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Analysis

CMS Issues Long-awaited, Controversial Final Rule on Price Transparency

By John Commins  
   October 29, 2020

CMS Administrator Seema Verma hailed the final rule as "perhaps the most consequential healthcare reform in the last several decades."

A long-awaited and controversial final rule on healthcare price transparency was released Thursday by the federal government.

The rule, mandated under a June 2019 executive order by President Donald Trump, requires private group health plans and individual health insurance market plans to disclose pricing and cost-sharing information in a consumer-friendly format. 

The mandate, which takes effect on January 1, 2021, has drawn the ire of payers and providers because of a key provision that health insurance companies must publicly disclose "in real time" the rates they pay providers for specific services.

The American Hospital Association this summer led an unsuccessful effort by providers to ask a federal court to nullify the final rule, arguing, among other things, that the final rule is "arbitrary and capricious," and that the requirement that hospitals publish negotiated rates with insurers violates the First Amendment and oversteps the government's legal authority. The plaintiffs have appealed the ruling.

"The proposal does nothing to help patients understand their out-of-pockets costs," AHA General Counsel Melinda Hatton said at the time. "It also imposes significant burdens on hospitals at a time when resources are stretched thin and need to be devoted to patient care."

Matt Eyles, president and CEO of America's Health Insurance Plans, on Thursday called the final rule "flawed" and predicted it would "reduce competition and push healthcare prices higher – not lower – for American families, patients, and taxpayers."

"This is precisely the opposite of what Americans want in their healthcare," Eyles said. "Competition experts, including the bipartisan Federal Trade Commission, agree that disclosing privately negotiated rates will reduce incentives to offer lower rates, creating a floor – not a ceiling – for the prices that drug makers, providers, and device makers would be willing to accept."

The mandate also requires payers to provide personalized estimates of patients' out-of-pocket cost for 500 of the "most shoppable items and services," along with the costs for the remaining procedures, drugs, durable medical equipment and any other item or service they may need, the Centers for Medicare & Medicaid Services said.

CMS Administrator Seema Verma on Thursday called the final rule "perhaps the most consequential healthcare reform in the last several decades," which "will allow for unprecedented price transparency that will benefit employers, providers, and patients to help drive down healthcare costs."

"Price transparency puts patients in control and supports competition on the basis of cost and quality which can rein in the high cost of care," she said.

“CMS’ action represents perhaps the most consequential healthcare reform in the last several decades.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The final rule, which takes effect on January 1, 2021, requires private group health plans and individual health insurance market plans to disclose pricing and cost-sharing information in a consumer-friendly format. 

The rule has drawn the ire of stakeholders because of a provision that health insurance companies must publicly disclose "in real time" the rates they pay providers for specific services.

The rule also requires payers to provide personalized estimates of patients' out-of-pocket cost for 500 of the "most shoppable items and services," along with the costs for the remaining procedures, drugs, and any other item or service they may need.


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