Government is Taking Aim at Price Transparency in Healthcare

Healthcare Price Transparency

What impact does pricing have on consumer behavior? It depends on who you ask. On one side of the table, government officials believe patients want and need to understand what they will be required to pay before a procedure to help them control their own costs and, ultimately, drive down market costs. The other side claims this burdensome “paperwork” does not help patients make decisions on where to get medical treatment and actually drives up costs.

There has been a flurry of activity recently related to price transparency. As the government proposes rules to make pricing more visible, the healthcare industry is fighting back. While we won’t know for a couple of months yet how this will pan out exactly, there is one thing health care organizations should count on – you should expect to see regulations around price transparency in January 2020.


The President’s Executive Order

President Trump signed an executive order to Improve Price and Quality Transparency in Healthcare in June that looks to put patients first. The order requires that hospitals disclose actual costs upfront, including negotiated rates, for many common tests and procedures offered.

His goal is for patients to have enough information about their out-of-pocket costs to choose whatever healthcare option is best for them. That means they need to know what they will be billed in advance. The department of Health and Human Services (HHS) has been tasked with developing policy and the rules requiring hospitals to disclose their pricing in an easy-to-read format for patients. Detailed requirements won’t be ironed out until November.

2020 OPPS Proposed Rule

A few days later in June, HHS’ Centers for Medicare & Medicaid Services  (CMS) released proposed rule revisions to the Medicare hospital outpatient prospective payment system (OPPS) for 2020. The policy, which was initially implemented in January, requires hospitals to post online a list of standard charges. However, it did not include penalties for not complying.

In light of the executive order, and including feedback from stakeholders, the new update includes:

  • Definitions of “hospital,” “items and services,” “service packages,” “standard charges” and “gross charges”
  • Penalties for noncompliance of $300 per day capped at $100,000 a year
  • Required posting of 300 shoppable services; 70 of which are identified by the rule
  • Payer-specific pricing information showing the charge negotiated with a third-party payer

“Standard charges” for all items and services must be made public, via a machine-readable file on the internet. It needs to include billing/accounting codes as well as a description of the service. The payer-specific charges for 300 “shoppable” services like x-rays, lab tests, cesarean delivery, etc. must be shared and have to include ancillary services the hospital typically provides with the shoppable service.

Right now, CMS expects enforcement to come from complaints made to its organization, but they are also considering conducting audits of hospital websites themselves. The agency is seeking comments on both enforcement and penalty structure through September 27, 2019

Georgia Forms Healthcare Task Force

In the meantime, more price transparency regulation could be brewing at the state level.

Georgia Lieutenant Governor Geoff Duncan recently named a healthcare task force to discuss price transparency issues and how to move forward statewide. Their goal is to identify improvements to tackle both cost and access burdens to healthcare in the state.

The committee will meet three times before the next legislative session begins in January 2020. The first meeting happened earlier this month and the next two are set for October 9 and November 5.  The committees’ findings and recommendations will most likely be used to inform any newly-written legislation that comes out of the legislature in Spring 2020.

Now is the Time to Prepare

With so much discussion and regulation happening around price transparency, it’s extremely likely that healthcare organizations will need to be price transparent, in some format, beginning next year. Can you afford to wait until November to see what HHS comes up with?

Waiting will give you less than two months to figure out how to comply – a task that will be a heavy lift for staff, assuming you even have the capacity and a deep understanding of the regulations. The fines will begin adding up at the first of the year and, depending on the size and financial fitness of your organization, maybe too much for your budget to take on.

It’s best to start looking at price transparency now and begin preparing for what is being proposed so that you can hit the ground running with whatever makes the final regulations on day one.

For more information, contact Healthcare Advisory Principal Valerie Barckhoff.

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