Last week the Wall Street Journal published a report that the Trump Administration was weighing whether it would force hospitals to disclose prices negotiated with health plans. Although the sell-side treated this information as new, the proposal was actually included in the recent pair of rules on interoperability and data blocking released about three weeks ago and discussed in this note.
The WSJ report is being interpreted by some analysts – possibly because they are conflating the new proposed requirement to post chargemaster prices and the data blocking rule – as a requirement that providers publicly post their prices.
In fact, what the rule proposes is an extension of the Blue Button initiative at CMS to all federal health programs. CMS is proposing to require these plans to implement, test and monitor openly published APIs accessible to third party applications. The scope and volume of information accessible through the plans’ open APIs would include:
- Adjudicated claims including cost
- Encounters with capitated providers
- Provider remittances
- Enrollee cost-sharing
- Clinical data including lab results
- Provider directories and formularies
The requirement would only apply to federal health programs, including Medicare, Medicare Advantage, Medicaid and, importantly, plans sold in the individual and small group markets on the exchanges. The application of the price disclosure to exchange plans de facto requires it of all plans sold in the individual and small group market. The change would not apply to large group and self-insured plans.
What CMS appears to envision is not en masse disclosure of all prices to the general public but a system where beneficiaries and plan members will be able to understand prices and costs related to their providers and treatment.
In other words, more airline app than Amazon.
The impact of this price disclosure will take some time to be felt. The episodic nature of health care service delivery combined with developing awareness among beneficiaries and enrollees mean a slow roll to a place where prices matter. When prices do start to matter, the investor-owned hospitals are generally among the lowest cost providers, according to our early analysis of the chargemaster data that became available in January, and should be well positioned to take share. Non-profits are a much different case with large academic research hospitals being some of the highest cost providers in their markets.
While the sell-side seems skeptical this rule will be finalized, we are pretty certain it will be with perhaps an implementation delay or two. Because the price disclosure would only apply to federal health programs we are not inclined to believe that providers will prevail in court.
Call with questions.
Emily Evans
Managing Director – Health Policy
Twitter
LinkedIn
