CMS Finalizes Rule on Hospital Price Transparency and HHS Proposes New Rule on Health Plan Price Transparency
On Friday, November 15, 2019, CMS announced a final rule requiring hospitals to make public various gross and contract-negotiated charges. HHS, in conjunction with the Department of Labor and the Treasury Department, also announced a new proposed rule that would require health plans to make public various prices as well as develop and maintain a cost estimator tool. The first, the Final Rule for 2020 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) Price Transparency Requirements for Hospitals to Make Standard Charges Public (the Final Rule), is the culmination of an effort by the Trump Administration to increase hospital price transparency since the issuance of an Executive Order earlier this summer. The Final Rule will require hospitals to post their gross charges and payer-negotiated rates on the internet, as well as payer-specific rates for 300 “shoppable” services, i.e. non-emergency services capable of advanced planning. The new proposed rule, by contrast, called “Transparency in Coverage (the Proposed Rule),” would require health insurance companies and group health plans to disclose on a public website their negotiated rates for in-network providers as well as allowed amounts paid for out-of-network providers. Health insurers would also be required to offer a transparency tool to provide members with personalized, out-of-pocket cost information for all covered services in advance.
Final Rule on Hospital Price Transparency, Effective January 1, 2021
Earlier this year, on June 24, 2019, President Trump issued an Executive Order directing the Secretary of Health and Human Services to, among other things, propose a regulation “to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services.” The Executive Order noted that the proposed regulation should require both “the posting of standard charge information for services, supplies, or fees billed by the hospital” and “require hospitals to regularly update the posted information and establish a monitoring mechanism for the Secretary to ensure compliance…”
On July 29, 2019, in response to the Executive Order, CMS proposed a regulation requiring hospitals to make public their “standard charges,” defined as two types of charges: gross charges (i.e., chargemaster rates) and payer-specific negotiated charges for all items and services provided by the hospital. The proposed rule also contemplated requiring hospitals to make these charges available on the internet in a machine-readable format that includes additional information such as common billing or accounting codes used by the hospital and a description of the item of service. Further, the proposed rule contemplated making public payer-specific negotiated charges for common “shoppable services” in a manner that is “consumer-friendly.” “Shoppable services” are services that can be scheduled by a healthcare consumer in advance. “Consumer-friendly” means the hospital charge information must be made public in a prominent location online, or in written form upon request, that is easily accessible, without barriers, and searchable. It also means the service descriptions are in “plain language” and the shoppable services are displayed and grouped with charges for any ancillary services the hospital customarily provides with the primary shoppable service.
After the public comment and notice period, CMS issued the Final Rule on November 15, 2019. The Final Rule will require all hospitals in the United States—not just those paid under the Medicare OPPS—to make “standard charges” available to the public and provide CMS authority to enforce those requirements. The Final Rule departs from the proposed rule to add additional categories of “standard charges” that a hospital must disclose, so that for each item of service a hospital must publish its: 1) gross charges; 2) discounted cash prices; 3) payer-specific negotiated charges; 4) de-identified minimum negotiated charges; and 5) de-identified maximum negotiated charges. Hospitals will be required to disclose the standard charges for all items and services, including supplies, facility fees and professional charges for employed physicians and other practitioners.
The Final Rule also requires hospitals to post payer-specific negotiated rates online in a searchable and consumer-friendly manner for 300 services for which patients are likely to shop. Seventy of the services are stipulated in the Final Rule. Hospitals can choose the other 230 services they post online. Hospitals that fail to publish the negotiated rates online could be fined up to $300 per day.
The Final Rule is effective January 1, 2021.
New Proposed Rule Regarding Health Plan Price Transparency
The Proposed Rule, Transparency in Coverage, would require health plan issuers in the individual and group markets to disclose cost-sharing information to a beneficiary or his or her authorized representative of such individual’s cost-sharing liability for covered items or services furnished by a particular provider. Under this Proposed Rule, plans and issuers would be required to make this information available on an internet website and, if requested, through non-internet means, thereby allowing a participant, beneficiary, or enrollee (or his or her authorized representative) to obtain an estimate and understanding of the individual’s out-of-pocket expenses and effectively shop for items and services. Health plans would be required to create and develop an online tool that consumers could use.
