The FY19 IPPS proposed rule also would increase rates by 1.75 percent after accounting for inflation and other adjustments required by law.


April 25—Hospitals would be required to post their “standard charges” online by FY19 under Medicare rules proposed this week.

The proposed policy would move beyond current requirements for hospitals to establish and make public a list of their standard charges—or at least allow the public to request such a charge list—and instead require hospitals to post those charges “via the Internet in a machine readable format and to update this information at least annually, or more often as appropriate. This could be in the form of the chargemaster itself or another form of the hospital’s choice, as long as the information is in machine readable format,” officials with the Centers for Medicare & Medicaid Services (CMS) wrote in the Inpatient Prospective Payment System (IPPS) proposed rule.

CMS officials said the change was necessary to increase price transparency in health care, even though the current transparency requirements may not have helped patients much.

“We also are concerned that chargemaster data are not helpful to patients for determining what they are likely to pay for a particular service or hospital stay,” CMS officials wrote about existing requirements.

The proposal drew a positive from hospital advocates.

“Although mandated under current law, CMS previously had not released specific guidance on how hospitals should make public a list of their standard charges,” Rick Pollack, president and CEO of the American Hospital Association (AHA), said in written statement. “The new requirements included in the IPPS proposed rule will help hospitals provide this information in a more useful manner to patients. We plan to submit additional ideas related to price transparency to CMS in response to the [request for information], including ways to help patients identify their out of pocket costs.”

CMS officials’ concerns about patient confusion were echoed by Richard L. Gundling, vice president of healthcare financial practices at HFMA.

“The price information that is most useful to consumers is an estimate of their individualized out-of-pocket responsibility for the specific service they seek,” Gundling said. “The chargemaster prices serve only as a starting point; adjustments to these charges are routinely made for contractual discounts that are negotiated with third-party payers or set directly by governmental payers. Few patients actually pay the chargemaster price, so it’s not relevant in their decision-making.”

Among additional policies on which CMS sought comment was a requirement that providers inform patients of their out-of-pocket costs for a service before the service is furnished.

Earlier in April, hospital advocate responses to a Senate inquiry about price and quality transparency outlined measures they would support but also urged caution in pursuing new federal requirements.

CMS also sought comments in the new payment rule on surprise out-of-network bills from physicians, such as anesthesiologists and radiologists, who provide services at in-network hospitals, and on unexpected facility fees and physician fees for emergency department visits.

“We are seeking information from the public regarding barriers preventing providers from informing patients of their out of pocket costs; what changes are needed to support greater transparency around patient obligations for their out of pocket costs; what can be done to better inform patients of these obligations; and what role providers should play in this initiative,” a CMS fact sheet stated.

CMS is also considering whether to publicize any “hospital non-compliance” with its transparency requirements, as well as undertaking “additional enforcement mechanisms.”

Potential Impacts

Suzanne Delbanco, executive director of the Catalyst for Payment Reform, described the posting of charges as “a baby step.”

“Charges are not functionally useful for anyone, but they can help consumers understand the magnitude of costs associated with different healthcare services and compare hospitals to some degree,” Delbanco said.

Posting charges, Delbanco said, will get hospitals used to a level of scrutiny they may not have had before and allow them to see whether they are “completely out of line” with their competitors.

François de Brantes, an industry consultant, disagreed and said the posting requirement should have no effect because all hospitals know that other hospitals’ charges aren’t reflective of negotiated amounts.

De Brantes described recent hospital calls for more research on patient transparency preferences as “disingenuous” because existing research already has identified what information patients want and because “hospitals also know that posting charges won’t affect consumer decisions. So just get it done.”

“And maybe one side benefit will be that the public outcry against the level of some of these charges will be such that it will force a rationalization of those [chargemaster] numbers,” de Brantes said.

Payment Provisions

The FY19 IPPS proposed rule also would increase rates by 1.75 percent, after accounting for inflation and other adjustments required by law. The initial market-basket update of 2.8 percent for hospitals that were meaningful users of electronic health records (EHRs) in FY17 and submit quality data was reduced by 0.8 percent for a productivity cut and by 0.75 percent through an additional market-basket cut, as mandated by the Affordable Care Act (ACA).

Also proposed was a 0.5 percent payment increase to partially restore payments lost through statutory cuts in the American Taxpayer Relief Act of 2012, which aimed to recoup payment adjustments that CMS viewed as stemming from documentation and coding changes in FY10-FY12 and not from actual changes in case mix.

