CMS Hospital Price Transparency Rule

CMS enacted a new rule that required Hospitals to list the prices for “shoppable services” so that consumers could be more well informed about pricing. The rule went into effect at the beginning of 2021, and can be found here:

Because the rule also requires hospitals to list negotiated prices with each payer, CMS anticipates that the healthcare market will react to the information in a way to drive down costs, overall:

Comment: Many commenters cautioned that disclosure of payer-specific negotiated charges would increase, not decrease, healthcare costs in certain markets due to anticompetitive behaviors or increases in prices as a result of hospital knowledge of better rates negotiated by neighboring hospitals.

Response: We continue to believe, as supported by (for instance) academic research, economics research, or both, that the healthcare market could work more efficiently and provide consumers with high-value healthcare through policies that encourage choice and competition. Research suggests that in a normal market, price transparency (more generally) will result in reduced rates, overall.[187] There are models in the States that have shown that release of the information has driven costs down not up.[188] On aggregate, we believe the effects on competition, resulting from hospital price transparency, would drive down healthcare prices. We acknowledge, that knowledge by a hospital of other hospitals’ payer-specific negotiated charges could also drive up rates; especially if a hospital discovers it is currently being paid less than other hospitals by a payer and, thereby, negotiates higher rates. On the other hand, payers may negotiate lower rates, if they discover hospitals have negotiated lower rates with competing payers.

I spot checked a few hospitals, and compliance is pretty spotty so far. It is not clear how strongly CMS plans to enforce the new rule.

It is also possible the Biden administration may change or redact the rule, but so far there isn’t any indication that they plan to do so.

Just curious to hear other people’s perspectives on the rule.

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This is going to be interesting to see how it shakes out. Thanks for the link.

More importantly I think right now is the entire industry is on baited breath with regards to the permanent status of the Rebate rule. It was stalled again by CMS and and AHIP I believe still has it in court.

I think the general sentiment here is that Biden admin repeals it because it came from the Trump era; but there’s some prescribers who are very adamant about trying to reinstate it.

Long story short everything I’ve seen on the group side of Medicare with regards to pricing from PBMs is that if the rebate rule were to be repealed you’d see $30-$45 jump in premium to offset the loss of rebates. That was the biggest story of the past 2 years; that and the HIF (which I think is now gone permanently)