Analysis finds shoppable hospital services at center of transparency rule a small part of employer plan spending

Medical bill healthcare cost price patient spending
A new analysis found that spending for shoppable hospital services, which are the subject of a new transparency rule, made up a small amount of Medicare spending in 2017. (Getty/everydayplus)

The shoppable healthcare services that are the subject of the Trump administration’s controversial hospital transparency rule made up a small amount of spending from employer health plans in 2017, a new analysis finds.

The analysis released Thursday from the Health Care Cost Institute questions the impact of the Centers for Medicare & Medicaid Services’ final rule to require hospitals to post the payer-negotiated rate for 300 shoppable services.

CMS calls a shoppable service as anything that can be scheduled by a patient in advance. The goal of the rule is to help consumers pick the best price among hospitals for a shoppable service, but hospitals question the feasibility of the rule and the cost of implementing it. 

The final rule requires that hospitals must put the payer-negotiated rates for certain services online in a searchable format by 2021. CMS specifies 70 services that hospitals must make the rates available for and the remaining 230 will be selected by hospitals, the analysis found.

The institute’s analysis found that the “70 CMS-specified shoppable services totaled 12% of 2017 medical spending (excluding prescription drug spending from the denominator) among individuals with employer-sponsored insurance.”

The 70 services also made up 16% of out-of-pocket medical spending.

The analysis also looked at the overall employer-sponsored insurance spending on 429 diagnostic codes for shoppable services.

“We estimate that approximately 36% of 2017 total spending (including prescription drug spending) and 43% of out-of-pocket spending was attributed to shoppable services,” the analysis said.

The study suggests that consumer-focused transparency efforts “alone are not likely to substantially alter the trajectory of healthcare spending,” said Katie Martin, senior fellow for the institute. “Although the amount of total health care spending that is shoppable is not trivial, our findings point out the potential limitations of consumer-focused initiatives.”

CMS Administrator Seema Verma conceded to reporters when the final rule was released last year that it will likely not have a large financial impact. 

"It is a very tiny percentage of overall revenue, less than 1%," Verma said.

It remains unclear whether the transparency rule will go into effect next year. A cadre of hospital groups has filed a lawsuit challenging CMS’ authority to install the rule.

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