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Hospitals Must Post Prices for Common Procedures in 2021

Nov. 15, 2019, 2:44 PM

Some 6,000 hospitals nationwide must disclose their standard charges for 300 services such as hip replacements and tonsillectomies in an easy-to-read format as part of a rule announced Nov. 15.

The rule and a proposal that would require insurance companies to disclose out-of-pocket costs to patients are part of the Trump administration’s efforts to control medical costs by making charges more transparent.

The rules could dramatically change billing in health care and the way the industry conducts transactions. The two rules will be among the most scrutinized proposals to pass through the department as both hospitals and insurers say the rules could cost them more and reveal negotiated prices they say are proprietary.

These changes “may be a more significant change to American healthcare markets than any other single thing we’ve done, by shining light on the costs of our shadowy system and finally putting the American patient in control,” Health and Human Services Secretary Alex Azar said in a statement.

Beginning in 2021, hospitals must publicly post their standard charges online. Hospitals will have to post payer-specific negotiated charges, the amount the hospital will accept in cash for an item or service, and the minimum and maximum negotiated rates for 300 common shoppable services that can be scheduled in advance, like imaging, outpatient visits, and lab tests.

The information must be in a prominent location online that is easily accessed and is searchable. The service descriptions must be in plain language that basic consumers can understand. Hospitals that don’t comply can face penalties of up to $300 per day.

lnsurer Disclosures

Under the second rule, insurance plans would have to disclose on the internet personalized out-of-pocket costs for services to patients. Most plans, including employer-based group health plans and health insurance issuers offering group and individual coverage, will be required to post the information, although individual insurance plans sold prior to the Affordable Care Act will not.

Plans would also be required to make their in-network negotiated rates with doctors and allowable out-of-network rates available to the public.

Insurers that encourage patients to shop for providers that provider lower cost services with higher value and share those savings will receive credit for those actions in their medical loss ratio. The medical loss ratio is the percentage of a premium that an insurer spends on services that improve care quality, and insurers have to pay rebates if they don’t meet a certain threshold.

The administration is looking for comments on whether insurance companies should be required to make the pricing information disclosed through an application programming interface, software that enables two computer programs to talk to each other. They also are asking for feedback on how quality information can be incorporated into these rules.

To contact the reporters on this story: Shira Stein in Washington at sstein@bloomberglaw.com; Tony Pugh in Washington at tpugh@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Andrew Childers at achilders@bloomberglaw.com