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Health Insurers and Hospital Groups Argue Price Transparency Rules on Hospitals, Clinical Laboratories, and Other Providers Will Add Costs and ‘Confuse’ Consumers

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 pushback from hospital and payer lobbies centers on a pair of new federal rules that build on directives in President Trump’s 2017 Executive Order Promoting Healthcare Choice and Competition (13813) and that direct federal agencies to modify their implementation of the Patient Protection and Affordable Care Act.

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.

The second is a Final Rule which goes into effect on Jan.1, 2021, titled, “Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates. Price Transparency Requirements for Hospitals to Make Standard Charges Public” (CMS-1717-F2). The rule requires hospitals to disclose online not only their chargemaster prices but also prices negotiated with payers for 300 “shoppable” healthcare services.

These shoppable services include:

Medical Laboratory and Pathology Services

  • 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

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.

The Alliance of Community Health Plans (ACHP) echoed those views in its own statement, claiming the Trump plan will burden consumers and drive up costs.

“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.

“America’s hospitals and health systems stand with patients and are dedicated to ensuring they have the information needed to make informed healthcare decisions, including what their expected out-of-pocket costs will be,” said Rick Pollack (above), President and CEO, American Hospital Association, in a news release. “Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry.” (Photo copyright: American Hospital Association.)

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.

—Andrea Downing Peck

Related Information:

Executive Order Improving Price Quality and Transparency in American Healthcare to Put Patients First

Transparency in Coverage Proposed Rule (CMS-9915-P)

Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates. Price Transparency Requirements for Hospitals to Make Standard Charges Public

Insurers: Price Transparency Rule Puts ‘Staggering,’ Expensive Burden on US

Lawsuit vs Alex M. Azar II, in his official capacity as Secretary of Health and Human Services

Hospital Groups File Lawsuit Over Illegal Rule Mandating Public Disclosure of Individually Negotiated Rates

The Pros and Cons of New Health Care Price Transparency Rule

Azar Price Transparency

Hospital Groups File Lawsuit to Block Trump’s Price Transparency Rule

CDC Ranks Two More Drug-Resistant Microbes as ‘Urgent Threat’ to Americans; Clinical Laboratories Are Advised to Increase Awareness of Antimicrobial Resistance

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.

This is why the Centers for Disease Control and Prevention (CDC) issued the report “Antibiotic Resistance Threats in the United States, 2019 (2019 AR Threats Report)” last fall. The federal agency wants to call attention the emergence of new antibiotic-resistant bacteria and fungi. In its report, the CDC lists 18 bacteria and fungi that pose either urgent, serious, or concerning threats to humans. It also placed one fungus and two bacteria on a “watch” list.

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.

In 2013, the CDC estimated that about two million people each year acquired an antibiotic-resistant (AR) infection that killed as many as 23,000. However, in 2019, the CDC reported that those numbers were low and that the number of deaths due to AR infections in 2013 was about twice that amount. During a news conference following the CDC announcement, Michael Craig (above), a Senior Adviser for the CDC’s Antibiotic Resistance Coordination and Strategy Unit said, “We knew and said [in 2013] that our estimate was conservative … and we were right,” Live Science reported. In 2019, CDC reported 2.8 million antibiotic-resistant infections annually with more than 35,000 related deaths in the US alone. (Photo copyright: Centers for Disease Control and Prevention.)

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.

Last year, Dark Daily reported on C. auris, noting that as of May 31 the CDC had tracked 685 cases. (See, “Potentially Fatal Fungus Invades Hospitals and Public Is Not Informed,” August 26, 2019.)

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.   

—Donna Marie Pocius

Related Information:

CDC:  Biggest Threats and Data: 2019 Antibiotic Resistance Threats in the United States

More People in the U.S. Dying from Antibiotic-Resistant Infections Than Previously Estimated; Significant Progress Since 2013 Could be Lost Without More Action

These Two Drug-Resistant Microbes Are New “Urgent Threats” to Americans’ Health

CDC Report: 35,000 Americans Die of Antibiotic-Resistant Infections Each Year

The Superbug Candida Auris is Giving Rise to Warnings and Big Questions

On the Emergency of Candida Auris Climate Change, Azoles, Swamps, and Birds

Largest Study of Sepsis Cases Among Medicare Beneficiaries Finds Significant Burden

Sepsis Among Medicare Beneficiaries: The Burdens of Sepsis 2012 to 2018

Dark Daily: Hospital-Acquired Infection

Potentially Fatal Fungus Invades Hospitals and Public is Not Informed

Hospital Associations and Healthcare Groups Battle HHS Efforts to Expand Pricing Transparency Rules to Include Negotiated Rates with Payers

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.”

The plaintiffs include the:

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.”

