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Study Comparing Data from Hospitals and Insurers Finds Major Hospitals Still Not Complying with Price Transparency Law

But insurers are complying under the Transparency in Coverage regulations and that is where discrepancies in the disclosure of prices to the public have been found

Despite federal regulations requiring hospitals to publicly post their prices in advance of patient services, some large health systems still do not follow the law. That’s according to a new Transparency in Coverage Report from PatientRightsAdvocate.org (PRA), which found that some hospitals are “flouting” the federal Hospital Price Transparency Rule.

By cross-referencing price disclosures by hospitals and insurance companies, which are required to publish the amounts they pay for hospital services under federal Transparency in Coverage regulations, PRA, a 501(c)(3) nonprofit, nonpartisan organization, discovered the healthcare providers’ noncompliance with federal transparency regulation.

“Prices revealed in newly released health insurance company data files show some major American hospitals are omitting prices from their required price disclosures in violation of the federal hospital price transparency rule,” according to the PRA report.

Sally C. Pipes

Hospitals conceal their prices because they don’t want people to know how much rates for the same procedure vary,” Sally C. Pipes (above), President and CEO of Pacific Research Institute, wrote in the Washington Examiner. “A lack of price transparency benefits hospitals but not patients or payers. The federal government should not let providers get away with flouting the law,” she added. Clinical laboratories are also required under federal law to publish their prices. (Photo copyright: The Heartland Institute.)

Prices Paid by Insurers Missing in Hospital Files

PRA analysts compared publicly available Standard Charge File (SCF) data from seven Ascension Health and HCA Healthcare hospitals in Texas and Florida, and Transparency in Coverage disclosures from Blue Cross Blue Shield, Cigna, and UnitedHealthcare.

“PatientRightsAdvocate.org discovered several instances in which prices were omitted from the hospital files but appeared in the insurance company files,” noted the PRA report. “These discrepancies indicate that some large hospitals are not posting their complete price lists as required by the hospital price transparency rule.”

The federal Centers for Medicare and Medicaid Services (CMS) says hospitals must post standard charges in a single machine-readable digital file, and display in a consumer-friendly way, “300 shoppable services with discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.”

But according to the PRA report and news release, the study team discovered that this was not always the case. Below are examples from the report of some of the discrepancies between prices on a hospital’s website and what payers’ websites showed as prices involving those same hospitals:

Ascension Seton Medical Center, Austin, Texas:

  • The hospital SCF for shoppable services showed “N/A” (not available).
  • UnitedHealthcare files included 16 rates it negotiated by plan and BCBS shared 12 prices by plan.

Ascension St. Vincent’s Clay County Hospital, Middleburg, Florida:

  • The hospital’s SCF “did not contain negotiated rates” for services by Current Procedural Terminology (CPT) codes.
  • UnitedHealthcare showed negotiated rates for 69 CPT codes.

HCA Florida Northside Hospital, St. Petersburg, Florida:

  • PRA analysts found in the hospital SCF file “a range of 300 codes” and “one single negotiated rate.”
  • The insurer, meanwhile, displayed “many different rates corresponding to 300+ codes in the range.”

HCA Houston Healthcare Clear Lake, Webster, Texas:

HCA Medical City, Fort Worth, Texas:

  • The provider displayed in its SCF “one distinct dollar price for all 62 MS-DRG codes that appeared as a group.”
  • BCBS of Texas Blue Premier plan displayed 58 distinct negotiated rates for the codes in that group.

The report also summarized findings for:

PRA’s report casts light on inconsistencies between what insurers and providers share with the public on prices.

“Today’s report confirms that hospitals are hiding prices from patients and [this] calls into question their public assertions that individual prices don’t exist for many of the services they provide,” said PRA Founder and Chairman Cynthia Fisher in the news release.

“The data made possible by the [federal] Transparency in Coverage (TiC) rule reveals prices negotiated with insurers that hospitals did not disclose in the machine-readable files required by law. Our report is just the tip of the iceberg of what the staggering amount of data in TiC disclosures will reveal,” she added.

Ascension, HCA Note Compliance with CMS Rule

For its part, Ascension, in a statement to Healthcare Dive, confirmed it is complying with the CMS rule and offers consumers tools to estimate costs.

“We’re proud to be a leader in price transparency,” Ascension said.

HCA told Healthcare Dive it has “implemented federal transparency requirements in January 2021 and provides a patient payment estimator in addition to posting third-party contracted rates.”

