Friday, while media attention was focused on the House Impeachment inquiry, HHS released its final rule on hospital price transparency.
It requires every non-federal hospital to post detailed information for 300 shoppable services starting January 1, 2021 or pay fines. Hospitals must provide this information online in a machine-readable file including 1) gross charges; 2) discounted cash prices; 3) payer-specific negotiated charges; 4) de-identified minimum negotiated charges; 5) de-identified maximum negotiated charges; in addition to supply costs, facility fees and professional charges for employed physicians and other practitioners for each specified service.
Industry reaction to the final rule was swift: The Federation of American Hospitals, the American Hospital Association, the Association of American Medical Colleges and the Children’s Hospital Association promised to file a lawsuit challenging the rule. But public support for price transparency in healthcare is growing and Congress is receptive.
I read the entire 331-page rule. It’s a fascinating document premised on HHS’ core belief:
“We believe there is a direct connection between transparency in hospital standard charge information and having more affordable healthcare and lower healthcare coverage costs. We believe healthcare markets could work more efficiently and provide consumers with higher-value healthcare if we promote policies that encourage choice and competition. As we have stated on numerous occasions, we believe that transparency in healthcare pricing is critical to enabling patients to become active consumers so that they can lead the drive towards value.” (p.9-10)
It’s hard to argue that price transparency in healthcare is adequate: polls show the public is getting tired of excuses. So, HHS deserves an A for effort, but this final rule has flaws:
The rule applies to every hospital, with very few exceptions. Only federal, Indian Health Services and VA hospitals are excluded. That means factors related to an individual hospital’s patient population, programs and services, and cost structure are not considered. Teaching hospitals, rural health providers, critical access hospitals, safety-net hospitals and others operate differently. This rule applies inadequately recognizes those distinctions. It’s a mandate to 6002 non-federal hospitals that takes effect in 13 months.
The cost for implementing the rule will be significant. The rule says:
“We estimate the total burden for hospitals to review and post their standard charges for the first year to be 150 hours per hospital at $11,898.60 per hospital for a total burden of 900,300 hours (150 hours X 6,002 hospitals) and total cost of $71,415,397 ($11,898.60 X 6,002 hospitals). We estimate the total annual burden for hospitals to review and post their standard charges for CMS-1717-F2 7 subsequent years to be 46 hours per hospital at $3,610.88 per hospital for a total annual burden for subsequent years of 276,092 hours (46 hours X 6,002 hospitals) and total annual cost of $21,672,502 ($3,610.88 X 6,002 hospitals).”(pp 194)
Fat chance. The cost will be dramatically higher in most hospitals and duplicative in states like Florida, Maine, New Hampshire and others where hospital price transparency is already required.
And perhaps the biggest flaw: the rule will not enable consumers to know their out-of-pocket costs. Arguably, that’s what matters most to consumers.
This rule will advance discussion about hospital price transparency and stimulate app developers to create price comparison tools for simple, uncomplicated hospital services. But how hospital price transparency translates to responsible shopping by consumers, given the role of insurance coverage and variability in the cost structure and program mix of hospitals, remains the big question.
HHS deserves an A for effort, but this rule has flaws. Like HHS has done with other rules, modifications to make it more useful to consumers and more impactful on competition among hospitals are important.
OTHER NEWS FROM LAST WEEK
Two Reasons Project Nightingale got Unusual Attention
Last week, Google and Ascension announced their joint venture: Project Nightingale. It claimed page one coverage in Monday’s Wall Street Journal and garnered lots of attention in healthcare’ media outlets. Essentially, Ascension will transfer its 50 million patient records to Google’s Cloud platform to promote data integration and use its G Suite artificial intelligence tools in analyzing the data. it is legal under the Health Insurance Portability and Accountability Act (HIPAA) since Ascension is a covered entity permitted to share its data with its business associate (Google). Google has data sharing arrangements with Mayo Clinic, the University of Chicago, Stanford Medicine, Cleveland Clinic, the University of Colorado and others, but this deal drew unusual attention for two reasons: Ascension and Google are big name players and the timing of their announcement is coincidental given increased Congressional oversight of data privacy and security. Since 2018, 38 pieces of legislation about data sharing have been introduced in Congress to restrict access and add protections. Project Nightingale will be closely watched.
