CMS wants hospitals to post their rates. But hospitals aren't sure how

While the Trump administration wants hospitals to begin posting "shoppable" prices online starting next year, some hospitals are scrambling to figure out how they'll be able to meet such a requirement.

Some officials have complained that they do not have contracts automated in order to post such rates. Others say it will create major problems as they release payer rates with little context for the patients who are supposed to benefit from such transparency.

The Centers for Medicare & Medicaid Services (CMS) proposed the requirement hospitals post payer-negotiated rates for certain shoppable services starting on Jan. 1, 2020, as part of its outpatient payment rule earlier this month. The proposed rule is open for comment now, and CMS must release a final rule by November.

The rates must be available in a consumer-friendly format online and be searchable.

RELATED: As hospitals post price lists, consumers are asked to check up on them

(Lia Shaked/Questex)
CMS projected in the proposed rule that the cost for implementing the new transparency requirement would be around $1,000 per hospital. However, some hospitals are balking at that figure, because their contract rates with insurers are not automated or online.

“Yesterday, I spoke with a 700-bed hospital in the Midwest that has over 600 contracts,” said Rick Louie, managing director of data analytics consulting firm Hospital Pricing Specialists. “They said it’s virtually impossible to display every contract rate in a searchable form, regardless of infinite time and money. If a 700-bed hospital has these issues, the cash-constrained rural hospitals don’t have a chance.”

The issues

There are “too many nuances with each contract,” said Louie, whose company offers pricing reports to hospitals. Another major issue is how to explain the context of payer-negotiated prices, such as why an insurer pays a certain rate at a hospital.

For example, UnitedHealthcare may give an HCA Healthcare hospital a good price for a cardiac procedure because they “have great outcomes and get a ton of volume from United,” he added.

A hospital executive would have to “get this out in an easy to understand format, but you are giving someone a loaded gun and not really showing people how to use it,” said Derek Pierce, managing director of consulting firm Healthcare Management Partners. “This ultimately will come out, but I think it is going to take a while to get the message as to what these folks are looking at.”

Several hospital executives detailed problems with implementing the requirement to CMS officials during a recent stakeholder call, including the issue with automating contracts. Smaller hospitals, in particular, will be hit hardest. Agency officials responded by calling for the hospitals to comment on the proposed rule with their concerns.

“We see other hospitals that have done a great job and put other websites,” CMS Administrator Seema Verma told reporters during a roundtable earlier this month. She mentioned websites made by larger systems such as the Mayo Clinic or Intermountain. 

But hospital groups such as the Federation of American Hospitals have voiced major concerns with the transparency policy. Such opposition could pressure CMS to hold off on implementing the requirement for 2020.

“I think it will ultimately come about within this administration, but I think once they start trying to get into the details it will take longer to get to the finish line,” Pierce said.

RELATED: CMS looking to define enforcement for its hospital price transparency rule

Hospitals are starting to take transparency seriously, especially with the requirement starting this past January that they post list “chargemaster” prices online.

CMS said when it released the rule that the new requirement comes with a steep penalty of $300 a day for each day the facility is not in compliance. Verma said when the payment rule was released that the agency wasn’t happy with the compliance of the "chargemaster" transparency requirement.

But Louie said hospitals are working fast to implement that requirement, knowing that the push for transparency is evident.

“The old argument that 'charges don’t matter' doesn’t fly when a patient is holding up a bill for an X-ray that is 10 times higher than what a neighboring hospital charges,” he said. “Negative pricing stories like these are becoming more prevalent, especially with social media, and cause irreparable damage to a hospital’s reputation.”