CMS Finalizes Transparency Rule on Hospitals, Proposes similar Rule on Insurers

Concerning mandates remain, but effective date delayed a year.

November 21, 2019

President Donald Trump joined Health and Human Services Secretary Alex Azar, the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma, and other senior administration and Congressional leaders on Nov. 15 to announce his administration had finalized its proposed rules mandating hospitals make public their privately negotiated payment rates. While CMS delayed the effective date by a year to Jan. 1 of 2021, the actual effective date remains uncertain, as the American Hospital Association and other hospital groups announced a lawsuit to block implementation.

The final rule requires hospitals to post in machine-readable format all standard charges for all services a hospital provides, and expands the definition of a standard charge to include five different types:
1. Gross charges
2. Payer-specific negotiated charges
3. Deidentified minimum charges
4. Deidentified maximum charges
5. Cash-discounted charges

Additionally, hospitals would be required to post in an online consumer-friendly format, 300 shoppable services, of which 70 would be chosen by CMS and 230 would be chosen by individual hospitals based on the services they offer. Hospitals that currently have an online cost-estimator tool covering these services would be deemed to be compliant by CMS. Hospitals that are found to be in non-compliance would be subject to corrective action and could face civil monetary penalties of up to $300 per day.

While WHA has long been a leading proponent of consumer transparency through its PricePoint and CheckPoint websites, in its comment letter to CMS on the proposed rule, it echoed concerns identified by the Federal Trade Commission that the rule could actually lead to anticompetitive behavior that results in higher prices for consumers.

In addition to the final rule impacting hospitals, CMS also proposed a new rule targeted at insurers that mirrors many of the required mandates for hospitals. Health insurance plans would be required to create consumer-friendly online tools allowing individuals to see:
  • Their cost-sharing liability and expected out-of-pocket costs for any service performed by a specific in-network provider.
  • The amount the individual has spent toward their deductible, along with their out-of-pocket maximum.
  • The negotiated rate for in-network providers and allowed amount for out-of-network providers.
  • A list of items covered if the service is for a bundled payment.
  • Any prerequisites for care, such as prior authorization.
Health plans would also be required to display this information in machine-readable format, and also in a paper copy if requested by a beneficiary. Health plans would also be rewarded via their medical loss ratio for incentivizing consumers to select “lower-cost, higher-value” providers. The rule contains a request for information on how they should measure provider quality.

As previously mentioned, litigation is expected to delay implementation of the final rule applying to hospitals. In the meantime, WHA is exploring ways to assist member hospitals with implementation and will provide updates in future communications to members. For additional information, contact WHA Director of Federal and State Relations Jon Hoelter or Senior Vice President of Finance/Chief Operating Officer Brian Potter.

This story originally appeared in the November 21, 2019 edition of WHA Newsletter