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Hospitals need to post their negotiated prices in less than six short weeks

Barring an appeals court decision overturning the rule, the mandate goes into effect on January 1, 2021.

Susan Morse, Managing Editor

The U.S. Court of Appeals for the District of Columbia, as of Tuesday, had yet to hand up a ruling in a bid by the American Hospital Association and six other provider organizations to vacate a rule mandating hospitals to publish their negotiated rates with payers for services provided. 

Judges in the appeals court hearing on October 15 appeared skeptical of attorney Lisa Blatt's argument for the AHA and the other groups that the negotiated prices can be unknowable.

Barring a decision in favor of the AHA, hospitals will be required to post their negotiated rates in less than six short weeks.

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WHY THIS MATTERS

The final rule will require hospitals to make their standard charges public in two ways beginning in 2021:

First, they must be available in a comprehensive machine-readable file. Hospitals will be required to make public all hospital standard charges for all items and services (including the gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient and the minimum and maximum negotiated charges) on the Internet in a single data file that can be read by other computer systems.

The file must include additional information, such as common billing or accounting codes used by the hospital (such as the Healthcare Common Procedure Coding System codes) and a description of the item or service, in order to provide common elements for consumers to compare standard charges from hospital to hospital.

Secondly, hospitals must display shoppable services in a consumer-friendly manner. They will be required to make public payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient for an item or service, and the minimum and maximum negotiated charges for 300 common shoppable services in a manner that is consumer-friendly and update the information at least annually.

Hospitals will need to do more than post their chargemaster prices, which they are already doing under a previous rule that went into effect on January 1, 2019.

They are facing implementation of the more recent mandates as the number of COVID-19 cases surges across the country.

THE LARGER TREND

In November 2019, the Centers for Medicare and Medicaid Services finalized a rule that required hospitals to provide patients with clear, accessible information about the standard charges for the services they provide, in order to make it easier for consumers to shop and compare prices across hospitals.

The provider plaintiffs brought a case against that rule in federal court and lost. An appeal was filed on June 30, and oral arguments were heard on October 15.

On appeal, the plaintiff's attorney, Lisa Blatt, who serves as chair of Williams & Connolly's Supreme Court and Appellate practice, said that hospitals agree patients need to know their out-of-pocket costs, but that the rule does not achieve that objective.

Many negotiated rates don't have knowable algorithms, Blatt said. The rate has to be knowable, and many rates are unknowable, she said.

CMS wants hospitals to provide gross charges for services, which could represent an inflated rate that no one pays, she said. 

The rule is completely silent on rates. For instance, it doesn't take into account bundled payments, in which prices are bundled as one cost, she said.

The rule also violates hospitals' First Amendment and the Administrative Procedure Act, she said. The rule came about in response to President Trump's executive order to increase price transparency in healthcare.

Payers face similar rules with different deadlines and an interoperability mandate.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com