CMS Administrator Seema Verma scoffs at hospital execs' arguments against transparency

CMS Administrator Seema Verma (right) is interviewed by Forbes chairman and CEO Steve Forbes at the Healthcare Summit in New York City. (Forbes/GettyImages)

NEW YORK CITYCenters for Medicare & Medicaid Services (CMS) Administrator Seema Verma pushed back on hospitals' resistance to publishing payer-negotiated prices, as now mandated by a federal rule.

Verma also warned that hospitals will face fines for not complying with the new rule.

Hospitals have balked at the cost of implementing the rule, which goes into effect in 2021, and warn the regulation could harm price competition. As anticipated, major hospital groups and several individual facilities filed a lawsuit charging the Trump administration’s price transparency rule is “unlawful, several times over.” 

Asked about hospitals' response to the price transparency rule while being interviewed at the Forbes Healthcare Summit on Thursday, Verma replied, "Is it can’t do it, or won’t do it?"

"People are asking for price transparency. People are frustrated and that’s why we're hearing calls for Medicare for All," she said.

RELATED: CMS releases proposed and final rules to make hospitals and insurers post prices, cost-sharing information

Verma said hospitals are "hiding behind" the argument that patients will be confused if hospitals publish payer-negotiated rates.

"Let's just put it out there. Let patients determine what they need, give them the ability to shop around," Verma said.

The Trump administration released a final rule last month requiring hospitals to publish payer-negotiated prices for 300 shoppable services and a proposal to mandate insurers post online real-time cost-sharing information. 

Hospital's federal lawsuit against CMS was announced Wednesday, the day before Verma's interview at the Forbes healthcare conference.

“Hospitals and commercial health insurers keep the rates they privately negotiate confidential for good reason: it would undermine competition if they were required to be disclosed publicly and blunt incentives for health insurers to participate in innovative arrangements,” according to the lawsuit filed in the U.S. District Court for the District of Columbia.

Top insurance industry groups are asking for more time to respond to the proposed rule that would force them to provide real-time out-of-pocket cost estimates. America’s Health Insurance Plans and the Blue Cross Blue Shield Association wrote to the Trump administration seeking a 90-day delay to a comment period for the proposed rule released last month. Comments are due in January and the groups want the period postponed until April.

RELATED: Insurers press for more time to respond to transparency rule, say changes could disrupt market

Verma said the strategy around price transparency is to bring more competition into the marketplace by using free-market principles proven in other sectors of the economy.

"It’s not only about trying to lower costs and create more competition, but also allowing providers to compete on cost and quality and it's about making the system work better for patients," she said.

Verma cited examples of how price transparency initiatives have brought down prices in states like New Hampshire. Kentucky also experimented with price transparency for state employees which resulted in lower prices, according to Verma.

Hot topic

The topic of price transparency sparked at least one heated debate at the Forbes event.

During a panel discussion earlier in the day, Michael Dowling, president and CEO of New York-based health system Northwell Health, said price transparency sounded good in theory. "But our chargemasters for private payers represent us compensating for how much public payers underpay us," he said.

RELATED: Hospitals question how to implement CMS transparency rule

"It’s tricky because the list price doesn’t represent how much we are being paid," Laurie Glimcher, M.D., president and CEO of Dana-Farber Cancer Institute said.

Aledade co-founder and CEO Farzad Mostashari, M.D., then quipped: "The only thing that makes me think that transparency might reduce costs is hospital opposition to it."

Dowling called Mostashari's take on the issue "simplistic and naive."