US Pharm. 2020;45(1):34-36.
On November 15, 2019, the U.S. Department of Health and Human Services (HHS) issued a final rule to require pricing transparency by hospitals (the Hospital Price Transparency Rule). On the same date, the U.S. Departments of Treasury, Labor, and Health and Human Services (the Departments) proposed a second rule requiring certain group health plans and health insurance issuers to publish the pricing of healthcare items and services (the Transparency in Coverage Rules). Both rules require that pricing information be made publicly available.1
Hospital Pricing Transparency
Section 2718(e) of the Public Health Service Act requires hospitals to publish their standard charges for certain items and services in accordance with guidelines published by the Secretary for HHS. Under the Hospital Price Transparency Rule, such items and services include individual items and services and service packages that are provided by a hospital in connection with an inpatient admission or an outpatient-department visit for which the hospital has established a standard charge.2
For each hospital location, the hospital must publish the gross charges, payor-specific negotiated charges clearly associated with the names of the third-party payor and the plan, de-identified minimum and maximum negotiated charges, and discounted cash prices. All such items and services must be published online in a single digital file in machine-readable format. The hospital must include, among other things, a description of each item, the service and service package, and any code (e.g., CPT, HCPCS, DRG, and NDC codes) the hospital used for accounting or billing. The hospital must display the digital file prominently on a publicly available website using a specified naming convention, ensure that that the data are easily accessible without barriers, and update the data at least annually.3
Hospitals must make public their standard charges for at least 300 “shoppable services” in a consumer-friendly manner, with 70 such services specified by the Centers for Medicare & Medicaid Services (CMS) and the remainder selected by the hospital. The 70 shoppable services specified by CMS include, for example, injections of anesthetics and/or steroid drugs into the lower or sacral spinal nerve root using imaging guidance.4
A shoppable service is defined under the Hospital Price Transparency Rule as a service that can be scheduled by a healthcare consumer in advance. The hospital must group each shoppable service with the ancillary services customarily provided by the hospital as part of or in conjunction with the shoppable service. The hospital must include a plain-language description of each shoppable service and select the services based on the utilization rate or billing rate of the services. As a result, the services selected by the hospital should be commonly provided to the hospital’s patient population. CMS will deem a hospital as having met the requirements for making public the standard charges for shoppable services so long as the hospital maintains an Internet-based price-estimator tool that meets certain identified requirements.5
The Hospital Price Transparency Rule includes the authority for CMS to monitor compliance, whether by evaluating complaints by third parties, reviewing analyses by individuals and entities of noncompliance, or auditing the hospital’s website. CMS may assess a civil monetary penalty after giving the hospital a warning notice or requesting a corrective action plan (CAP) if the noncompliance is a material violation of one or more rule requirements. If the hospital fails to respond to CMS’ requests that a CAP be submitted or its terms be satisfied, CMS may impose a penalty of not more than $300 per day and publish the penalty on its website. The Hospital Price Transparency Rule will go into effect on January 1, 2021.6
Proposed Coverage Transparency
The draft Transparency in Coverage Rules would require certain group health plans, including self-insured plans and health insurance issuers, to disclose price and cost-sharing information to their members. Under the rules, consumers would receive real-time access to cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services.7
Under the proposed rules, nongrandfathered group health plans and health insurance issuers offering nongrandfathered health insurance coverage would be required to make available to their members personalized, out-of-pocket cost information for all covered items and services through an Internet-based self-service tool, as well as in paper form, upon request. In addition, each such plan and issuer would be required to make available to the public the in-network negotiated rates with their network providers and historical payments of allowed amounts to out-of-network providers through standardized, regularly updated machine-readable files.8
Plans and issuers would be required to disclose to their members an estimate of cost-sharing liability for items and services, including prescription drugs. Members could request cost-sharing information using a specific billing code related to a prescription drug or a descriptive term (e.g., the name of the drug), enabling them to find out the estimated cost of a prescription drug obtained through a provider such as a pharmacy or mail service. The rules also would enable members to determine the cost of a set of items or services including a prescription drug or drugs that are subject to a bundled payment arrangement for a treatment or procedure.9
