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Update 11/18/19:

On Friday, November 15, 2019, CMS did two things:

  • They finalized a rule requiring hospitals to disclose privately-negotiated rates (effective January 2021)
  • They proposed a new rule that would require insurers to provide patients with their out-of-pocket costs in advance of visits

As expected, major hospital organizations immediately announced that they would be challenging the rule in court. These organizations, along with insurers, cited First Amendment rights and unlawful disclosure of trade secrets as grounds for their legal action. Beyond the court fight, both groups reiterated the difficulty in sharing/maintaining this information as well as increased confusion for patients trying to understand their bills.

With an entire calendar year and a presidential election between now and when this rule will be enforced, I’m sure it will be back in the news again before long.

Original article follows.

A Reprieve for Healthcare Providers?

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) published its Medicare Outpatient Prospective Payment System (OPPS) rule for calendar year (CY) 2020. One notable omission was the proposal related to expanding hospital requirements on price transparency.

You may recall that last July the CMS proposed expanding price transparency to include the provider’s negotiated prices with insurers. The stated goal of this proposal was to create competition to drive healthcare costs down for patients.

Advocates from both the hospital and insurer side vehemently pushed back on the proposal, arguing that it would be orders of magnitude more complex than just posting the hospital’s chargemaster. Moreover, healthcare organizations have a vested interest in keeping negotiated prices under wraps – publicizing those prices would mean revealing private contract rates to competitors.

Will it Significantly Lower Healthcare Costs for Patients?

Some patient advocates have expressed concerns as well, stating that, while the general sentiment for price transparency is good, revealing contract prices would ultimately result in higher prices for patients as insurers raise rates to match each other.

Price transparency, in general, has had some impact on prices, but how much remains to be seen. A University of Michigan study last year found that MRI costs dropped 5% for patients and 4% for insurers when New Hampshire consumers had access to price information. Would that cost reduction be even greater if negotiated rates were published? The current administration seems to think so.

Do Consumers Even Look at Pricing?

A key question is whether or not consumers are embracing this insight into costs. A 2016 study in the Journal of American Medical Association found that healthcare spending increased slightly for employers that offered a price transparency tool – partly because only 10% of employees even accessed the tool over the course of a year.

This makes sense to me as I’m not convinced that most consumers are ready to shop for healthcare like they shop for tires – not yet anyway. Given high deductible plans and significant out of pocket caps, that approach may be in the not-so-distant future though.

At the End of the Day

The most revealing thing about this proposed rule and its reception is that price transparency is a complex problem that deserves a complex solution. Everyone from patients to providers to the administration want the high cost of healthcare problem fixed, but everyone has a different version of what “fixed” might look like.

On a state-level, Florida passed its own version of price transparency a few years ago in an attempt to bring estimates directly to patients through their Florida Health Price Finder. While accuracy of those prices still remains a concern, it at least gives patients a starting point for evaluating out of pocket cost for a procedure.

As with most complex issues, there is no single solution – no magic bullet, if you will. The true opportunity here is for healthcare organizations to get ahead of any legislative enforcement and find ways to help patients with the high cost of healthcare. Patients want to know a cost estimate of their out of pocket expense in advance, but often don’t know where, when, or even how to ask the right questions.

Focusing efforts on early financial education through third-party software or FTE training is one way to ensure patients are getting the information they need. Providers that can address patients’ want/need for more information will be well ahead of the curve and position themselves to attract and retain more patients.