CMS Proposals Would Boost Price Transparency, Take Steps to Promote Safety as COVID-19 Remains a Threat

This week, CMS offered proposals during the annual rulemaking process that it said would “address the health equity gap, ensure consumers have the information they need to make fully informed decisions regarding their healthcare, improve emergency care access in rural communities, and use lessons learned from the COVID-19 pandemic to inform patient care and quality measurements.”

In other words, the Biden team is looking to levy fines on hospitals that are skirting the pricing transparency rule that took effect during President Donald Trump’s final weeks in office. And CMS has taking the first step toward publicizing vaccination rates of staff at hospitals and surgical centers, so that consumers can make informed choices when scheduling their care.

The actions follow President Joe Biden’s wide-ranging Executive Order aimed at increasing competition, which include steps to protect rural healthcare and continue the focus on transparency in hospital pricing. There had been speculation whether Biden would retain one of the Trump administration’s last major health policy moves, but Biden appears poised to expand it. Proposals announced Monday are included in the release of the CY 2022 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule.

“As President Biden made clear in his executive order promoting competition, a key to price fairness is price transparency,” HHS Secretary Xavier Becerra said as the proposal was announced. “No medical entity should be able to throttle competition at the expense of patients. I have fought anti-competitive practices before, and strongly believe healthcare must be in reach for everyone.”

The proposed transparency rule, Becerra said, calls for stiffer penalties for concealing the costs of services and procedures, and shows that such practices “will not be tolerated by this administration.” The action follows reports from consumers as well as analyses, including a study by The American Journal of Managed Care®, that hospitals are not making clear, accessible pricing information available online as has been required since the rule took effect January 1, 2021.

For failing to comply with the rule, CMS proposes the following fines:

• Hospitals with a bed count of 30 or less, $300 a day
• For hospitals with more than 30 beds, once the bed count exceeds 30 beds, add a penalty of $10 per bed per day, with the daily fine not to exceed $5,500;
• A full calendar year would have a minimum fine of $109,500 and a maximum fine of $2,007,500 per hospital.

Even with the uneven compliance, CMS has already seen wide variation in pricing, even within the same hospital or the same health system, depending on which insurer is billing the hospital.

Updated payment rates. CMS is proposing to update OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.3%. According to CMS’ fact, sheet, this update is based on the projected hospital market basket increase of 2.5% reduced by 0.2 percentage point for the productivity adjustment. CMS officials note elsewhere they are using CY 2019 date to set CY 2022 rates due to the disruption caused by the COVID-19 public health emergency.

CMS seeks health equity. Agency officials are asking for input on ways to report health disparities based on social risk factors and race and ethnicity, to make such reporting more comprehensive and actionable. Comments could involve data collection, analysis and reporting of quality measure results by factors that include race, Medicare/Medicaid dual eligible status, disability status, LGBTQ+, and socioeconomic status, or other factors.

Rural emergency care. CMS reports that 138rural hospitals have closed since 2010, “disproportionately within communities with a higher proportion of people of color and communities with higher poverty rates.” The trend deprives rural Americans of key services, including access to emergency care. Congress enacted Section 125 of the Consolidated Appropriations Act of 2021 (CAA), to create a new provider type for Rural Emergency Hospitals (REHs). CMS is requesting a range of information to develop requirements that will apply to REHs, which the goal of creating the new provider designation on or after January 1, 2023.

Publicizing COVID-19 vaccination rates? CMS seeks comment on how hospitals are using flexibilities allowed during the public health emergency to provide mental health services remotely and whether CMS should consider permanent changes. CMS also seeks input on how to measure how many front-line healthcare workers in hospital outpatient departments and ambulatory surgical centers are vaccinated against COVID-19, and how to make this information available to the public so consumers have this information when making healthcare decisions.

Patient safety in Medicare. CMS plans to reverse some policies that would have had Medicare pay for surgical procedures that could pose a risk to patients. The agency seeks to halt the phased elimination of the Inpatient-Only (IPO) list—procedures that Medicare will only make payment for when provided in the inpatient setting. CMS adopted a policy for 2021 to eliminate this list over a phased period and removed musculoskeletal procedures from the list in 2021. However, the current CMS leadership determined that criteria for removing items from the list were not followed and that there was not enough evidence that these services could be performed safety on Medicare patients on an outpatient basis. Some of the procedures to be removed from the IPO list included limb amputations and invasive spinal procedures. CMS seeks to return them to the list in 2022, and seeks comment on the future of the IPO list and criteria for evaluating which services should be on it.

OPPS Payments in 340B. The ongoing debate about cuts to the drug discount purchasing program known as 340B will reach the Supreme Court of the United States this fall. CMS notes in the Monday’s proposal that beginning January 1, 2018, Medicare adopted a policy to pay an adjusted amount of average selling price (ASP) minus 22.5% for certain separately payable drugs or biologicals acquired through the 340B Program. “In this rule, we are proposing to maintain the payment rate of ASP minus 22.5% for certain separately payable drugs or biologicals acquired through the 340B Program. Under this proposal, rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals would continue to be excepted from this policy.”