Insurance industry claims new federal price transparency regulations cost each payer as much as $13.6 million in set up and maintenance costs
Price transparency in hospital, clinical laboratory, and other service provider costs marches ever closer to reality for America’s healthcare consumers. Meanwhile, some insurers and hospital groups are working to block implementation of federal rules they argue will confuse consumers and potentially lead to higher costs.
The first is a Proposed Rule, titled, “Transparency in Coverage Proposed Rule” (CMS-9915-P) that would require payers to make public on their websites negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Insurers also would be required to make an online “tool” available to members that would provide consumers with out-of-pocket cost estimates for “all covered healthcare items and services.” The 60-day public comment period for this rule went into effect November 15, 2019.
Medical laboratories and anatomic pathology groups may want to closely monitor ongoing efforts by payers and hospital groups to block these rules, since any changes will extend to their services, as well as extend price transparency to most employer-based group health plans and health insurance issuers offering group and individual coverage.
Will Transparency Lead to Higher Healthcare Costs?
In its story on insurer claims, FierceHealthcare reported that the rule would require payers to disclose a “staggering” amount of data, leading to implementation costs 26 times more than the Trump administration’s $510,000 estimate. To comply with the federal rule, an insurer will spend as much as $13.63 million on setup and maintenance. That prediction is based on an economic analysis from economic consulting firm Bates White, which conducted the survey on behalf of The Blue Cross Blue Shield Association (BCBSA).
“Some plans have indicated they would be forced to run two sets of tools—one designed to meet member shopping needs and another implemented only to meet the requirements of the proposed rule,” the BCBSA told FierceHealthcare.
Meanwhile, the Association for Community Affiliated Plans (ACAP) argued in a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma that cost-sharing liability estimates—which are not a price quote for care—could “lead to consumer confusion and frustration.” The ACAP also asserts the transparency plan could inadvertently lead to higher healthcare cost increases.
“In the absence of quality data, consumers may determine that high cost equates to higher value, select the higher-cost providers, and ultimately drive up medical expenses, especially in circumstances where the consumer’s out-of-pocket costs have been met,” wrote ACAP Chief Executive Officer Margaret A. Murray.
“We have long supported efforts to make quality and pricing information more accessible, understandable, and actionable for consumers,” the ACHP wrote. “But they need real-time, patient-specific information tied to individual coverage benefits, not a massive published list of prices that may only frustrate consumers and likely increase costs over time.”
Hospital Associations and Healthcare Systems Bring Lawsuit Against HHS
In December 2019, several hospital associations and healthcare groups filed a lawsuit to block next year’s implementation of the hospital price transparency rule. The plaintiffs included the:
These healthcare organizations and providers joined together to argue that HHS lacks the statutory authority to require and enforce public disclosure of individually negotiated rates between commercial health insurers and hospitals. They also say consumers are likely to be confused by the information they receive.
In its legal response, HHS contends that hospitals are adding to consumers’ confusion by failing to provide transparency.
“They do not dispute that consumers are casting about for accurate information about prices in a complex healthcare system, yet they rely on that same complexity as an affirmative reason to deprive patients of pricing information they need to figure out their out-of-pocket expenses,” HHS said in its brief.
DePaul University Professor Anthony LoSasso, PhD, who specializes in healthcare economics, admits to being “on the fence” regarding the pros and cons of transparency plans.
“I want to think that people can benefit from price transparency. But for a variety of reasons, people don’t look at pricing info even when it’s available,” LoSasso told WTTW News in Chicago.
Nevertheless, HHS vows to continue its push for price transparency.
“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it,” HHS Deputy Assistant Secretary and National Spokesperson Caitlin Oakley told Reuters in a response to the hospital groups’ lawsuit.
In light of the government’s push to make healthcare pricing more transparent, clinical laboratory and anatomic pathology leaders in hospitals and health systems would be wise to prepare for a future that includes price shopping by consumers.