Advice for Clinical Laboratories Sharing Test Prices

Hospitals flouting the federal transparency rule is not new. Dark Daily has covered other similar incidences.

In “Two Georgia Hospitals First to Be Fined by CMS for Failure to Comply with Hospital Price Transparency Law,” we reported how CMS had issued its first penalties to two hospitals located in Georgia for violating the law by not updating their websites or replying to the agency’s warning letters.

And in “Wall Street Journal Investigation Finds Computer Code on Hospitals’ Websites That Prevents Prices from Being Shown by Internet Search Engines, Circumventing Federal Price Transparency Laws,” we covered the Wall Street Journal’s report on “hundreds of hospitals” that had “embed code in their websites that prevented Alphabet Inc.’s Google and other search engines from displaying pages with the price lists.”

Clinical laboratory leaders who oversee multiple labs in healthcare systems may benefit from advice about CMS rule compliance shared in HealthLeaders.

  • Post a separate file for each provider.
  • Be “cognizant” of different sets of standard charges for multiple hospitals under one license.

“Today’s healthcare consumer wants to know prices in advance of service. That’s because many have high deductible health insurance plans of, say, $5,000 for an individual or $10,000 for a family as the annual deductible,” said Robert Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report.

Clinical laboratory tests may not be the most expensive healthcare service. But they are critical for high-quality hospital care and outcomes. Increasingly, patients want to know in advance how much they will cost. This is true of patients of all generations, from Baby Boomers to Generations X, Y, and Z.

Donna Marie Pocius

Related Information:

PRA New Report: Insurance Pricing Files Reveal That Hospitals are Hiding Prices

Transparency in Coverage

Hospitals Are Still Hiding Costs

Hospitals Are Hiding Prices from Patients, Advocacy Report Says

Large Health Systems Are Being Called Out for Lack of Price Transparency

Two Georgia Hospitals First to Be Fined by CMS for Failure to Comply with Hospital Price Transparency Law

New CMS Proposed Rule Encourages Value-Based Reimbursement Based on Patient Outcomes When Payers and Drug Manufacturers Negotiate Payment for Pricey Therapies

Clinical laboratories and anatomic pathology groups should consider this another example of how CMS is taking forward steps to encourage value-based payment arrangements throughout the health system

With the sky-high cost of many prescription drugs and gene therapies, it was only a matter of time before the Centers for Medicare and Medicaid Services (CMS) would seek to link reimbursement for them to patient outcomes.

A recent CMS proposed rule (CMS-2842-P) concerning value-based purchasing (VBP) for prescription drugs covered by Medicaid encourages payers to engage in Medicaid state value-based purchasing (aka, pay-for-performance) arrangements for expensive prescription drugs. This rule may have implications for medical laboratories and anatomic pathology groups if it were extended to cover companion diagnostics linked to expensive therapeutic drugs and gene therapies.

CMS also intents the proposed rule to help drug manufacturers ease roadblocks to contracting with payers—including Medicaid—a CMS fact sheet explained.

Federal officials are looking to reimburse healthcare providers for prescribing drugs that are shown to work best on patients that truly need them, while also incentivizing pharmaceutical manufacturers to created drugs “of high patient value,” stated Laffer Healthcare Intelligence, a Nashville, Tenn. healthcare investment firm, in an email to its intelligence service subscribers. 

In a press release announcing the proposed rule, Seema Verma, CMS Administrator, said “We are creating opportunities for drug manufacturers to have skin in the game through payment arrangements that challenge them to put their money where their mouth is.”

Old Regulations Don’t Address Value, Expensive Gene Therapies

According to CMS, for 30 years federal regulations have favored the “volume of drugs” sold over the “quality of drugs.” Simultaneously, during the past three years the US Food and Drug Administration (FDA) has approved four gene therapies with many more “in the development pipeline,” Verma wrote in the journal Health Affairs. “While the lifesaving impact of these often-curative therapies are profound, their costs are unprecedented,” she stated.

CMS’ new rule proposes to define value-based purchasing as “an arrangement or agreement intended to align pricing and/or payments to evidence-based measures and outcomes-based measures,” Verma added.

Companion Diagnostic: Molecular and Genetic Testing

For clinical laboratories, the case CMS makes for therapeutic drugs could be applied to expensive molecular diagnostics and genetic testing. CMS may base reimbursement on how accurately and how fast a lab test can enable a diagnosis. Also, payment could be linked to a lab’s report and guidance to the ordering provider in selecting a therapy that makes a difference in the patient’s outcome.

