Price transparency rule could lead to narrower networks, experts say
The Trump administration’s price transparency rule is meant to empower consumers by letting them know up front what they’ll be expected to pay for medical services. Consumers are often stuck with bills that leave them raising their eyebrows and scratching their heads, and the Centers for Medicare and Medicaid Services hopes the rule requiring hospitls to disclose their negotiated prices with consumers will prevent that from happening.
But will it? That’s a key question as the industry looks forward to 2020, with the rule slated to go into effect in 2021.
Many aren’t convinced that the rule will have its intended effect. The American Hospital Association and others have challenged the rule in court, and experts are saying it misses the mark despite its good intentions.
Becky Greenfield, attorney with Miami-based boutique firm Wolfe Pincavage, said that while the rule’s heart may be in the right place, the prices that are required to be published don’t necessarily reflect what consumers’ out-of-pocket costs will be, which has the potential to only increase confusion.
A patient’s chosen hospital could be out of network, which means there isn’t one set price for what they’re going to be paid aside from what is usual and customary, said Greenfield. Even hospitals in a network with a payer such as Blue Cross Blue Shield could have multiple contracts with that payer. And the goal of pursuing value-based initiatives may be at odds with what the rule is trying to accomplish.
“I think it’s admirable what the government is trying to do,” Greenfield said. “There’s a proposed rule in conjunction with the formal rule — the transparency in coverage rule — and that rule has to do with the payers. That’s in the proposed rule stage. I think that the administration has goals, and this is a big leap to get toward that goal, which is what everyone wants: for consumers to know what they’re going to pay. But I don’t think they really considered that missing link. Some of these issues may be addressed in the proposed rule.”
ONUS ON PAYERS?
There are two situations, said Greenfield, in which a patient could really lose their shirt. The first is emergency services.
“The second is when you go to a facility in your network and you get anesthesia services or other services from physicians who aren’t in your network,” she said. “It’s important to note that in those two situations, this rule really has no impact, because when you have an emergency you’re not going to be looking online and comparing prices. You’re not thinking about price.
“Physicians out of network are required to disclose their pricing information and in both of those situations the hospital isn’t the one that necessarily knows what the out-of-pocket costs are, and they’re certainly not the ones who create the contract that defines what the out-of-pocket costs are based on deductibles and copayments and coinsurance. So in all situations, but especially in emergency situations, the best entity to tell a patient what the out-of-pocket costs are, are the payers.”
Kerry Martin, CEO of revenue cycle technology company Vitalware, agreed that the onus should be placed on the payer. They’re the ones with the most data and the ones getting paid by the consumers themselves, he said — and if he were authoring the rule, he would put a greater percentage of the weight on payers’ shoulders.
“To me, this is a payer responsibility,” he said. “The payer knows my claim, my deductible, my copay, what my out-of-pocket is going to be, whether I’m using a hospital that’s in network or out of network. The payer knows all that stuff. That’s where this needs to reside. But you’re also asking payers to divulge what they’ve negotiated with insurance companies. So to a certain extent, you’re trying to remove the capitalism out of healthcare. That may not be fair to all those hospitals trying to educate students to become doctors, and those doctors have much higher costs because they’re teaching students at the same time. … It kind of puts the hospital in the middle of all this.”
On the hospital side, he said it makes more sense for them to be open about what typical procedures cost from a charge perspective, and to say they’ll charge payers X amount of money for a shoppable procedure.
“You’re not going to shop around on your way to the emergency room, so it’s things that will be shoppable,” said Martin about his hypothetical price transparency approach. “Hospitals put out what typical charges are — a high and low range, typical reimbursement. The patient understands what the reimbursement is, and I think you have a typical range of out-of-pockets. And if I want more succinct data than that I should go to my payer.
“If we’re going to capitalize healthcare, we absolutely have to allow that negotiation to continue, and continue behind closed doors,” he said. “The government can’t get involved in that.”
What vexes Martin especially is the perceived misunderstanding on CMS’ part when it comes to price vs. charges. Much of the language in the rule, he said, focuses on negotiated charges, yet hospitals don’t negotiate charges with the payers, he said. According to Martin, there is in fact no such thing as a negotiated charge — indicating that those who crafted the rule may not fully understand the complexities of the issue.
WHERE THIS LEAVES HOSPITALS
In the proposed rule Greenfield mentioned, payers would be required to provide real-time access to cost information with an online tool, allowing consumers to obtain estimated out-of-pocket costs for various services. Current tools that purportedly do the same thing aren’t typically that accurate, but if payers can get a handle on it, she believes they’re the best entities to shoulder the responsibility.
In feeling out some of her hospital clients, she found that some are having internal meetings to try to rally the troops, but as of yet there hasn’t been a deep dive into the cost picture. That, said Greenfield, would require involvement from hospital IT departments and possibly the use of outside data — a lot of it. Which means it would be a lot of work to get sites up and running that have all of the relevant data presented in a consumer-friendly manner.
“It could have an impact on negotiations with payers,” she said. “There are some tools that payers use currently to see what hospitals are getting from other payers, but this would be an easy way for them to see who are the cheapest providers, and I’m sure they’ll leverage that in their negotiations. These prices may not take into account whether the hospital is a specialty hospital or a safety net hospital, or the patient satisfaction for that hospital. Those are all value things that aren’t reflected in prices.”
That in turn could lead to narrower networks, and since hospitals may not want to accept a lower rate, it ultimately may end up hurting the consumer.
Another potential impact is that it could expose hospitals to greater liability in terms of misrepresentation claims. Patients could potentially sue a hospital, claiming the latter provided incorrect information; alternatively, the hospital could open itself up to that risk if it goes out of network in the middle of the year.
“I’m hopeful the rule as it stands is not going to be what comes out of this,” said Greenfield. “After reading the complaint from the AHA and other plaintiffs, I think they have some pretty strong arguments, and I hope the court considers those arguments and imposes the injunction. This may just not be the correct forum for a huge change like this.”
Martin was blunt in his assessment of the future.
“(CMS) has put themselves in a position of antitrust, unfair trade practices,” he said. “The next couple of years will be filled with lawsuits.”