In a separate study, HHS finds a 40% increase in sepsis cases, as more patients succumb to infections without effective antibiotics and antimicrobial drugs
Given the drastic steps being taken to slow the spread of the Coronavirus in America, it’s easy to forget that significant numbers of patients die each year due to antibiotic-resistant bacteria (ARB), other forms of antimicrobial resistance (AMR), and in thousands of cases the sepsis that follows the infections.
The CDC’s website states that “more than 2.8 million antibiotic-resistant infections occur in the US each year, and more than 35,000 people die as a result.” And a CDC news release states, “on average, someone in the United States gets an antibiotic-resistant infection every 11 seconds and every 15 minutes someone dies.”
Those are huge numbers.
Clinical laboratory leaders and microbiologists have learned to be vigilant as it relates to dangerously infectious antimicrobial-resistant agents that can result in severe patient harm and death. Therefore, new threats identified in the CDC’s Antibiotic Resistance Threats in the United States report will be of interest.
Drug-resistant Microbes That Pose Severe Risk
The CDC has added the fungus Candida auris (C. auris) and carbapenem-resistant Acinetobacter (a bacteria that can survive for a long time on surfaces) to its list of “urgent threats” to public health, CDC said in the news release. These drug-resistant microbes are among 18 bacteria and fungi posing a greater threat to patients’ health than CDC previously estimated, Live Science reported.
The CDC considers five threats to be urgent. Including the
latest additions, they are:
Dark Daily has regularly covered the healthcare industry’s ongoing struggle with deadly fungus and bacteria that are responsible for hospital-acquired infections (HAI) and sepsis. This latest CDC report suggests healthcare providers continue to struggle with antimicrobial-resistant agents.
Acinetobacter Threat Increases and C. auris
a New Threat since 2013
Carbapenem-resistant Acinetobacter, a bacterium that
causes pneumonia and bloodstream and urinary tract infections, escalated from
serious to urgent in 2013. About 8,500 infections and 700 deaths were noted by the
CDC in 2017.
C. auris, however, was not addressed in the 2013
report at all. “It’s a pathogen that we didn’t even know about when we wrote
our last report in 2013, and since then it’s circumvented the globe,” said Michael
Craig, Senior Adviser for the CDC’s Antibiotic Resistance Coordination and
Strategy Unit, during a news conference following the CDC announcement, Live
Science reported.
Today, C. auris is better understood. The fungus
resists emerging drugs, can result in severe infections, and can be transmitted
between patients, CDC noted.
By year-end, CDC tracking showed 988 cases in the US.
More Patients Getting Sepsis as Antibiotics Fail: HHS
Study
In a separate study published in Critical Care Medicine, a journal of the Society of Critical Care Medicine (SCCM), the US Department of Health and Human Services (HHS) found that antibiotic-resistant bacteria and fungi are resulting in more people acquiring sepsis, a life-threatening condition, according to an HHS news release.
Sepsis increased by 40% among hospitalized Medicare patients
from 2012 through 2018, HHS reported.
“These (untreatable infections) are happening here and now in the United States in large numbers. This is isn’t some developing world thing. This isn’t a threat for 2050. It’s a threat for here and now,” Cornelius “Neil” Clancy, MD, Associate Chief of Veterans Affairs Pittsburg Health System (VAPHS) and Opportunistic Pathogens, told STAT.
It is troubling to see data about so many patient deaths
related to antibiotic-resistant infections and sepsis cases when the world is
transfixed by the Coronavirus. Nevertheless, it’s important that medical laboratory
leaders and microbiologists keep track of how the US healthcare system is or is
not responding to these new infectious agents. And, to contact infection
control and environmental services colleagues to enhance surveillance, ensure
safe healthcare environments and equipment, and adopt appropriate strategies to
prevent antibiotic-resistant infections.
In a federal lawsuit, seven healthcare organizations and hospitals systems allege HHS exceeded its statutory authority and clinical laboratories will want to watch how this court case unfolds
There is quite a brouhaha over the final new federal rule requiring hospitals to allow patients and the public to see the prices they charge for services—including clinical laboratory and anatomic pathology prices. Some very influential hospital associations and healthcare systems are opposing implementation of this rule.
