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CMS Proposes Repeal of Median MA Rate Reporting, While Lawmakers Raise Concerns Over Hospital Price Transparency Compliance, Request Increased Enforcement

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As part of the FY 2022 Inpatient Prospective Payment System (IPPS) proposed rule issued on April 27, 2021, CMS intends to repeal a requirement that hospitals report their median payer-specific negotiated charges with Medicare Advantage (MA) plans. Meanwhile, lawmakers continue to call for increased hospital transparency in other areas. On April 13, 2021, four key lawmakers in the U.S. House of Representatives wrote to HHS expressing concern over reports of non-compliance with hospital price transparency rules that went into effect earlier this year. CMS regulations published in November 2019 require hospitals to publicly report information regarding their standard charges, including privately negotiated charges with commercial health insurers, effective January 1, 2021. The letter from bipartisan leaders of the House Energy and Commerce (E&C) Committee urges HHS to increase enforcement of these rules to ensure hospital compliance.

Although CMS may be backing away from one of the hospital transparency rules issued by the last administration, it is expected that CMS's current leadership will continue to require hospitals to report standard charge information, and hospitals should anticipate increased oversight.

Proposed Repeal of MA Rate Reporting Requirement

CMS is proposing to retract a hospital reporting requirement imposed by the last administration. Under the FY 2021 IPPS final rule, CMS required hospitals to report on the Medicare cost report the median-payer-specific negotiated charge the hospital has negotiated with all MA plans, by MS-DRG, for cost reporting periods ending on or after January 1, 2021. CMS also finalized a policy to use the MA rate information to set fee-for-service (FFS) payment rates, beginning in FY 2024.

In the FY 2022 IPPS proposed rule, CMS indicated plans to repeal both requirements after "further consideration of the many contract arrangements hospitals use to negotiate rates with MA organization payers, and the usefulness, for rate-setting purposes, of the market based data." In comments submitted in response to the proposed rule, hospitals opposed requirements to report market rates on the cost report and using them to set FFS rates. Hospitals emphasized that the Medicare statute requires CMS to base FFS rates on hospital resources, not market rates. Hospitals linked the proposal to the hospital price transparency rules, which they also opposed.

Concerns Related to Hospital Non-Compliance

Although CMS is proposing to repeal the median MA plan rate reporting requirement, it is continuing to implement the hospital price transparency rules, which impose two requirements on hospitals: 1) establish, update, and make public in a machine-readable file a list of all standard charges for all items and services; and 2) make public a consumer-friendly list of standard charges for a limited set of "shoppable services." A more detailed summary of the reporting requirements is available here.

The ultimate penalty for non-compliance may include the imposition of civil monetary penalties (CMPs) of up to $300 per day if a hospital fails to respond to a request for a corrective action plan or fails to comply with the terms of a corrective action plan. CMS announced in December 2020 that the agency plans to audit a sample of hospitals to ensure compliance, beginning in January 2021, and to investigate complaints of non-compliance submitted to CMS. According to recent media reports, CMS began issuing warning letters to hospitals last month.

In a letter to HHS Secretary Xavier Becerra from E&C Committee Chairman Frank Pallone (D-NJ), Ranking Member Cathy McMorris Rodgers (R-WA), Health Subcommittee Chairwoman Anna Eshoo (D-CA), and Ranking Member Brett Guthrie (R-KY), the House leaders highlighted reports from the media and studies highlighting hospitals that have not posted any pricing information online or have posted some, but not all, required information.

The letter noted concern that some hospitals are posting pricing data but making it difficult for consumers to access the information. The letter references media reports that some hospitals have blocked their pricing websites from appearing in online search engine algorithms. The lawmakers also expressed concern over reports that hospitals are requiring consumers to navigate through multiple links on a hospital's website to access pricing data.

The letter requested that HHS take the following actions:

  • Enforce the final rule to ensure hospitals are fully compliant with the disclosure requirements;
  • Revisit CMS's enforcement tools, including the amount of the CMPs, and conduct regular audits of hospitals for compliance; and
  • Brief congressional staff on the implementation of the final rule and on the agency's audit of hospitals' compliance.

Concerns Related to Accessibility of Pricing Data

A key question among hospitals has been what steps they must take to ensure pricing data posted online is "accessible." The regulations require that hospitals make the pricing data "easily accessible, without barriers" and indicate that hospitals must make the data available free of charge, without consumers having to establish a user account or password, or submit personal identifying information. CMS declined to implement further requirements related to the accessibility of pricing data, although the agency specified that, if data becomes difficult to find or access, CMS may revisit requirements related to accessibility in future rulemaking.

Recent media reports indicated that CMS posted guidance to an online tech forum website related to the accessibility of pricing data to be reported by insurers under a different set of regulations. CMS reportedly specified that websites housing pricing information must allow for access to the website via search engines. Although the guidance was reportedly related to insurer transparency requirements, not hospital transparency rules, it is possible that CMS is responding to concerns that hospital pricing data websites have been blocked from appearing in search engines.

Implications for Hospitals

Although CMS is proposing to rescind the requirement for hospitals to report median MA plan rates on the cost report, the agency has not indicated any plans to back away from other hospital transparency requirements. HHS Secretary Becerra has expressed interest in taking actions to increase hospital price transparency, suggesting that the Biden Administration may be likely to continue implementation of the hospital price transparency rules issued by the Trump Administration. The call from members of Congress for HHS to revisit its pricing transparency enforcement tools, including the amount of the CMPs to impose against non-compliant hospitals, raises the additional question as to whether the Biden Administration will revise enforcement standards, including CMPs, to further promote transparency and ensure compliance.

In particular, hospitals should anticipate increased HHS scrutiny of compliance and should monitor its guidance related to the accessibility of pricing data, in the event that the agency responds to the concerns raised by the lawmakers regarding consumers being unable to access pricing data on hospital websites.

For more information or any question regarding these issues, please contact Jeff Davis, Leslie Demaree Goldsmith, or any member of Baker Donelson's Reimbursement team.

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