Court Upholds Hospital Price Transparency 2021 Rules

2021 Transparency looks like it’s going to happen

Rosemary Holliday, Managing Partner, Holliday & Associates / ChargeAssist

In a disappointing blow for hospitals nationwide, on June 23, a federal judge upheld CMS regulations for January 2021 expanded price transparency requirements. The ruling was against the American Hospital Association’s attempt to block CMS’s expanded price transparency regulations effective January 2021. AHA filed the lawsuit December 2019 claiming that the federal government did not have the authority to mandate the disclosure of negotiated prices.

As noted in the quote below from Modern Healthcare June 23, 2020 5:13 PM Hospitals Lose HHS Lawsuit Over Price Transparency by Michael Brady, the definition and use of “chargemaster prices” and “negotiated rates” with insurors were a key component of arguments.

Modern Healthcare June 23, 2020 5:13 PM Hospitals lose HHS lawsuit over price transparency by Michael Brady
Modern Healthcare

The ruling came from Judge Carl Nichols with the U.S. District Court for the District of Columbia (appointed by President Trump). Judge Nichols wrote in his decision that hospitals were “…attacking transparency measures…by limiting consumers’ abilities to have insight into hospital prices in advance of services.” Hospitals may be affected by market changes and need to respond to a market where consumers are more empowered…” The ruling went on to say, “the possibility that the nature of their negotiations with insurers might change is too attenuated from the compelled disclosure to make the Rule unlawful.” The Judge also rejected AHA’s arguments about the expanded Rule’s administrative burden and the potential for increased transparency driving up hospital pricing. The judgement says “Traditional economic analysis suggested to the agency that informed customers would put pressure on providers to lower costs and increase the quality of care.” He also noted that the requirement will empower patients, stating that “all of the information required to be published by the Final Rule can allow patients to make pricing comparisons between hospitals.”

There are clear disconnects with not only CMS’ ill-defined guidance and the challenges that have unfolded as hospitals tackle this mandate; but also with the oversimplified views of Administration and the public sector. A founder of a Patient Rights advocacy group was quoted in the press to say that ruling could make shopping for health services more like buying groceries or retail. The President’s tweet just after the ruling is equally nonsensical.

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AHA’s Senior VP Melinda Hatton said: “The proposal does nothing to help patients understand their out-of-pocket costs…It also imposes significant burdens on hospitals at a time when resources are stretched thin and need to be devoted to patient care.” AHA has said it will appeal.

Holliday & Associates’ ChargeAssist software solutions for transparency include not only our current functionality for the CDM Public Portal, but also expanded display options for 2021. We have also endorsed a business partner’s methodology for creating a meaningful and consumer-friendly “Shoppable Services” listing. Their solution ensures that the selected procedure data is compliant with the rules, but goes a step further by providing highly-accurate price estimates. Considering the real risk of patient lawsuits relative to charges that vary from information provided as “estimates”, now is most definitely the time to ensure that publicized prices are built correctly. Charge Master accuracy, pricing verification, and accurate public view data continue to be more important than ever in our stressed and challenged industry.

We are advising our Charge Master consulting and software customers to not delay, and proceed as soon as possible with plans for the 1/1/21 mandate. Look to your vendors and consulting partners for help with this process if staffing is stretched or data aggregation is challenging.

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