For more than a decade, Dark Daily has
reported on the federal government’s efforts to enact pricing transparency in
healthcare. In many e-briefings, we advised pathologists
and medical
laboratory leaders that the outcome of those efforts will likely affect
clinical laboratory workflows and bottom lines, and that many clinical laboratories
are not prepared to negotiate directly with customers over the price of their
services.
Now, the federal Centers for Medicare and Medicaid Services
(CMS) has passed a final
rule (CMS-1717-F2) that expands on an earlier rule mandating pricing
transparency for hospital procedures—including medical
laboratory and anatomic
pathology services. This new rule requires hospitals to disclose not only
their chargemaster
prices, but also prices negotiated with payers.
Hospital leaders are not pleased by this, and though the
final rule does not go into effect until January 1, 2021, they are already
pushing back through representative organizations such as the American Hospital Association (AHA), which has
brought a lawsuit to federal court that seeks to overturn the new rule.
New Transparency Rules Include Rates Negotiated with Health
Insurers
Beginning Jan. 1, 2019, CMS required hospitals to disclose chargemaster prices to customers. These are essentially the “list prices” for hospital procedures. However, as Dark Daily reported in “California Healthline Report Finds Hospital Chargemaster Prices Fluctuate Dramatically Even Among Hospitals Located Near Each Other,” June 12, 2019, there were problems. Chargemaster prices typically do not reflect the actual fees charged to patients or payers. Thus, consumers still found it problematic to price shop before committing to healthcare.
In an effort to remedy this, the
new 2020 final rule expands the pricing information hospitals are required to
provide and includes several categories of prices negotiated with health insurers.
Simultaneous to this final rule, CMS also announced a
proposed rule (CMS-9915-P) titled, “Transparency
in Coverage,” that if passed, will require health insurers to disclose
pricing for healthcare services as well.
In a federal Department of Health and Human Services (HHS) press
release, the Trump Administration stated that both rules will “increase
price transparency to empower patients and increase competition among all
hospitals, group health plans, and health insurance issuers in the individual
and group markets.”
“Under the status quo, healthcare prices are about as clear
as mud to patients,” said CMS Administrator Seema Verma in the HHS press
release. “This final rule and the proposed rule will bring forward the
transparency we need to finally begin reducing the overall healthcare costs.”
AHA Sues HHS in Federal Court
In response, four hospital organizations and three health
systems filed a
lawsuit in federal court against the HHS. The suit alleges the final rule
“exceeds the agency’s statutory authority,” and violates the First Amendment by
requiring public disclosure of prices negotiated with payers. This information,
they say, is “highly confidential and commercially sensitive.”
In court
documents, the plaintiffs argue that “the Final Rule is arbitrary and
capricious and lacks any rational basis. The agency’s explanation for the Final
Rule runs counter to both logic and evidence. In fact, it is belied by the
agency’s own research regarding what patients care about most when selecting a
hospital: their own out-of-pocket costs. The agency’s justification for the
Final Rule therefore does not stand up to even the barest of scrutiny. That is
the epitome of arbitrary and capricious agency action.”
A brief
filed by the plaintiffs contends that patients’ actual out-of-pocket costs
are determined by a complex set of factors and aren’t reflected in negotiated
rates. In addition, the brief states, “the sheer burden of compliance with the
rule is staggering, and way out of line with any projected benefits associated
with the rule.”
Details of the Final Rule on Hospital Price Transparency
If it goes forward, starting Jan. 1, 2021, the final rule
requires hospitals to disclose five types of standard charges, according to the
HHS and AHA press releases:
The chargemaster rate, also known as the gross
charge;
The discounted cash price, which CMS defines as
the amount the hospital will accept from self-paying patients;
The payer-specific negotiated charge, defined as
“the charge that the hospital has negotiated with a third-party payer for an
item or service.” This would be the charge that applies if a patient uses an
in-network provider;
The maximum charge negotiated with payers; and
The minimum charge negotiated with payers.