Charles N. Kahn III (above), President and CEO, Federation of American Hospitals (FAH), said in an AHA press release that, “CMS’ final rule fails to offer patients easy-to-understand information regarding their out-of-pocket obligations for care, so we feel obligated to contest the regulation. We contend the agency exceeded its authority and should go back to the drawing board.” (Photo copyright: FAH.)

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.

—Stephen Beale

Related Information:

Hospitals Sue HHS Over Negotiated Price Disclosure Rule

Hospitals Vary in Publishing CMS Chargemaster Prices

Providers Critical of CMS Price Transparency Push in Pay Rule

Verma: Chargemaster Rule Is ‘First Step’ to Price Transparency

Trump’s Transparency Executive Order Leaves Details to HHS, CMS

CMS May Not Have Power to Make Hospitals Disclose Negotiated Prices

HFMA Summary Negotiated Rate Posting Requirement CY 2020 OPPS Proposed Rule

Rules Issued on Disclosure of Hospital and Health Plan Negotiated Rates

Joint Statement from National Hospital and Health System Groups on Public Disclosure of Privately Negotiated Rates Final Rule

Hospital Groups File Lawsuit Over Illegal Rule Mandating Public Disclosure of Individually Negotiated Rates

Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States

Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans

Lawsuits Alleging Overcharges to Proceed in Two Courts in 2020

Latest Push by CMS for Increased Price Transparency Highlights Opportunities and Risks for Clinical Laboratories, Pathology Groups

Preparing Clinical Laboratories for Invasive Federal Enforcement of Fraud and Abuse Laws, Increased Scrutiny by Private Payers, New Education Audits, and More

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:

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.

In fact, the US Department of Justice (DOJ) and the US Department of Health and Human Services (HHS) in September announced charges against 35 people including nine physicians for allegedly participating in healthcare fraud schemes involving genetic cancer testing of seniors nationwide, states a DOJ news release.

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.

The rule (CMS-6058-FC), called “Program Integrity Enhancements to the Provider Enrollment Process,” has new revocation and denial authorities to stop waste, fraud, and abuse, the news release points out.

Reasons CMS can revoke or deny enrollment to providers, according to another McDonald Hopkins Alert, include:

  • Outstanding debt to CMS following overpayment to the provider;
  • Coming back into CMS programs with a new identity;
  • Billing for services from non-compliant locations;
  • Abusive ordering or certifying under Medicare Part A or Medicare Part B.

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.”

During an upcoming Dark Daily webinar, attorneys Elizabeth Sullivan (left) and Courtney Tito (right) of McDonald Hopkins, LLC, will advise clinical laboratory leaders and financial staff on how to prepare for future aggressive payer audits, rigid enforcement of fraud and abuse laws, and more. (Photos copyright: LinkedIn/Dark Daily.)

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.

Register for “Bracing for Aggressive Payer Audits, Rigid Enforcement of Fraud and Abuse Laws, and More” at https://www.darkdaily.com/product/payor-audits-webinar/ or by calling 512-264-7103.

—Donna Marie Pocius

Related Information:

Dark Daily Webinar: What Lab Leaders Need to Know About How to Prepare for 2020: Bracing for Aggressive Payer Audits, Rigid Enforcement of Fraud and Abuse Laws, and More

Federal Law Enforcement Action Involving Fraudulent Genetic Testing Results in Charges Against 35 Individuals Responsible for Over $2.1 Billion in Losses is One of the Largest Healthcare Fraud Schemes Ever Charged

OIG Focusing on Laboratories Involved in Genetic Testing Scams

CMS Announces New Enforcement Authorities Reduce Criminal Behavior in Medicare, Medicaid, and CHIP

CMS Aims to Combat Criminal Behavior Through Enrollment Process

Does New Opioid Law Require Clinical Laboratories to Change How They Pay Sales Employees?

Federal Judge Blocks New HHS Rule That Would Have Required Pharmaceutical Companies to Include Pricing in Television Ads

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.

“We are telling drug companies today: You’ve got to level with people [about] what your drugs cost,” Health and Human Services (HHS) Secretary Alex Azar (above) stated after Congress passed the President’s proposal, STATreported. “Put it in the TV ads. Patients have a right to know, and if you’re ashamed of your drug prices, change your drug prices. It’s that simple.” [Photo copyright: Washington Times.]

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.

—JP Schlingman

Related Information:

Drug Makers Will Have to Include Prices in TV Ads as Soon as This Summer

Judge Blocks Trump Rule Requiring Pharma Companies to Disclose Drug Prices in TV Ads

Appeal Shows Trump’s HHS Isn’t Giving Up on Putting Drug Prices in TV Ads

Trump Finalizes Rule to Require Drug Prices in TV Ads

Johnson and Johnson Will List Drug Prices in TV Commercials

PhRMA Members Take New Approach to DTC Television Advertising

What You Need to Know about Putting Drug Prices in TV Ads

Why Putting List Prices in Drug Ads Matters

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