Hospitals, insurers signal major fight over CMS price transparency proposal

Health insurance form payer plan enroll
Insurers and hospitals both are fighting a new Centers for Medicare & Medicaid Services proposal to disclose privately negotiated rates for certain hospital services. (Valeriya/Getty)

Hospitals and insurers are signaling a major fight with the Trump administration over a proposed rule to reveal negotiated prices for items and services.

Industry groups for both providers and payers came out vehemently opposing parts of the proposed outpatient payment rule released late Monday by the Centers for Medicare & Medicaid Services (CMS). Nestled in the rule is a proposal to make hospitals publish online starting next year the list and negotiated prices for “shoppable” hospital services and products such as clinic visits or lab tests.

“Disclosing the negotiated rate between insurers and hospitals will not help patients make decisions about their care,” according to a statement from five hospital groups released late Monday. “Instead, this disclosure could harm patients by reducing patient access to care.”

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The American Hospital Association (AHA), America’s Essential Hospitals, Children’s Hospital Association, the Federation of American Hospitals and the Association of American Medical Colleges signed the statement.

RELATED: HCA Healthcare weighs in on CMS price transparency proposal during earnings call

AHA President and CEO Rick Pollack added in a separate statement that price disclosure could “limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry.”

Pollack did not elaborate on what specific anticompetitive behavior could arise.

The AHA may pursue legal options if the proposal is finalized, an association spokesperson said.

Hospitals have an unlikely ally in the insurance industry, which also isn’t so happy about the prospect of publishing negotiated rates. "Disclosing such rates will make it harder to bargain for lower rates, which will create a 'floor'—not a ceiling—for the prices that hospitals would be willing to accept,” said Matt Eyles, president and CEO of the insurance lobby group America’s Health Insurance Plans, in a statement.

But while hospitals and insurers ruminated over the proposal, some physicians were happy.

“By arming patients with more information, and transparency about hospital costs, CMS is helping to shine a light on major site-of-care differences,” said Ted Okon, executive director of the oncology advocacy group Community Oncology Alliance.

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

The goal of the proposal, which would go into effect Jan. 1, is to spur transparency in the hospital industry by enabling consumers to compare prices. Hospitals will have from the time the rule is finalized to Jan. 1 to publish the list in an easy-to-understand and searchable format online.

The rule also has a stiff penalty for noncompliance, with hospitals facing a $300-a-day penalty for each day they don’t have the list up.

CMS Administrator Seema Verma said the stiff penalties were added to ensure compliance from hospitals after lax compliance with a requirement starting this year for facilities to post only list prices online.

Hospitals shouldn't wait to get started on gathering their prices in the hopes that the administration backs off the rule, said Michael Abrams, managing partner of the consulting firm Numerof & Associates. 

"There is enough political pressure on the administration to do something that makes a meaningful difference on the cost of healthcare that I don't think they are going to back away from this," he said.

But Abrams is doubtful that hospitals will get a jump-start on complying with the rule.

"I expect a lot of resistance," he said. "Until that has dissipated many organizations won’t do anything. They will hope in vain that somehow this will go away."

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