Hospitals must list these charges for all billable “items
and services,” including medical laboratory and pathology services, in a
machine-readable format, such as a CSV file that
can be opened in a spreadsheet program.
In addition, they must provide a “consumer-friendly” list of charges for at least 300 “shoppable services,” defined as services that consumers can schedule in advance. Each list would include 70 services specified by CMS and an additional 230 services selected by the hospital.
The CMS-specified shoppable services include 14 laboratory
and pathology tests. They include:
Basic metabolic panel
Blood test, comprehensive group of blood
chemicals
Obstetric blood test panel
Blood test, lipids (cholesterol and triglycerides)
Kidney function panel test
Liver function blood test panel
Manual urinalysis test with examination using
microscope
Automated urinalysis test
PSA (prostate specific antigen)
Blood test, thyroid stimulating hormone (TSH)
Complete blood cell count, with differential
white blood cells, automated
Complete blood count, automated
Blood test, clotting time
Coagulation assessment blood test
Blood Brother Clinical Laboratories Also Affected by
Price Transparency
Price transparency is also at the center of two federal
lawsuits involving Laboratory Corporation of America (LabCorp) and Quest
Diagnostics. The Dark Report, Dark Daily’s sister publication, reported
on these suits in “Lawsuits
Alleging Overcharges to Proceed in Two Courts in 2020,” December 16, 2019.
The plaintiffs in those cases are uninsured or underinsured
customers who claim they were charged far more for medical laboratory tests
than customers covered by insurance. In both cases, customers were charged at
the chargemaster rates. The plaintiffs contend that the medical laboratories
should have disclosed their rates in advance.
Whichever way this all goes, clinical laboratories will need
to monitor the multiple efforts by the states and the federal government to
make it easy for patients to see the prices of hospital, physician, and other
medical services in advance of treatment. This has the potential to be a disruptive
trend, particularly for hospitals.
Medical laboratory leaders need to take opportunities to stay abreast of government and payer activity, particularly as payer audits become tougher, say legal experts
Even compliant clinical laboratories and anatomic pathology groups are reporting tougher audits and closer scrutiny of the medical lab test claims they submit for payment. This is an unwelcome development at a time when falling lab test prices, narrowing networks, and more prior-authorization requirements are already making it tough for labs to get paid for the tests they perform.
Clinical laboratory leaders can expect continued scrutiny of
their labs’ operations and financials as government and commercial payers move
forward with invasive programs and policies designed to ferret out fraud and
bad actors.
Federal officials are focusing their investigations on healthcare providers who mismanage or inappropriately use Medicare and Medicaid programs, while commercial payers are closely scrutinizing areas such as genetic testing prior authorization, say healthcare attorneys with Cleveland Ohio-based McDonald Hopkins, LLC.
“The government is looking at fraud, waste, and abuse, and all the different ways they come into play,” said Elizabeth Sullivan, Esq., a Member and Co-Chair of the firm’s Healthcare Practice Group, in an exclusive interview with Dark Daily. “We anticipate there will be more enforcement [of fraud and abuse laws] centered around different issues—anything that can be a false claim.”
Specifically, government officials will key in on violations of the Stark Law, EKRA (the Eliminating Kickback in Recovery Act of 2018), and other anti-kickback statutes and laws, Sullivan said.
“And clinical laboratories, by virtue of the type of
services and service arrangements they offer, will continue to be a target,” she
added.
Medical laboratory leaders also must prepare for aggressive tactics by insurance companies. “On the commercial side, payers are getting more aggressive and more willing to take things to ligation if they don’t get what they want and don’t see a settlement that satisfies their concerns over issues,” said Courtney Tito, Esq., also a Member with McDonald Hopkins, in the Dark Daily interview.
Current Investigations Likely to Impact Clinical
Laboratories
Sullivan and Tito advise clinical labs to be aware of the
following issues being fast-tracked by government and private payers:
EKRA (Eliminating Kickback in Recovery Act of 2018).
