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Just like visiting the grocery store online or in-person where prices are clearly marked, so should medical services. Well, to that end, the 2020 Medicare outpatient payment rule has been expanded upon. The Department of Health and Human Services (HHS) reworked the existing rules regarding price disclosure and as of January 1, 2021 hospitals were expected to post this information. The goal was for “consumer-friendly” prices to be available for roughly “300 ’shoppable’ services.” A total of 70 of them would be hand-picked by the Centers for Medicare & Medicaid Services (CMS). The balance of the list – the remaining 230 services – could be selected by individual hospitals.
The CMS also revealed a proposed rule that would nudge insurance plans to indicate personalized out-of-pocket cost details for medications and services. One more rule was to provide CMS new tools for enforcement which included such components as auditing, monitoring, corrective action plans, and the power to implement civil monetary fines to the tune of up to $300 per day. The overall goal was the bring the supermarket pricing concept – every item has a price tag – to health care products and services a consumer may purchase. The concept behind this idea was that it would give people the ability to price compare and determine the quality and hospital proximity to their budget. Naturally, this was intended to be of use to consumers who are not dealing with an emergency where time could be a factor in the level of care and patient outcome.
As to be expected, major hospital associations challenged the provision for transparency as it appeared in the outpatient rule. The argument was that “this rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery.” The HHS plan also came under fire by the America’s Health Insurance Plans. The concept of price transparency is nothing new in the healthcare industry. However, strong lobbying by groups opposed to this, such as hospitals and insurance providers, has continually appealed to legislators to halt the HHS proposals. They have been successful many times over in delaying or derailing rules that resemble the CMS attempt. It is interesting to note that patients have already had access to pricing details and explanations regarding benefits after they receive services. The HHS proposal was to require pricing details being made available to patients before their received care, not after. A very important consideration.
Proactive audits of hospital websites were conducted by CMS prompted by complaints but the first round of warning letters did not get released until April. The non-compliance letter gives the recipients 90 days to address concerns and then will be subject to another website review by CMS after the 90-day window closes. If the hospital continues to be non-compliant in providing pricing information, a second warning letter may be sent or a request for corrective action will be sent. If the hospital ignores that, CMS may request a corrective action plan, publicize the noncompliance penalty on the CMS website, or assess a civil monetary fine of up to $300 a day. CMS has indicated that hospitals that receive fines will be named on the agency website. The delay in naming names is because releasing that information before the issuance of a fine could identify facilities that have already taken corrective action or may end up in the process of complying after the first warning letter is received. This is why CMS has not made it public as to which hospitals have been issued warning letters for noncompliance.
Most hospitals are still dragging their feet on the issue of publishing service pricing. A study published in JAMA Internal Medicine on June 14th shows that non-compliant hospitals are opting to pay the $300 per day fine rather than facing the potential costs of price disclosure. When you apply logic to this, it doesn’t make sense. Why spend more on keeping costs secret than just owning up to the fact that numbers are just numbers and for some consumers, those digits can be a huge factor in their decision-making process. By hiding the costs, it just stresses out too many people afraid to not be able to afford the proper healthcare service.
Two groups of hospitals were studied for this research. They were 100 randomly sampled hospitals and the 100 hospitals that had the highest revenues in 2017. Of the 100 randomly sampled hospitals, 83% had failed to meet at least one of the requirements set out by the HHS rule. However, just over half of them had a cost estimator tool, but they each needed patients to input their personal information to access the pricing details. A total of 75% of the top-grossing hospitals had failed to meet at least one of the rule requirements, but 86% had estimator tools posted online.
You would think that hospitals and other health care providers would jump at the opportunity to not have to keep answering that often-heard question about what a procedure will cost. The same thing goes for patients who could have their minds put at ease long before being told they would be billed later for medical service. It isn’t a difficult concept to grasp. Price tags are a way of life in today’s world when you consider how far some people have to stretch their budget or need to know numbers to work into a tight budget. But for some reason, many hospitals and health care providers do not see price transparency as such a good idea. You can bet that the thought of “billing you later” wouldn’t fly the next time someone in noncompliance went to pick up groceries or to grab a takeout meal from somewhere. Eventually, hospitals will get on board when they see that being open with costs is more of a service to consumers than a penalty for doing business in a competitive market.