The Proposed Rule also includes proposals to require plans and issuers to disclose in-network provider negotiated rates, and historical out-of-network allowed amounts through two machine-readable files posted on an internet website, thereby allowing the public to have access to health insurance coverage information that can be used to understand health care pricing.
HHS (together with the Treasury and Labor Departments) also proposes amendments to its medical loss ratio program rules to allow issuers offering group or individual health insurance coverage to receive credit in their medical loss ratio calculations for savings they share with enrollees that result from the enrollee’s shopping for, and receiving care from, lower-cost, higher-value providers.
Comments to the Proposed Rule must be received by January 14, 2020. The administration is seeking comments in particular on whether insurance companies should be required to make the pricing information disclosed through an application programming interface, software that enables two computer programs to talk to each other. They also are asking for feedback on how quality information can be incorporated into these rules.
Reporter, Ariana Fuller, Los Angeles, +1 213 443 4342, firstname.lastname@example.org.
The Queen's Medical Center Wins Dismissal With Prejudice Against Complaint by Health Plan Involving Emergency Services Billing – On October 31, 2019, the United States District Court for the District of Hawaii dismissed with prejudice a lawsuit filed against The Queen’s Medical Center (Queen’s) by Kaiser Foundation Health Plan (Kaiser). Queen’s is the largest hospital system in Hawaii. King & Spalding assisted in obtaining the complete dismissal of Kaiser’s lawsuit against Queen’s.
Queen’s and Kaiser were parties to a hospital services agreement that expired on May 30, 2019. The parties were unable to come to terms on a new contract. Kaiser filed a complaint on June 12, 2019, seeking declaratory and injunctive relief against Queen’s regarding Queen’s billings for emergency services provided to Kaiser members. Kaiser argued that the same rules that govern out of network emergency services in California should govern in Hawaii. Queen’s moved to dismiss Kaiser’s claims in their entirety. U.S. District Court Judge Derrick K. Watson granted Queen’s motion to dismiss and denied each of Kaiser’s claims with prejudice. This represents a significant victory for Queen’s in a case raising complex issues of first impression under Hawaii law.
To see a copy of the order, please click here.
Reporter, John Whittaker, Sacramento, +1 916 321 4808, email@example.com.
Also In The News
King & Spalding Roundtable – Recalculating: Are the Major Stark, Anti-Kickback and CMP Proposed Rule Changes Taking Us in a New Direction?
Thursday, November 7, 2019
1:00 P.M. – 2:30 P.M. ET
Wednesday, November 20, 2019
1:00 P.M. – 2:30 P.M. ET
CMS and OIG recently proposed the most significant changes to the Stark Law rules, the Anti-Kickback Statute (AKS) safe harbors, and the Beneficiary Inducements CMP regulations that the agencies have offered in recent years. The proposed rules address value-based arrangements, introduce major changes to other key Stark Law concepts and definitions, address the donation of cybersecurity technology and services, and create flexibility to provide patient incentives in value-based arrangements and with respect to telehealth. Click here to read King & Spalding’s Client Alert highlighting the key proposals.
We are hosting a two-part webinar series to discuss these proposals in greater detail, described below. We will cover the opportunities raised by these proposals, as well as how they may impact enterprise risk and future enforcement actions. Our goal is to stimulate thinking about the submission to CMS and OIG of comments on these proposed rules, which are due on December 31, 2019.
- In Part One, we discussed proposed changes other than those relating to value-based arrangements and patient incentives. The topics included the proposed changes to fundamental Stark Law concepts such as taking into account the volume or value of referrals or other business generated, fair market value, commercial reasonableness, and the definition of indirect compensation arrangements. We also addressed proposed changes to the writing requirements, proposed changes to several commonly used compensation exceptions, and proposals related to cybersecurity technology and related services.
- In Part Two, we will discuss proposals related to value-based arrangements and patient incentives. This will include the newly proposed AKS safe harbors and Stark Law exception for value-based arrangements, modifications to existing AKS safe harbors and Stark Law exceptions to address value-based arrangements, newly proposed AKS safe harbors for patient incentives, revisions to the local transportation safe harbor, and a proposed telehealth exception to the Beneficiary Inducements CMP.
You do not have to be a client to attend, and there is no charge. To register, please click here.