The US Federal Government has demonstrated serious interest in price transparency in the healthcare sector. The most recent example is the new rule for hospital pricing, as promulgated by the Centers for Medicare and Medicaid Services (CMS) Federal Regulation 45 CFR Part 180 subchapter E. This new Regulation has received…
Wait for it…
Bi-partisan support.
Remember that term?
Scope Of The Rule
The final rule has a particular provision that defines “standard charges” within the context of the rule. According to section 2718(e) hospitals are required to publish detailed hospital charges in 5 categories.
Gross charges: this refers to the non-discounted price for goods and services, just the way they reflect in each hospital’s chargemaster;
Discounted cash prices: An amount that individuals who pay (without insurance) are charged.
Payer-specific negotiated charges: Any rate that the hospital has negotiated with a third-party payer (such as, an insurer) for goods or services offered in such hospital;
De-identified minimum negotiated rates: This refers to the lowest flat rate which a hospital has negotiated across ALL of its third-party payers, without any identification of the payer;
De-identified maximum negotiated rates: This refers to the highest flat rate which a hospital has negotiated across ALL of its third-party payers, without any identification of the payer;
Will hospitals comply?
They are already complying. Do Hospital Chief Compliance Officers or CFO’s want to run afoul of their typically largest customer – CMS? Certainly not.
Compliance is growing daily, with over 22% of hospitals complying as of April, 2021. When CMS begins strict enforcement, hospitals can be fined as much as $100,000 per year – a heavy cost while also “thumbing their noses at” their biggest customer, which can also be the literal lifeblood (pun intended) of rural hospitals sometimes.
It is important to note that the wordings of 2718(e) are interpreted to confine the chargemaster rule to hospitals. While there’s a bit of controversy as to the scope of application, the CMS has come to the conclusion that the new rule cannot be imposed on physicians who are not directly employed by any hospital and ambulatory surgery centers (ASCs).
While these chargemaster rules may be confined to hospitals, its relevance is not. Health insurance companies, hospitals and hospital groups, corporations, financial services firms, price comparison/lead generation businesses, researchers, as well as government agencies are continually finding this information valuable to compete in 2021 and beyond.
Supreme Court Justice Louis Brandeis is quoted in a 1913 Harper’s Weekly article; “Sunshine is said to be the best disinfectant.” As the “chargemaster transparency” rule is rolled out, everyone will soon be able to see prices that Americans are paying for hospital charges. Will this lead to a single payer system? Will this lead to competition between hospitals and insurance firms? Only time will tell, but we are watching closely.
Healthcare Data Analytics, Inc (www.hcpricing.com) is bringing transparency to US healthcare costs. Its Soleil platform provides comprehensive reported hospital pricing, allowing insurance companies, hospitals, corporations, research firms/universities, attorneys, financial services firms, government and others to finally analyze and track hospital pricing, in an effort to gain control of US healthcare costs.