FDA approves cancer therapies developed in China
An FDA panel granted approval to a blood cancer drug from Beijing-based BeiGene Ltd., setting the stage for American patients to access a Chinese cancer therapies for the first time. The accelerated approval- ahead of even China’s own national drug regulator- marks a breakthrough for the growing number of Chinese biotech companies pursuing global growth opportunities.
New Drug pricing commission proposed: Friday, Sen. Cory Booker (D-N.J.) and Sen. Bernie Sanders (I-Vt.) introduced The Prescription Drug Affordability and Access Act bill that would create the Bureau of Prescription Drug Affordability and Access to oversee drug company compliance with the pricing regulations, exclusivity protections, and competition for generic copies of a drug.
Fed Reserve Chairman to Congress: The Deficit Needs Attention
Federal Reserve Chairman Jerome Powell warned Congress Wednesday that the ballooning federal debt could hamper Congress’ ability to support the economy in a downturn, urging them to put the budget “on a sustainable path.” the federal budget deficit hit was $747 billion in FY18, $984 billion in FY19 (the highest in 7 years) and is forecast to hit $1 trillion in fiscal 2020. Powell reminded legislators that the Fed has cut its benchmark interest rate three times this year to 1.5%- above the near-zero level immediately after the recession (2007-09) but below the 2.25% to 2.5% range early this year. Healthcare is 28% of federal spending: if budget hawks prevail in Congress, cuts to healthcare will be a key focus.
Walgreens to go private
Last Monday, Bloomberg reported that private equity firm KKR & Co. is in the process of preparing a bid to take Walgreens Boots Alliance Inc. private which has lost ground to competitor CVS. Walgreens faces emergent competition in its prescription business from Amazon and others. Just a few years ago, Walgreens seemed the more forward-looking of the two competitors, partnering with provider organizations to launch accountable care organizations (ACOs), announcing co-branding deals with leading health systems, and unveiling plans to get into the care management business. But its more recent strategy of leveraging partnerships to acquire capabilities, rather than growing by acquisition, has been slow to deliver returns. Going private would remove the pressure to maximize quarterly earnings and allow the company to focus on building in-store health services- and reposition the company to better compete with the growing number of vertically-integrated competitors looking to profit from combining care delivery, pharmacy and insurance to lower the total cost of care.
CY 2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements (CMS-1717-F2) CMS November 15, 2019 https://www.cms.gov/newsroom/fact-sheets/cy-2020-hospital-outpatient-prospective-payment-system-opps-policy-changes-hospital-price Federal Register at: https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf.
“Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans” HHS November 15, 2019 https://www.hhs.gov/about/news/2019/11/15/trump-administration-announces-historic-price-transparency-and-lower-healthcare-costs-for-all-americans.html
Remarks by President Trump on Honesty and Transparency in Healthcare Prices, The White House November 15, 2019
‘Project Nightingale’ Gathers Personal Health Data on Millions of Americans” Wall Street Journal November 11, 2019
Chelsea Cirruzzo “OCR, Lawmakers Worry About Privacy In Ascension, Google Partnership” November 14, 2019 https://insidehealthpolicy.com/daily-news/ocr-lawmakers-worry-about-privacy-ascension-google-partnership
Casey Ross “In a ‘Wild West’ environment, hospitals differ sharply in what patient data they give Google” Stat News November 15, 2019 https://www.statnews.com/2019/11/15/hospitals-differ-in-patient-data-they-give-google/
“The Health Data Goldilocks Dilemma: Sharing? Privacy? Both?” The Healthcare Blog, Kuraitis & McGraw https://thehealthcareblog.com/the-health-data-dilemma-sharing-