The TPE audits program, according to CMS, is focused on providers with high claim error rates or unusual billing practices. During a TPE, a Medicare administrative contractor (MAC) works with a provider to identify and correct errors.
“The TPE audits are real hot right now. We are seeing a lot
of clients go through this,” Tito said.
Feds Crack Down on Genetic Testing Fraud Schemes
Genetic testing is another “hot button” issue for
enforcement by government and private payers, Sullivan and Tito state.
CMS is taking action against testing companies and
practitioners who submitted more than $1.7 billion in claims to Medicare, the
statement added.
The scheme involved medical laboratories conducting the genetic tests, McDonald Hopkins noted in an Alert about the DOJ investigation. The alert described how the scam operated:
Scam recruiters approached Medicare
beneficiaries at health fairs;
In exchange for a DNA sample (in the form of a
cheek swab) and a copy of the victim’s driver’s license, the “representative”
offered a free genetic test;
Representatives allegedly asked the seniors’
doctors to sign-off on test orders. If the seniors’ physicians refused, the
scammers offered kickbacks to doctors already in their group;
Clinical laboratories that performed the tests
were reimbursed from Medicare and, allegedly, shared the proceeds with the scammers.
“Although these opportunities may seem appealing as an
additional revenue source for providers, it is always important to review the
regulatory requirements as well as the potential anti-kickback statute and
Stark implications for any new arrangement,” Sullivan and Tito wrote in the McDonald
Hopkins Alert article.
Criminal Behavior in CMS Programs
Effective Nov. 4, 2019, CMS issued a final rule intended to stop fraud before it happens by keeping “unscrupulous providers” out of the federal healthcare programs in the first place, states a CMS news release.
Additionally, EKRA establishes “criminal penalties for unlawful payments for referrals to recovery homes and clinical treatment facilities,” Dark Daily recently reported. However, as the e-briefing points out, it is unclear whether EKRA applies to clinical laboratories.
Nevertheless, Sullivan points out that, “Even without EKRA,
the anti-kickback statute applies to any arrangement between individuals. And,
it is good to have an attorney look at those arrangements. What your sales reps
are doing in the field, how they are communicating, and their practices warrant
oversight. EKRA just makes it all the more important.”
Clinical Laboratories Need Compliance Plan, Focus on
Payers
With so many legal requirements and payer programs, Sullivan
advises medical labs and pathology group practices to work with resources they
trust and to have a compliance plan at the ready. “Have resources in place,
including but not limited to a compliance officer, a committee, and someone who
is spending time on these issues. Monitoring government enforcement and payer
activity is the most critical,” she said.
To assist labs in remaining fully informed on these critical
compliance topics, and the federal government’s latest legislation to combat
fraud, Dark Daily is offering a webinar on November 20th at 1pm Eastern
time. Sullivan and Tito will offer their insights and advice on how labs should
prepare for CMS’ battle to reign in fraud and commercial payers’ increased
scrutiny into prior authorizations.
Clinical laboratory leaders, compliance officers, and
finance staff will benefit greatly from this crucial resource.
Drug companies claim HHS rule violates their first amendment rights, but added web links to drug prices in their TV ads anyway
Will American consumers ever see the prices of their
prescription drugs? That almost happened this summer, when a Trump
administration healthcare transparency initiative would have required
pharmaceutical companies to include prices in drug advertisements. But that
requirement was halted by a federal judge one day before it was scheduled to take
effect.
The measure, which passed in May, was intended to provide
healthcare consumers with price transparency for some prescription medications
and help lower prescription costs. However, a federal judge placed the new law
on hold citing government over-reach.
This is a significant development for clinical
laboratory managers, pathologists,
and others watching efforts that will enable patients to see the cost of their
medical care in advance of service. Also, few were surprised to learn that this
court case was filed by pharmaceutical companies with the goal of preventing
prescription drug prices from being disclosed in these advertisements.
