CMS Finalizes Drug Pricing Transparency Rule

By Jonathan Springston, Editor, Relias Media

The Centers for Medicare & Medicaid Services published a final rule on May 8 that will require pharmaceutical companies to disclose prescription drug prices in TV ads.

Specifically, direct-to-consumer TV ads for prescription drugs and biological products covered by Medicaid or Medicare now must include the wholesale acquisition cost if that price is $35 or more for one month’s supply or the usual course of therapy, with the prices updated quarterly.

This rule stems from the Trump administration’s American Patients First blueprint that was introduced in May 2018. That plan called for boosting competition, enhancing negotiation, creating incentives for lower list prices, and lowering out-of-pocket costs. Preventing patients from receiving enormous surprise medical bills is a major goal.

“You, as the American patient, have the right to know what a prescription drug or healthcare service costs before you receive it,” Health and Human Services Secretary Alex Azar said in a statement. “We aim to address surprise billing in a way that will protect American patients from this abusive practice and lay a foundation for a system where the patient is put at ease and in control.”

There appears to be a consensus that protecting patients from surprise bills is important. However, there are many different opinions on the best way to address this issue. Vidor Friedman, MD, FACEP, president of the American College of Emergency Physicians (ACEP), welcomed federal action and said his group supports transparency. Still, Friedman argued that the White House’s proposals “do not go far enough to protect patients.”

“Patients should only be held responsible for any in-network cost-sharing amounts of emergency care, whether the care received is in- or out of network. However, such protection is currently applicable to only coinsurance and co-pays. To effectively address surprise billing, any legislation needs to extend this protection to the deductible portion of the patient's bill,” Friedman explained. “ACEP is concerned about the administration's call for a single hospital bill. Such a ‘bundled payment’ approach may seem simple in theory for voluntary medical procedures. But if applied to the unpredictable nature of emergency care, this untested idea opens the door to massive and costly disruption of the healthcare system that would shift greater costs to patients while failing to address the actual root cause of surprise bills – inadequate networks provided by insurers.”

Rick Pollack, president and CEO of the American Hospital Association (AHA), concurred with Friedman that federal action is welcome and important, but also that bundled payments is an “untested” idea that “would create significant disruption to provider networks and contracting without benefiting patients.”

“The AHA has urged Congress to enact legislation that would protect patients from surprise bills. We can achieve this by simply banning balance billing,” Pollack offered. “This would protect patients from any bills above their in-network cost-sharing obligations.”

As of Jan. 1, 2019, all hospitals are required to post list prices online, another directive from the Trump administration that was instituted to create more transparency and perhaps reduce surprise medical bills. But as many patient access department employees explained to Hospital Access Management in the March 2019 issue, this rule may cause even more confusion despite good intentions.

Surprise medical billing is a topic covered frequently in Hospital Access Management. In addition to the posted prices debate, the March issue includes two articles about proactive steps that could help prevent surprise bills. Registrars and patients often seem to lack even a rudimentary understanding of how insurance plans work. Many patient access departments have decided to start providing more education for registrars and patients about insurance coverage, including what is and what is not covered under those plans, so that payment planning starts well in advance of rendering services.

For example, at Yale New Haven Health, employees give patients a breakdown of what is covered, what is not covered, and how much is owed. Training starts with terminology (deductible, copay, coinsurance, total out-of-pocket costs, in network, and other insurance terms). Next, staff take benefit information from payer websites and apply it to particular services. Once staff members know the process, they can explain it better to often-confused patients and everyone can work together to create a satisfactory plan.

Sometimes, patients may be able to pay a high bill they received after services were rendered; they may be angry about the fact that no one bothered to prepare them for such an eventuality. The January 2019 issue of Hospital Access Management includes another article that re-emphasizes the importance of education and front-end communication between registrars and patients about how the billing process may unfold.

Be sure to check out the upcoming June issue of Hospital Access Management to read about how registrars are navigating tricky episodes of in-network hospital patients receiving surprise bills from providers.