Hospitals Price Transparency Rule: Next Stop the Courthouse

Many believe this rule will never see the light of day.

Among other provisions, the hospital price transparency rule pre-published by the Centers for Medicare & Medicaid Services (CMS) last Friday requires online, a publically accessible publication of “standard charges” that apply to 300 of each hospital’s “shoppable” services.

The provision in the final rule that really rocked the industry, when it was first proposed, was the requirement that hospitals publish payer-specific negotiated rates as part of those standard charges. According to the rule, hospitals are to publish the negotiated rates for 300 services for every payer and every payer’s individual plan with which the hospital has a contract.

Remember when you were a kid and your mom told you to clean your room, but all your friends were outside playing, so you shoved all your stuff into your closet or under your bed? You knew that in the long term, it wouldn’t work – your mom would find out soon enough. But in the short term, that perception of a clean room was enough to achieve your short-term goal – going outside to play.

This appears to be the U.S. Department of Health and Human Services’ (HHS’s) strategy behind establishing a requirement that hospitals publish specific payer negotiated rates.

First, HHS knows very well that it is highly unlikely that the requirement will ever see the light of day.

• HHS received over 1,400 comments in response to these transparency requirements first proposed in the July Outpatient Prospective Payment System (OPPS) rule, and we can pretty much assume that most of these were not love letters.
• After the rule was released on Friday, four hospital associations immediately promised litigation.
• The government itself predicted both the intense litigation and the possible negative consequences of such a policy in a number of reports. For instance, in 2015, the Federal Trade Commission (FTC) reported that “disclosing the terms of… health plan contracts might offer little incremental benefit to consumers, but could pose a substantial risk of reducing competition.”

The industry betting class appears to agree that the policy will likely never be activated – stock shares for managed care and hospital companies actually hit a record high on Friday, as the rule was being announced.

So HHS knows that the requirement won’t see daylight, but, like shoving all your laundry and toys under your bed, short-term goals for HHS will be achieved – it’s an election year, and HHS will be able to say it has passed a law that promises, to quote HHS Secretary Alex Azar, “revolutionary changes in our health system.”

Just like you’re able to tell your mother that your room is clean, even when it’s not.

Let’s beat this analogy into the ground, in reference to two other elements in the final OPPS rule published on Nov. 1 – the 340B cuts and site-neutral reimbursement reductions.  

Let’s say your mom finds out about how you stuffed everything under the bed, and tells you to fix it. I was the sort of kid who would do anything I could to avoid cleaning my room, even if I was told multiple times to do it, and even if it meant continually arguing with mom.

This appears to be HHS’s strategy with regard to the reduction in 340B payments and the cuts based on the site-neutral reimbursement policy. According to the OPPS final rule published on Nov. 1, both reductions remain for 2020.

But in both cases, HHS has been told by the courts to stop these reductions – in both cases, HHS has done the equivalent of, “yeah, whatever mom,” and continues to argue, leaning on the plan that it will appeal both cases (and, in the meantime, continue both reimbursement reductions).

To be absolutely honest, I don’t know what happens when a court says that an agency rule is not legal, but the agency keeps executing the rule anyway. Maybe it just bounces around in court for years.

All I know is that, ultimately, I could never get away with it with mom.