CMS Administrator Seema Verma made it clear last week: The agency is not done pushing policies aimed at giving patients greater access to information about the cost of their care.
“There will be more to come on price transparency … this is a large problem for the entire healthcare system,” Verma said last week at Modern Healthcare’s Women Leaders in Healthcare Conference in Chicago.
That won’t sit well with healthcare lobbyists who assaulted the agency’s most recent transparency pitch—that hospitals be forced to publicly post both their gross and insurer-negotiated prices.
While the hospital and insurer industries argued strongly that the CMS proposal wouldn’t bend the cost curve and may even harm patients, Verma said the criticisms are from stakeholders intent upon maintaining the status quo and the requirement could actually make a meaningful difference.
The idea, wrapped into the broader outpatient prospective payment system proposed rule, would force hospitals by January 2020 to post online the negotiated price by specific payer and plan for “shoppable services.” That includes procedures patients can book in advance, such as X-rays, outpatient visits and lab tests as well as bundled services like a cesarean delivery. Already hospitals are mandated to post their chargemaster prices, which most experts say has been largely ineffective because patients rarely pay those rates. Verma seemed to acknowledge as much.
That rule, she said, is only helpful to the uninsured, but “if you had insurance, it didn’t provide you with the information you need.” Further, accessing the information is likely confusing for consumers because the rule didn’t specify how hospitals must display that information to patients.
This new proposal “is more streamlined,” she added.
Critics of the agency’s approach contend that patients don’t need to see negotiated rates. What they want is information about their out-of-pocket costs, which some hospitals are already providing via online cost transparency tools. Hospital and insurer lobbying groups—who are expected to sue to stop the requirement—warned that exposing the rates could undermine their ability to negotiate with each other.
Evidence has shown that many people don’t shop for healthcare, often because they have trouble finding price information, according to Dr. Ateev Mehrotra, an associate professor at Harvard Medical School who has studied price transparency. He agreed with the hospitals that patients care about out-of-pocket costs, not negotiated rates.
“Not everyone is going to shop around … but some people will and that is probably enough for the market to move,” Verma countered. “That is enough for (hospitals) to say, ‘I may want to lower my price to attract more patients.’ It only takes a few people to actually move the market.”
How quickly that may happen is up for debate.
“It’s going to be nearly impossible for hospitals to comply with this even if there are stiff penalties,” said Paul Shorrosh, CEO of revenue-cycle vendor AccuReg, which has created price-estimator tools for hospitals like Mosaic Life Care. “Each of those (insurance) contracts has multiple payment methodologies depending on whether it’s inpatient or outpatient. The only way to do that is computerize it. There’s no other way. If they publish contracted rates, it’s not going to make sense to anybody.”
But most hospital cost-estimator tools don’t show what patients would pay by going to a competitor down the road. Enabling patients to make an apples-to-apples comparison between providers is exactly what the CMS hopes posting the negotiated rates will allow.
Just getting the secret data out in the open and allowing researchers and policy experts to harness it could help lawmakers create better policy, said Benedic Ippolito, an economist with the American Enterprise Institute. “Tomorrow it may not be the most useful data, but who knows in 10 years,” he said.
Ippolito also doubted that exposing negotiated rates could lead some lower-cost healthcare providers to raise prices to meet those of higher-cost competitors, as some observers predicted. That’s because most hospitals in any given market already have a pretty good idea of others’ prices, he said.
Bob Berenson, a healthcare policy expert at the Urban Institute think tank, along with several other sources, said the proposal could lead to lower prices if the public or policymakers use the price information to shame high-cost hospitals into bringing their prices down.
With healthcare spending climbing higher, Berenson said he doesn’t see many other options beyond transparency and price controls.
“I don’t see alternatives,” he said. “We have rates going through the roof.”