How providers, patients could benefit from CMS’ newly instated price transparency rule 

Medical bill healthcare cost price patient spending
The Centers for Medicare & Medicaid Services finalized plans to mandate price transparency in August. (Getty/everydayplus)

With the new year, hospitals are officially mandated to post their list prices online for patients to review. 

The Centers for Medicare & Medicaid Services included the price transparency requirement in its Inpatient Prospective Payment System (IPPS) rule, which was finalized in August. As of Jan. 1, every hospital in the country is required to make the price for each of its services accessible via its website. 

CMS gave providers limited parameters on how and where to present their data, aside from the fact that the chargemaster lists must be machine-readable. And that, experts say, is the crucial, overlooked piece in this policy. 

Free Daily Newsletter

Like this story? Subscribe to FierceHealthcare!

The healthcare sector remains in flux as policy, regulation, technology and trends shape the market. FierceHealthcare subscribers rely on our suite of newsletters as their must-read source for the latest news, analysis and data impacting their world. Sign up today to get healthcare news and updates delivered to your inbox and read on the go.

Michael Abrams, co-founder and managing partner at Numerof & Associates, told FierceHealthcare that this stipulation could allow creative third parties to build effective comparison tools for price shopping that would be more useful to patients than simply downloading a price list. 

“I think it’s a huge step forward,” he said. “This could really revolutionize this area.” 

RELATED: New app promises price transparency, quick connection between patients, specialists 

That said, there are plenty of skeptics. A recent poll from PMMC, a revenue cycle management firm, and Healthcare Business Insights found most providers (92%) have concerns about the policy. 

The main problem? Hospitals are worried patients could be misinformed or confused by list price data, which doesn’t reflect what they’d pay out of pocket, and that could lead to a public image problem. 

In addition, recent research suggests patients don’t flock to price transparency or comparison tools, because they find them confusing. Despite calling for access to such tools, just 1 in 5 patients makes use of them, Public Agenda found. 

Other groups, such as PwC, have called for hospitals to move away from posting chargemaster data as the sole source for transparency. Based on list prices alone, patients are more likely to choose nontraditional sites of care, PwC’s Health Research Institute said, which can hurt hospitals’ bottom lines. 

CMS is encouraging, but not requiring, hospitals to post more in-depth pricing and quality data under the rule. There are no exempted providers, however, and prices for all services offered must be included. 

RELATED: Looking for affordable care? Stay away from San Jose 

Abrams said providers may be required to do more explaining of list prices than they would if patients had immediate access to data on out-of-pocket costs, but even this amount of information empowers them to ask important questions. 

“I think it will prompt conversations about why prices are so high,” he said. “Quite frankly, it’s going to put providers on the back foot. I think it will force the industry to behave more like other market-based players—and I think that’s a good thing.” 

Abrams added that the increased price transparency could also be a boon for providers that offer high-quality care at the best value, and it will put a spotlight on the outliers who are charging significantly more than their peers. 

Hospital groups didn’t stage a major fight against the transparency measure, and Abrams said they may see the benefits in the program and that it’s a crucial step toward a more value-based system. 

“It’s not magic. It’s not able to solve the cost and quality problem by itself,” he said, “but it is a critical step in moving toward a market-based model that does reflect price and quality.”

Suggested Articles

To build scale and drive greater savings, providers in some regions are banding together in statewide Medicare accountable care organizations. 

CMS issued updated Medicaid guidance on regulations for state-run home and community-based services.

Regulators warn that suggestions to address surprise bills, such as rate setting and payment caps, come with significant downsides for states.