CMS Proposes to Ease, but Not End Hospital Price Transparency

If you’re a hospital lab administrator, you’ll probably be happy to learn that the Biden administration is proposing to repeal some of the more troublesome Trump price transparency rules relating. But before you pop the champagne corks, recognize that what CMS wants to do is not completely end but just modify the price transparency rules. Bottom Line: Price transparency will remain a thorn in the side of hospitals, only the specific rules and protocols will be different.

CMS Eliminates Cost Reporting Obligation

Under the Trump rule, hospitals were required to post their privately negotiated Medicare Advantage contract rates in their Medicare cost reports. On April 27, 2021, CMS issued a proposed rule eliminating this rule for the Inpatient Prospective Payment System for fiscal year 2022, which begins Oct. 1, 2021, eight months after the agency finalized the controversial rule as part of the federal push to enhance transparency in hospital pricing. CMS said it’s getting rid of the requirement because it could impose an “unnecessary burden on hospitals,” and estimates it could reduce the administrative burden on hospitals by approximately 64,000 hours. If this change is finalized, it would be retroactive to Jan. 1, 2021, when the hospital price transparency rule went into effect. (For an analysis of the rule, see NLR, Jan. 29, 2021)

Industry Reaction

Hospitals had lobbied hard for the change and are cheering the new rule. “Based on our initial review, we are very pleased CMS is proposing to repeal the requirement that hospitals and health systems disclose privately negotiated contract terms with payors on the Medicare cost report,” noted American Hospital Association (AHA) Executive Vice President Tom Nickels in a statement. “We have long said that privately negotiated rates take into account any number of unique circumstances between a private payor and a hospital, and their disclosure will not further CMS’s goal of paying market rates that reflect the cost of delivering care. We once again urge the agency to focus on transparency efforts that help patients access their specific financial information based on their coverage and care.”

Takeaway

The proposed rule could signal that CMS is going to give hospitals some leeway on price transparency requirements, but experts say it’s unlikely that that the government will completely back down from its goal of price transparency.