Under the draft rules, health insurance issuers that introduce plans encouraging consumers to shop for services from lower-cost, higher-value providers and that share the savings with their members would be permitted to take credit for these shared savings payments in their medical loss ratio (MLR) calculations. The Departments made this proposal to ensure that such health insurance issuers would not be required to pay MLR rebates based on a plan design that provides a benefit to members not currently captured in an existing MLR revenue or expense category.10
The Departments requested comments as to whether group health plans and health insurance issuers should be required to make available the aforementioned cost-sharing information through application-programming interfaces. The Departments also asked for comments on how healthcare-quality information may be incorporated into the price-transparency requirements included in the proposed rules.11
With regard to prescription drugs, the Departments sought comments on whether a rate other than the negotiated rate—such as the undiscounted price—should be required to be disclosed for prescription drugs, and whether and how to account for rebates, discounts, and dispensing fees to ensure that individuals have access to meaningful cost-sharing liability estimates for prescription drugs. The Departments also asked for comments as to whether certain circumstances exist in which drug-pricing information should not be included in an individual’s estimated cost-sharing liability. Finally, the Departments sought comment on whether the relationships between plans or issuers and pharmacy benefit managers (PBMs) allow plans and issuers to disclose rate information for drugs or whether contracts between plans and issuers and PBMs would need to be amended so that the plans and issuers could provide a sufficient level of transparency.12
The Hospital Price Transparency Rule and the draft Transparency in Coverage Rules were issued in connection with President Trump’s executive order, issued June 24, 2019, which seeks to enhance patients’ ability to choose the healthcare that is best for them and recognizes that in order to make fully informed decisions about their healthcare, patients must know the price and quality of the good or service in advance. In the order, the President stated that patients often lack access to useful price and quality information and the incentives to find low-cost, high-quality care. According to the Departments, at least 28 states have passed price-transparency legislation, but the states’ legislation varies broadly in terms of the disclosure required and the dissemination of the pricing information.13 The rules represent an additional step in the regulatory framework in requiring pricing information to be made available to consumers and helping consumers find high-value providers of low-cost care and services.
The information in this article is general in nature and is not intended to provide legal or other professional advice.
1. HHS. Medicare and Medicaid programs: CY 2020 hospital outpatient PPS policy changes and payment rates and ambulatory surgical center payment system policy changes and payment rates. Price transparency requirements for hospitals to make standard charges public. www.hhs.gov/sites/default/files/cms-1717-f2.pdf. Accessed November 26, 2019. (Namely, the Hospital Price Transparency Rule.) U.S. Department of Treasury, U.S. Department of Labor, HHS. Transparency in coverage, pp. 31 and 208. www.hhs.gov/sites/default/files/cms-9915-p.pdf. Accessed November 26, 2019. (Namely, the Transparency in Coverage Rules). See also HHS. Trump Administration announces historic price transparency requirements to increase competition and lower healthcare costs for all Americans. www.hhs.gov/about/news/2019/11/15/trump-administration-announces-historic-price-transparency-and-lower-healthcare-costs-for-all-americans.html. Accessed November 26, 2019.
2. HHS. Fact sheet: CY 2020 Hospital Outpatient Prospective Payment System (OPPS) policy changes: hospital price transparency requirements (CMS-1717-F2). www.cms.gov/newsroom/fact-sheets/cy-2020-hospital-outpatient-prospective-payment-system-opps-policy-changes-hospital-price. Accessed November 26, 2019. (Namely, the Hospital Price Transparency fact sheet.) The Hospital Price Transparency Rule, p. 315.
3. The Hospital Price Transparency fact sheet. The Hospital Price Transparency Rule, pp. 318-319.
4. The Hospital Price Transparency fact sheet; the Hospital Price Transparency Rule, p. 192.
5. The Hospital Price Transparency Rule, pp. 6, 48, 110, 174-175, 189, 314, 316, and 321. See also the Hospital Price Transparency fact sheet. In the commentary to the Hospital Price Transparency Rule, CMS recommended that hospitals indicate any ancillary services that are not provided by the hospital but the patient is likely to experience. CMS also recommended that hospitals indicate that such additional ancillary services may be billed separately by other entities involved in the patient’s care. The Hospital Price Transparency Rule, p. 48.