The rule also would implement the second of a three-year transition to using Worksheet S-10 data to determine uncompensated care payments. Disproportionate Share Hospital (DSH) payments would increase by $1.5 billion in FY19 due in part to an increase in the share of uninsured patients.

Investment advisory firm Hedgeye noted that overall hospital payments would increase by 2.1 percent after accounting for provisions such as the DSH payment increase and by 3.4 percent when a congressionally mandated increase in low-volume hospital payments was added.

Policy Changes

Among the many policy changes that the rule proposed was implementation of the Meaningful Measures initiative across CMS’s hospital quality-reporting and pay-for-performance programs. The proposal would remove from the inpatient quality-reporting program 18 measures that are "topped out" or no longer relevant, or for which the burden of data collection outweighs the value. Additionally, CMS proposed to “de-duplicate" 21 measures, which means they would be used in only one program. The agency proposed updating the scoring approach for the hospital-acquired conditions, readmissions, and value-based purchasing programs.

The EHR Incentive Programs would be renamed the "Promoting Interoperability Programs." CMS also proposed a more flexible, performance-based approach to determining whether a hospital has met the EHR requirements to avoid a payment penalty under Medicare.

Hospitals would have to use 2015 edition certified EHR technology (CEHRT) and report performance for a 90-day period in both 2019 and 2020.

The AHA praised CMS for limiting the reporting periods but was critical of the proposal to require use of 2015 edition CEHRT beginning in 2019.

“Additionally, the AHA is pleased that CMS has proposed a more flexible, performance-based approach to determine whether a hospital has met meaningful use requirements,” Tom Nickels, executive vice president of AHA, wrote in a statement.

The rule included a request for information (RFI) to invite EHR interoperability ideas. CMS said it is considering a revision of the conditions of participation related to interoperability “as a way to increase electronic sharing of data by hospitals,” according to the fact sheet.

CMS proposed that hospitals be required to report only four electronic clinical quality measures for one quarter and that the number of eligible measures be reduced. A new scoring mechanism would allow hospitals to receive points on measures under four objectives: e-prescribing, health information exchange, provider-to-patient exchange, and public health and clinical data exchange.

CMS would modify some measures in Stage 3 of Meaningful Use and remove six measures. The agency also proposed to add two measures related to opioid treatment.

CMS estimated that the elimination of 25 measures across five programs will cut more than 2 million “burden hours” for hospitals and save hospitals $75 million.

The move followed repeated Trump administration pledges to help providers cut their regulatory compliance costs, which a 2017 AHA analysis concluded amount to nearly $39 billion per year for providers. 

“The proposed increase in critically needed funds to treat the uninsured as well as the reduction in regulatory burden will also help enhance access to quality care for all patients,” Chip Kahn, president and CEO of the Federation of American Hospitals, wrote in an email.

LTCH Changes

CMS proposed to increase the base rate for long-term care hospitals (LTCHs) by 1.15 percent. However, based on policy changes in the proposed rule, CMS projected a cut of 0.1 percent, or $5 million, in LTCH PPS payments in FY19.

Hospitals were pleased by a proposal to permanently revoke the so-called 25-percent rule for LTCHs. The long-delayed rule from 2006 cuts Medicare LTCH payments to an equivalent amount under the IPPS for patients who are transferred from an acute care hospital that has referred more than one-quarter of its patients to the LTCH.

The policy, which hospitals have long urged CMS to scrap, was proposed for elimination to reduce the regulatory burden of tracking admission sources.

“This will help ensure that patients get the care they need when they need it without facing arbitrary restrictions [from] non-patient-centered regulations,” Nickels said.

CMS noted that during the delay in the rule’s implementation, numerous policy changes, including the FY16 introduction of a site-neutral payment rate, have addressed some of the concerns behind the 25-percent rule.

“While these changes do not specifically address our regulatory requirement to ensure that an LTCH does not act as an IPPS step-down unit, we believe that the creation of these financial incentives likely results in LTCH providers closely considering the appropriateness of admitting a potential transfer to an LTCH setting, regardless of the referral source, thereby lessening the concerns that led to the introduction of the 25-percent threshold policy,” CMS officials wrote in the rule.

The proposed changes, which would apply to approximately 3,330 acute care hospitals and approximately 420 LTCHs, would affect all discharges beginning Oct. 1, 2018.

The deadline for submitting comments on the proposed rule and the RFI is June 25.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, April 26, 2018