CMS may lack authority to compel hospitals to tell negotiated prices
The order for price transparency surpasses existing rules that oblige hospitals to publish retail prices for their services.
Although the Centers for Medicare and Medicaid intended to push hospitals to disclose the prices they negotiate with insurers, it may not have any legal standing to do so.
According to Modern Healthcare, while Congress granted CMS the power to force hospitals to publish “a list of the hospital’s standard charges for items and services provided by the hospital” under the Public Health Service Act, legislators never said anything about negotiated rates.
As a result of backlash from health systems, the administration has delayed its proposal, which was intended to be included in its update to the Outpatient Prospective Payment System, released last week.
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Hospitals even argued, in comments prior to the issuance of the final rule, that such a requirement would “violate their First Amendment rights to free speech.” In addition, the Federation of American Hospitals alleged in comments on the CMS original proposal that the agency was trying to redefine Congress’s words to change the law, instead of interpreting and enforcing the law as written.
The order for price transparency surpasses existing rules that oblige hospitals to publish retail prices for their services. The new rule would require hospitals to do the same for negotiated rates, and to keep them updated, as well as to create “shoppable services” for consumers to use when shopping around for care that they can schedule in advance.
“I think one would be very challenged to find evidence in the legislative history or the debate around the ACA that Congress ever contemplated requiring the disclosure of privately negotiated rates,” Philo Hall, senior counsel in Epstein Becker & Green’s healthcare and life sciences practice, told Modern Healthcare. “The burden would be on the administration to prove that this is what the law and the statute intended.”
It’s not even a sure thing that such a provision would do much good, although when consumers do have access to prices they tend to choose cheaper providers. But with consumers being shielded from the true price of health services, they don’t have enough incentive to shop around, according to the report, and there aren’t enough of them that do so to bring prices down.
Still, hospitals consider negotiated rates as trade secrets and as such are reluctant to reveal them.
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