6. The Hospital Price Transparency Rule, pp. 2 and 323-329. The Hospital Price Transparency fact sheet.
7. See the Transparency in Coverage Rules, pp. 1-2. HHS. Fact sheet: Transparency in Coverage Proposed Rule (CMS-9915–P). www.cms.gov/newsroom/fact-sheets/transparency-coverage-proposed-rule-cms-9915-p. Accessed November 26, 2019. (Namely, the Transparency in Coverage fact sheet). The proposed rules define “items or services” as including supplies, drugs, and fees for which a provider charges a patient in connection with the provision of healthcare. Transparency in Coverage Rules, pp. 31 and 208. See also U.S. Department of Labor, News release: U.S. Department of Labor joins Departments of Health and Human Services and Treasury to improve price and quality transparency in healthcare. www.dol.gov/newsroom/releases/osec/osec20191115. Accessed November 26, 2019.
8. The Transparency in Coverage fact sheet. Grandfathered health plans are health plans in existence as of March 23, 2010, the date of enactment of the Patient Protection and Affordable Care Act (the “Act”), and are subject only to certain provisions of the Act so long as the plans maintain their status as grandfathered health plans under the applicable rules. The rules proposed above would not apply to grandfathered health plans (as defined in 26 CFR §54.9815-1251, 29 CFR §2590.715-1251, and 45 CFR §147.140). The Transparency in Coverage Rules, p. 102. Transparency in Coverage fact sheet at n. 2. With respect to a request for cost-sharing information for all in-network providers, if a plan or issuer utilizes a multitiered network, the tool would be required to produce the relevant cost-sharing information for the covered item or service for each tier. To the extent that cost-sharing information for a covered item or service under a plan or coverage varies based on factors other than the provider, the tool would also be required to allow users to input sufficient information for the plan or issuer to disclose meaningful cost-sharing information. For example, if the cost-sharing liability estimate for a prescription drug depends on the quantity and dosage of the drug, the tool would be required to allow the user to input a quantity and dosage for the drug for which he or she is seeking cost-sharing information. Transparency in Coverage Rules, pp. 44-45.
9. The Transparency in Coverage Rules, pp. 35-36. In the commentary to the rules, the Departments acknowledged that outside a bundled payment arrangement, plans and issuers often base cost-sharing liability for prescription drugs on the undiscounted list price (such as the average wholesale price or wholesale acquisition cost), which frequently differs from the price the plan or issuer has negotiated for the prescription drug. In these instances, providing the individual with a rate that has been negotiated between the issuer or plan and its pharmacy benefit manager could be misleading, as this rate would reflect rebates and other discounts and could be lower than what the individual would pay, particularly if the individual has not met his or her deductible. However, arguably, requiring the issuer to disclose only the rate upon which the individual’s cost-sharing liability estimate is based would perpetuate the lack of transparency around drug pricing. Id. at p. 36.
10. The Transparency in Coverage fact sheet. See also the Transparency in Coverage Rules, pp. 97 and 100.
11. Transparency in Coverage Rules, pp. 26 and 95-96. Application programming interfaces, or APIs, are software tools published by one software developer that allow other software developers to create software applications that can interact with the software without the other developers knowing the internal workings of the software, while maintaining consumer data-privacy standards. Id. at p. 79. Transparency in Coverage fact sheet at n. 3.
12. Transparency in Coverage Rules, pp. 36-37.
13. Trump DJ. Executive order on improving price and quality transparency in American healthcare to put patients first. June 24, 2019. www.whitehouse.gov/presidential-actions/executive-order-improving-price-quality-transparency-american-healthcare-put-patients-first. Accessed November 26, 2019. Transparency in Coverage Rules, p. 173.
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