Survey: Majority of hospital execs believe final CMS transparency rule will face court challenge, delay

Medical bill healthcare cost price patient spending
A recent survey of hospital leaders found that executives believe a proposed rule for price transparency will be delayed and challenged in court. (Getty/everydayplus)

A majority of hospital leaders who responded to a recent survey believe the Trump administration’s transparency rule will be delayed or challenged in court and as a result are not preparing.

The survey from the healthcare consulting firm Advis of 161 hospital and health system leaders, provided exclusively to FierceHealthcare, showed that 65% believe there will be major changes to the proposed rule that calls on hospitals to post the insurer-negotiated rate for certain services.

The transparency provision was included in the latest Centers for Medicare & Medicaid Services’ (CMS') hospital outpatient payment proposed rule, which must be finalized by Nov. 1 and go into effect Jan. 1, 2020.

But hospital leaders don’t seem too scared about the short turnaround to implement the transparency provision. The survey found 57% believe that any final rule will be challenged in court, likely sparking a delay. A likely legal point of contention is how the rule would impact contract laws by releasing the prices.

“When you negotiate rates with the Blues or Aetna, it is a private contractual process,” said Monica Hon, Advis’ vice president. “A lot of times these contracts ensure that this is protected.”

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Several other CMS rules have been challenged successfully in court, including a recent decision by a federal judge to strike down the agency's site-neutrality payment rule. Hospitals also are banking on CMS postponing implementation of any final provision because of CMS’ track record.

“That is just historically speaking the way we are used to new rules,” Hon said. “They are gambling on the fact they will have some time to come up with a price list if that were to go into effect.”

The proposed rule requires hospitals to put the payer-negotiated rate for shoppable services in a searchable format online. The proposal would fine a hospital $300 a day for not putting up the list. CMS goes a step further than a current requirement for hospitals to post their list prices online.

Among the leaders surveyed, 44% are not doing anything to get ready for the new requirement until they see the final rule. Another 37% are using internal resources to build the price transparency tools, and 27% are organizing their payer contracts and rate sheets.

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Some hospital leaders said they are confused about how to move forward. 

“Our system team and I decided there is not enough information in the proposed rules,” said Mark Kelly, administrator at Regional One Health Extended Care Hospital in Memphis. “Frankly more questions than answers arise when reading these rules to realistically come up with some numbers."

He also questioned whether small hospitals have “the manpower to put together what is being proposed.”

Hospital executives are also skeptical that the proposal would lead to the intended result of empowering consumer shopping. Only 45% of respondents believe that consumers will actually shop for healthcare services as they do for other types of services, and 54% believe they will not.

Another 39% believe the rule will contribute to greater migration of certain services from inpatient to outpatient settings.