“This is exactly the concept of the companion diagnostic,” said Robert Michel, editor-in-chief of Dark Daily and its sister publication, The Dark Report. “Take, for example, a $5,000 genetic cancer test that that stages a $500,000 cancer prescription drug. Patients who will not benefit from the drug will not get it. And the $5,000 lab test may keep, say, 10 people from getting a drug that wouldn’t work for them. Thus, the $50,000 in lab tests could save $5 million in prescription drug costs,” he explained.

Deals That Focus on Gene Therapies

One gene therapy recently approved by the FDA is Zolgensma (trade name for Onasemnogene abeparvovec), a treatment for children with spinal muscular atrophy. It costs about $2 million for a one-time use, FDA Review reported.

For its part, Novartis, the Basel, Switzerland-based creator of Zolgensma, said the proposed CMS changes are “an important first step,” and helpful to the company’s “access strategy” in the US, BioPharma Dive reported.

Healthcare experts envision that deals struck under the new proposed CMS rule will focus on gene therapies and expensive drugs, MedPage Today reported.

Alexander Dworkowitz, Partner, Manatt Health
“Measuring outcomes is costly; it takes time, and everyone has to come up with a way to do it. So, if a drug costs $50, it’s not worth going to every single patient (in research). If the drug costs $500,000, maybe it’s worth it … figuring out if the drug worked. That’s why people talk about it in the context of gene therapies,” Alexander Dworkowitz (above), Partner, Manatt Health, New York, told MedPage Today. (Photo copyright: Manatt, Phelps and Phillips, LLP.)

Advancing Precision Medicine, Improving Patient Access

The CMS news release summarized potential benefits of the proposed rule (comments period ends July 20):

  • Support paying providers on improved patient outcomes instead of fees for services and volume.
  • Insurers could be in a better position to negotiate based on a drug’s effectiveness.
  • More clinical evidence about therapies may become available.
  • Providers and payers may see opportunities to use and offer medications and treatments in a precision medicine manner.
  • Patients may have greater access to new therapies.

Proposed Rule Names Pharmacy Benefit Managers, Opioids

According to the Laffer Healthcare Intelligence analysis email, CMS’ 137-page proposed rule is “very broad,” but focuses on three themes:

  •  “First, CMS wants to establish an official definition for VBP models to accelerate development of drug pay-per-value programs.
  • “Second, CMS want to restrict the amount of opioids doctors can prescribe.
  • “Third, very subtle changes are proposed that negatively affect the PBM (pharmacy benefit management) industry.”

CMS’ proposal also includes standards aimed at fighting opioid prescription fraud and misuse in Medicaid drug programs, noted Fierce Healthcare.

Transparent Drug Prices

Medical laboratory leaders may want to monitor the progress of this proposed rule. In addition to value-based payment, the rule advances price transparency by clearing the way to sharing prices of therapeutic drugs and how they improve patient care, while also lowering costs.

Meanwhile, a refresh of lab information technology to enable authorization of genetic and molecular tests by payer also may prove worthwhile.

—Donna Marie Pocius

Related Information:

Fact Sheet: Establishing Minimum Standards in Medicaid State Drug Utilization and Supporting Value-based Purchasing for Drugs in Medicaid, Revising Medicaid Drug Rebate and Third-Party Liability Requirements (CMS 2482-P)

CMS Issues Proposed Rule Empowering Commercial Plans and States to Negotiate Payment for Innovative New Therapies Based on Patient Outcomes

Federal Registry: Establishing Minimum Standards in Medicaid State Drug Utilization Review and Supporting Value-based Purchasing for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third-Party Liability Requirements (CMS 2482-P)

CMS’ Proposed Rule on Value-based Purchasing for Prescription Drugs: New Tools for Negotiating Prices for the Next Generation of Therapies

FDA Approves $2 Million Drug; Blame the Price on Excessive Regulation

With New Proposal, Trump Administration Tries to Encourage ‘Value-based’ Drug Deals

CMS Proposes Rule to Encourage ‘Value-based’ Drug Payments in Medicaid—Could Ease Access to Expensive Therapies, Experts Say

CMS Proposed Rule Aims to Foster More Medicaid Value-based Drug Agreements

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