New Healthcare Price Transparency Rule to Unveil Negotiated Rates

HHS dropped two healthcare price transparency rules earlier today. The first is a final rule requiring hospitals to make all standard charges, including payer-specific negotiated rates, public in a machine-readable file online, and the second is a proposed coverage transparency rule applying to health plans.

“President Trump has promised American patients ‘A+’ healthcare transparency, but right now our system probably deserves an F on transparency. President Trump is going to change that, with what will be revolutionary changes for our healthcare system,” HHS Secretary Alex Azar said in an official announcement.

He went on to say that the two rules “may be a more significant change to American healthcare markets than any other single thing we've done, by shining light on the costs of our shadowy system and finally putting the American patient in control.”

The finalized hospital price transparency comes days after it was noticeably absent in the final 2020 Outpatient Prospective Payment System (OPPS) rule. This separate final rule dubbed the 2020 OPPS & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public Final Rule confirmed that HHS will move forward with requiring hospitals to publish negotiated rates despite industry push back.

HHS first proposed the hospital price transparency requirement in July 2019. Hospitals and payers opposed publishing negotiated rates online and called on HHS to abandon the proposal or possibly face legal action.

Hospitals, however, will not only have to publish gross charges and payer-specific negotiated charges, as proposed, but also discounted cash prices, the de-identified minimum negotiated charge, and the de-identified maximum negotiated charge for all items and services provided by the hospital, according to the final rule.

The information will also have to be made public in a machine-readable format online. Three hundred “shoppable” services will also need to be “displayed and packaged in a consumer-friendly manner.”

HHS explained that information that is made public in a “prominent location” online and that is easily accessible, without barriers, and searchable will be deemed consumer friendly. Item and service descriptions must also be in “plain language” and the shoppable service charges must also be published and grouped with charges for ancillary services for hospitals to meet the requirement.

Hospitals will have to comply with the new requirements by January 1, 2021 or face possible financial penalties, the final rule stated.

HHS is also seeking to add more healthcare price transparency requirements. This time, the rules would apply to health plans.

The proposed Transparency in Coverage rule would require most employer-based group health plans and health insurance issuers offering group and individual coverage to disclose price and cost-sharing information to members up front, HHS explained.

More specifically, the rule would mandate the health plans to give consumers “real-time, out-of-pocket estimates,” including cost-sharing liability for all covered items and services. The information would need to be available through an online tool that plans would need to make available to all members, as well as in paper form, at the consumer’s request.

Health plans would also need to publicize their negotiated rates for in-network providers and allowed amounts paid for out-of-network care. The information would also need to be online on a public website.

HHS intends for the proposed rule to “encourage health insurance issuers to offer new or different plan designs that incentivize consumers to shop for services from lower-cost, higher-value providers by allowing issuers to take credit for "shared savings" payments in their medical loss ratio (MLR) calculations,” the department state in the announcement.

Both the final and proposed healthcare price transparency rules usher in a new era, according to CMS Administrator Seema Verma.

“Under the status quo, healthcare prices are about as clear as mud to patients,” she said in the announcement. “Thanks to President Trump's vision and leadership, we are throwing open the shutters and bringing to light the price of care for American consumers. Kept secret, these prices are simply dollar amounts on a ledger; disclosed, they deliver fuel to the engines of competition among hospitals and insurers. This final rule and the proposed rule will bring forward the transparency we need to finally begin reducing the overall healthcare costs.”

To view the final rule (CMS-1717-F2), click here.

To view the proposed rule (CMS-9915-P), click here.