) would be required 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." Hospitals that do not comply with the regulations could face a monetary penalty of up to $300 per day until they are in compliance or provide CMS with a corrective action plan.

    Both the American Hospital Association (AHA) and America's Health Insurance Plans (AHIP) submitted comments against the proposal. In separate comments, the groups said the proposal exceeds CMS' statutory authority and would do little to help patients shop for lower prices.

    AHIP President and CEO Matt Eyles in comments wrote that the proposal "exceed[s] CMS' statutory authority, constitute a taking of health insurance providers' trade secrets, and unconstitutionally compel speech."

    AHA similarly wrote, "This approach would confuse—not help—patients in understanding their potential out-of-pocket cost obligations, would severely disrupt private contract negotiations between providers and health plans, and exceeds the Administration's legal authority."

    The Federation of American Hospitals wrote, "HHS' proposed interpretation of the final rule is untenable and unreasonable because it is wholly inconsistent with other laws that protect payer-specific negotiated rates from disclosure or prohibit disclosure of this data."

    Indiana-based Schneck Medical Center in a comment wrote that the proposal is inconsistent with the Public Health Service Act, which it writes requires hospitals to post "standard charges," which the industry has long considered chargemaster or "list" prices, not payer-negotiated rates.

    AHIP and several hospital organizations also noted that the payer-specific negotiated rates differ from what the patient pays due to differences in plans at the patient level.

    The Association of American Medical Colleges also pointed out that some facilities do not negotiate with insurers for each line item, but instead reach a payment for all items related to a given service. "This means that items and services would be reflected as $0.00, indicating that no cost can be attached to them," AAMC said. "Beneficiaries are likely to find this to be more confusing than elucidating."

    The Federation of American Hospitals (FAH) added that the negotiated rates are not linked to quality data, and therefore, could mislead patients to perceive higher prices as better quality.

    AHA also noted that the requirement would "impose a substantial burden on hospitals without a corresponding benefit for patients," noting that CMS estimated the proposal to cost hospitals about $1,000 per year.

    The Rural Hospital Coalition said those additional costs could be particularly burdensome for rural providers that operate on smaller margins.

    Sandy Sage—a nurse at HomeTown Health, which is a network of rural hospitals and health care providers—said, "To expect rural and critical-access hospitals to find a patient-friendly way to publish information that they may not even be able to put their hands on will be a huge burden."

    Meanwhile, other critics raised concerns that publicly disclosing insurer-negotiated rates could hamper negotiations by giving insurers an unfair advantage in negotiations, allowing them to demand similar discounts hospitals have struck with their competitors. Critics, including AHIP, also warned that the inverse could be true, allowing providers to demand higher rates, which would ultimately drive prices up.

    AHA also raised a concern that the rule could fuel "anticompetitive behavior among commercial insurers in an already highly concentrated insurance industry, seriously limiting the choices available to patients."

    And the Rural Hospital Coalition added that the transparency of payer-negotiated rates could "negatively impact the availability of health insurance in rural areas and would put further financial pressure on rural hospitals that are already financially fragile."

    Some doctors, patient advocates write in favor of price transparency proposal

    However, several doctors and patient advocacy groups wrote in favor of the requirements, saying the price disclosure would help control prices

    For instance, Chao Li, a physician, wrote, "Access to honest and actual prices is fundamental to ensuring patient choice and ultimately reducing medical care costs," adding, "[c]urrently, Americans are unable to make fully informed decisions and choose the care options that are best for them and their families."

    Hospital groups denounce proposed 340B, site-neutrality payment cuts

    Hospital groups also pushed back on CMS' plans to continue implementing site-neutrality and 340B payment cuts.

    CMS in the proposed rule said it would implement phase two of its plan outlined in last year's final rule to reimburse at the site-neutral rate—40% of HOPPS—for hospital outpatient clinic visits (HCPCS code G0463) across all hospital outpatient departments (HOPDs), even those that are otherwise exempt from site-neutral payments. To do so, CMS for 2020 proposed implementing a 30% cut, which would bring the national average reimbursement rate down from $116 per visit to just $46.

    The agency also proposed to continue a policy that cut Medicare Part B payments for drugs under Medicare's 340B drug discount program by nearly 30%, despite a recent court ruling saying the cuts are unlawful. In the proposed rule, CMS acknowledged the judge's recent ruling and said it is continuing the appeals process. However, CMS said in the "event of an unfavorable decision on appeal," it wanted comments on whether a 3% increase of average sale price would be an appropriate payment for 340B drugs in 2020. It also sought comment on how to adjust payments from 2018 and 2019.

    AHA criticized both moves. In regard to the site-neutrality provisions, AHA said, "CMS has not only undermined clear congressional intent, but has threatened to impede access to care, especially in rural and other vulnerable communities."

    In regards to the planned 340B cuts, AHA urged CMS to "refrain from doing more damage to impacted hospitals with another year of illegal cuts."

    Meanwhile, AAMC in its comment wrote, "As a remedy for the adverse outcome in its 340B Program litigation, CMS should refund payments to each affected 340B hospital calculated using the 'JG' modifier, which identifies claims for 340B-acquired drugs that were reduced under the CY 2018 and CY 2019 hospital OPPS final rules" (Armour, Wall Street Journal, 9/27; King [1], FierceHealthcare, 9/27; Clason, CQ News, 9/30 [subscription required]; King [2], FierceHealthcare, 9/27).

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