HHS Tells Big Pharma to ‘Level with People’ About Drug
Costs
Reducing prescription drug prices is a critical issue for
healthcare consumers. Therefore, any policy that helps lower costs should
provide benefits for both patients as well as the healthcare industry overall.
That’s why President Trump signed the initiative that required pharmaceutical
companies to include drug prices in television advertisements.
The controversial proposal, which would have applied to all prescription
drugs that cost more than $35 for a one-month supply, was scheduled to go into
effect over the summer until it was blocked by Federal Judge Amit Mehta of
the US District Court for the District of Columbia.
Judge Mehta ruled that HHS does not have the regulatory
power to force pharmaceutical companies to include the prices of prescription
drugs in their TV ads and that the agency had violated laws passed by Congress.
“That policy very well could be an effective tool in halting
the rising cost of prescription drugs. But no matter how vexing the problem of
spiraling drug costs may be, HHS cannot do more than what Congress has
authorized,” Mehta wrote in his decision, NPR
reported.
Drug companies Amgen
(NASDAQ:AMGN), Eli Lilly (NYSE:LLY) and Merck (NYSE:MRK) along with the Association of National Advertisers (ANA) filed
lawsuits over the regulation stating it was a violation of their free speech
rights. They won the reprieve on July 8, just one day before the regulation would
have gone into effect.
Mehta stated in his opinion
that the Social
Security Act, which HHS used as its basis for the regulation, does not
“empower HHS to issue a rule that compels drug manufacturers to disclose list
prices,” Fierce
Pharma reported.
In August, the Trump administration filed an appeal after the
federal judge struck down the regulation. The exact basis for that appeal has
not been disclosed.
Drug Companies Decry New Law as Unconstitutional
Many drug makers are not happy with the rule. Drug industry
trade group Pharmaceutical Research and
Manufacturers of America (PhRMA) believes that mandating drug companies to
disclose pricing in TV commercials is a violation of their First Amendment
rights, STAT reported.
Nevertheless, PhRMA proposed that pharmaceutical companies
provide a web link in their TV advertisements that directs consumers to pricing
information online. And some companies also are experimenting with going a step
further and voluntarily complying with the original regulation.
In a news
release, PhRMA states, “To help patients make more informed healthcare
decisions, [PhRMA] member companies today announced their commitment to
providing more transparency about medicine costs. PhRMA member companies’
direct-to-consumer (DTC) television advertisements will soon direct patients to
information about medicine costs, including the list price of the medicine,
out-of-pocket costs, or other context about the potential cost of the medicine
and available financial assistance. The biopharmaceutical industry will also
launch a new platform that will provide patients, caregivers, and providers
with cost and financial assistance information for brand-name medicines, as
well as other patient support resources.”
However, Azar said that action is not in compliance with the
rule. “They put $4 billion a year into television advertising because the
television ad is where people are getting their information, and to point them
to the internet would be the equivalent of saying that they should simply be
putting their ads on the internet and not running them on TV,” he told the
press, STAT reported.
Opponents of the rule noted that actual drug costs for
consumers can vary widely depending on coverage and that patients might forgo
their medications if they are concerned about the costs, reported Politico
following passage of the measure in May.
Critics also claimed that that there were no enforcement
mechanisms outlined for companies that did not comply with the ruling, and that
it relied on the pharmaceutical industry to police itself. If a particular
company failed to include the required information in its TV ads, competitors
could file suit against it under the deceptive and unfair trade practice
provisions of the Lanham Act,
Politico noted.
Solutions to the public’s demand for price transparency in
healthcare may be forthcoming. However, at press time, no further information
concerning the status of this HHS regulation was available. Dark Daily
will continue to monitor the situation and inform readers of any developments.
Meanwhile executives and pathologists at the nation’s
clinical laboratories should continue to develop strategies to serve patients
who want to know the prices of their medical laboratory tests before they arrive
to have their specimens collected.
This summer, several pharma companies may have succeeded in
getting a federal court to stop this particular rule to disclose prescription
drug prices. But the trend toward price transparency has deep roots and will
continue forward.