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Hospitals to Disclose Rates Negotiated With Health Insurance Companies

By Stacey Kusterbeck, Author, Relias Media

Hospitals have about one year to get on board with the latest move toward more price transparency. As of January 2021, they will need to disclose negotiated rates with individual insurers, information that always has been closely guarded, under a final rule issued by CMS.

“Under the status quo, healthcare prices are about as clear as mud to patients,” CMS Administrator Seema Verma said in a recent statement.

To clear it all up for consumers, hospitals will have to post payer-specific negotiated charges online for 300 “shoppable” medical services (X-rays, outpatient visits, imaging, and other services scheduled in advance). The rule specifies 70 of these services, and allows hospitals to choose which additional 230 services to post. Not surprisingly, legal challenges are coming, arguing that the rule exceeds the Trump administration’s authority.

In a joint statement, hospital trade groups argued that “instead of helping patients know their out-of-pocket costs, this rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovation in value-based care delivery.”

Yet some experts say there is a real opportunity for hospitals, much-maligned as too secretive and charging too much, to set themselves aside from the competition. The idea is to get ahead of all the price transparency requirements in a way that is appealing to consumers.

“Not only can hospitals market themselves as more efficient, with more reasonable prices, but also with as-high or higher quality outcomes,” says George A. Nation III, a professor of business and law at Lehigh University.

It is not just hospitals that are in the hot seat. Under a proposed rule from CMS, health insurance companies would have to publicly disclose their negotiated rates for in-network providers and also the amounts paid to out-of-network providers. Health plans also would be required to give their members real-time, personalized information on what they are going to owe.

“This would empower consumers to shop and enable them to compare costs between specific providers before receiving care,” according to a CMS fact sheet.

Hospital Access Management keeps readers a step ahead of all the coming changes in price transparency. Check out this article on posting negotiated prices from the August 2019 issue and this story from the March 2019 issue on how posting charges online changed hospital processes. The upcoming January 2020 issue will include tips for compliance with these latest requirements and how to avoid problems with patients, health plans, lawyers, and regulators.