CMS wants hospitals to publish charges

Years behind schedule, the CMS has proposed a rule carrying out a Patient Protection and Affordable Care Act requirement that all U.S. hospitals publish how much they charge for every service.

“We are providing hospitals with the flexibility to determine how they make a list of their standard charges public,” according to the CMS proposal. “We encourage hospitals to undertake efforts to engage in consumer-friendly communication of their charges to help patients understand what their potential financial liability might be.”

But the proposal, buried in a lengthy inpatient-payment rule issued last week, is unlikely to cause transparency advocates to pop Champagne corks. That's because hospitals would be required to tell the public only what they charge, not the rates they actually receive from private insurers. Charge information is widely seen as less useful for consumers in high-deductible plans who are shopping for lower-priced providers. Another limitation is that hospitals could fulfill the requirement by allowing the public access to the charge data after an inquiry, the CMS said.

Requiring hospitals to post actual price information in a uniform format online or in physical form would be more useful to consumers, said Jaime King, a health policy expert and professor of law at the University of California Hastings in San Francisco. “I don't think (the proposed rule) goes far enough. It's a really good first step. It suggests that CMS is taking the need to have price transparency seriously,” he said.

Medicare officials argue that charge information has value to the public because it shows the wide variability in hospitals' base pricing. It's also applicable to self-pay patients, who traditionally have been billed for full hospital charges.

The proposed publication of charge data may put pressure on hospitals with higher charges. That could affect Medicare spending in the outlier program, which bases payment for uncommonly expensive cases on charges, King noted.

Prior to this proposed rule, the CMS had taken no steps to implement the little-noticed, 56-word price-transparency provision in the healthcare reform law, contained in Section 2718e. It states that every hospital must, at least annually, make public a list of its charges for “items and services,” including charge rates for Medicare's severity-adjusted diagnosis-related groups. The provision technically went into effect in September 2010, but experts said hospitals wouldn't be expected to comply until the CMS published regulations.

The transparency rule would go into effect Oct. 1.

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