Last week was a busy week for price transparency.
The best way to celebrate and digest all this great news? Break it all down and share my team’s reactions. After all, we live and breathe price transparency.
If you’d rather listen to this than read about it, totally cool. You can hear this entire by hitting play, below.
Alright, let’s get into it.
The Proposed Rule will go into effect on 1/1/24
Overall, I’m impressed.
We've spoken with CMS and Congress over the past three years and participated in the MITRE TEP panel referenced in the document. Reading this version of the proposed rule, we can see that CMS has been listening to and learning about commercial reimbursement for hospitals from stakeholders, and we’re thrilled to see it.
The Proposed Rule covers Hospital Price Transparency, including a stated intent to reconcile the Final Rule requiring hospitals to post prices for shoppable services with the No Surprises Act (NSA) and Transparency In Coverage (TiC). These three pieces of regulation aren’t always cohesive, but they all have requirements designed to educate patients on the cost of care before scheduling an appointment. It's interesting to see CMS make efforts toward creating a more consolidated set of regulations.
Data Ubiquity is Coming
I walked away from reading this proposed rule with a few themes. Placed in no particular order, the first is data ubiquity.
CMS’ proposal to have a standard format makes accessing the data easier for all parties. This has plagued hospital price transparency since 1/1/21. When the Final Rule went into effect, hospitals had no standard schema. This made it exceedingly difficult for researchers and third parties to aggregate the data en masse.
It's apparent from CMS's writing that it was hard to aggregate the data and enforce compliance itself. Along with the standard schema elements, this will create a frenzy of macroeconomic competition for folks who have written off the hospital data in the past because it had no set schema.
The proposal clearly attempts to capture the myriad ways hospitals contract with payers. The initial requirement for hospitals to publish data as a dollar amount wasn't enough to truly reflect the complexity of contracts. With the new proposed schema, data will be significantly more precise once (if) the new requirements go into effect on 3/1/24.
Data precision will also come from formal certification of data completeness and accuracy. This reminds me of Medicare cost reporting, which the CFO certifies upon submission. A formal certification of data completeness and accuracy, tied to a transparent standard schema, will create a new level of accountability.
A New Level of Accountability
The Proposed Rule creates a full loop of accountability. The standard schema described by CMS leads to full government enforcement. You can picture the dashboard collecting machine-readable files (MRFs) daily, and CMS will know the answers to questions like:
- “Hey, did this hospital have a file today?”
- “Did the file have these payers?”
- Did the file have rates for surgery, drugs?
And much, much more.
That level of oversight is not possible today, but it becomes possible with what's proposed.
Consumer Choice Improves
We often get questions like, “What does this do for the consumer?” In the past, it's been hard to create a true consumer experience due to negotiation uncertainty. Consumers should be able to choose based on price and certainty. This Proposed Rule would give consumers a choice to go with a certain dollar amount, even if the price might be higher, or the uncertain algorithmic estimate, even if the price might be lower. And CMS provides an example of that in the Proposed Rule.
Pushing The Industry Towards Overall Certainty
If this becomes a Final Rule and HR 4507 (which goes into some new standards for TiC) continues to make its way through additional House committees, the industry will be pushed even further toward simplification, standardization, and overall certainty.
Market forces will bear more heavily on this data, and it will become uncool to have complex algorithms that render costs unknown in advance. This is huge for consumers and great for competition. It’s also great for everybody’s favorite party animal, the actuary. Actuaries will be responsible for creating more standard fee schedules and removing some of the risks that come from the encounter by encountering variations in the complexity of hospital services.
Unintended Consequences of the Proposed Rule
This is a good Proposed Rule as written, but I believe some unintended consequences might arise if it were to go into effect. Let's dig into some of those.
Files will need to be reformatted and columns renamed, and you'll have to publish a new header file now on hospital websites. This will take some work.
Affirmation of contents and the overall accountability
Over the past two and a half years, the industry could hide behind the complexity of publishing rates and ask the government to recognize its good faith efforts to do so.
This law does away with good faith efforts and intent. It creates a full loop of accountability and granularity in what is being published. This is good, but I also recognize that it creates additional burden for hospital and health system leadership.
For example, hospitals must disclose additional details related to specialty drugs, like units and unit type, thanks to standard columns. Previously, they could not include drugs or include a catch-all for drugs. Now, there’s nowhere to hide. This is true not just for drugs, but also any complex algorithmic reimbursement.
Real-time compliance penalties and monitoring
Additionally, CMS has proposed publishing a fuller list of compliance actions. They want to go beyond publishing when penalties are assessed, instead looking further upstream when CMS has decided that the hospital might be out of compliance. This shows that CMS is taking compliance seriously, and they expect hospitals to take it seriously as well.
Claims data could be entering the chat
Interestingly, a potential new dataset may be permitted thanks to adding a new field. The Expected Allowed Amount must now be represented as a dollar amount when there's an algorithmic reimbursement methodology. This formalizes hospitals bringing claims data into the equation along with MRFs. Previously, hospitals could not represent a rate by using historical claims information. Now, it appears that claims data could be used to calculate the average allowed amount for this newly proposed consumer-friendly column.
Representations of Algorithms, Case Rates, and Technical Guidance
Previously, some reimbursement methodologies could be ignored and/or omitted from the MRF. Now with the ability to represent a reimbursement methodology as an algorithm, we may start to see things like multiple outpatient procedure discounting, stop loss, percent of charge, fee schedule, percent of Medicare, percent of Medicaid, hurdle rates, not to exceed rates, etc.
All this becomes fair game. CMS says it will issue additional technical guidance around algorithms, so ladies and gentlemen, place your bets.
A Desire for Additional Information by Hospitals
CMS is hoping hospitals will include additional information like quality and payment methodology. Previously, there was no clear place within the MRF to detail these items, but additional columns now make space for that.
A quick watch-and-see
There's a footnote that details what the government chose not to include as a required data element. One that stood out had to do with the value-based care framework. There is a risk that a hospital, to avoid the complexity of fee-for-service revenue being in their MRF or just building the MRF in general, will have an incentive to “hide” value-based care revenue in the closet.
If you layer in some of the transparency and coverage requirements around value-based care, you might have some accountability to counteract that, but that's something we should pay attention to.
I want to stress that the standardization of this data is a good thing, especially because it forces a consumer conversation and a better consumer experience. It also permits other proxy consumers of the data – physicians, care navigators, nurses, employers, etc, will now have a stronger pulse on the price of healthcare.’
In a year, that'll be a new decision for many folks. In five years, I have a feeling cost certainty will be the name of the game, both B2B and B2C.
But hey, that’s just me. I want to hear what you think. Drop us a line!