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Price transparency: A new chapter begins

Column | Pricing

Price transparency: A new chapter begins

The federal government has moved to mandate a version of price transparency.

The federal version of price transparency will emerge from the rulemaking process that began when an executive order, initially expected this fall, was issued on June 24. The order instructs the U.S. Department of Health and Human Services (HHS) to publish a rule requiring hospitals to publicly post information based on negotiated rates for common or shoppable items and services, in an easy-to-understand, machine-readable format. The order stipulates that the regulation “should require the posting of standard charge information for services, supplies, or fees billed by the hospital or provided by employees of the hospital . . . and establish a monitoring mechanism for the Secretary to ensure compliance with the posting requirement.” Separately, HHS and the U.S. Departments of Labor and Treasury are instructed to issue an advance notice of proposed rulemaking requiring providers, health insurance issuers and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs to patients before they receive care.

HFMA is a champion of price transparency — the idea that consumers should be able to know their out-of-pocket responsibility up front. That’s the core of the industry-consensus recommendations we published on improving price transparency, our best practices for patient financial communications and our consumer guide to understanding healthcare prices. We have been leading in this area for more than a decade.

Having said that, when it comes to regulation, the details can be critical. With reference to the executive order, for example, exactly what are shoppable services? They are typically considered to be elective services that can be scheduled in advance, such as screening colonoscopies and childbirth. HHS’s definition remains to be seen.

If you follow price transparency news, the stipulation that hospitals post “negotiated rates” may have jumped out at you. The issue of whether to disclose rates negotiated between hospitals and insurers has been a lightning rod in healthcare circles, with many industry groups arguing that disclosure would have unintended consequences. The wording in the order may point to disclosure of average payment rates, or a range of rates, rather than actuals. But the intent is still vague.

These are just a few issues of interest. HFMA looks forward to engaging with CMS and HHS as this process unfolds. Among other things, we will provide input on issues of equity, such as the false equivalence of comparing prices at a hospital with a high versus low Medicaid payer mix. (Government programs pay below costs so prices for other purchasers must be set at levels to alleviate those underpayments.) And we will keep HFMA members fully informed, as always.

 All in all, this will be an exceptionally important rulemaking process. However, as an industry, it would be a serious mistake to narrow the scope of our price transparency efforts to these regulations. Price transparency goes way beyond compliance. View this as an opportunity to connect with patients/consumers and address their concerns about transparency and out-of-pocket expenses. Familiarize yourself with the recommendations in HFMA’s price transparency report. That’s the foundation to build on as we navigate through this time of change.

About the Author

Joseph J. Fifer, FHFMA, CPA,

is President and CEO of HFMA.

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