Health Policy 2019: What You Need to Know

Health Policy 2019

No matter the year or decade, the healthcare sector is continually in flux. 2019 saw three significant policy shifts that will impact Americans in the new year. 

January 2019: CMS Rule on Posting Standard Charges

On January 1, 2019, a Centers for Medicare and Medicaid Services (CMS) rule took effect requiring hospitals to list their standard prices of services and items that they provided online in a machine-readable format. By making the amounts available to individuals, this approach aimed to help patients understand their out-of-pocket financial responsibility, or enable them to compare prices across hospitals.

What’s the Goal?

The CMS pinpointed the lack of price transparency as the main problem.

According to CMS Administrator Seema Verma, “healthcare prices are about as clear as mud to patients.” 
For patients paying out of pocket, it’s necessary to understand the cost before receiving care, which was the intention of this CMS rule.

What Was the Outcome?

This rule met with mixed results. It was a success in terms of raising awareness around the need for price transparency in healthcare. But there are difficulties with this approach.

Standard charges, AKA chargemaster prices, are crucial when it comes to negotiating with commercial health insurers, but they’re prices that most patients will never see. As a result, the American Hospital Association and other industry groups criticized this rule for publicizing prices that don’t actually apply to the patient and could confuse or scare patients away from receiving needed care.

Additionally, hospitals have thousands of standard charges, and reading through a list of highly technical procedure classifications can be intimidating for patients, even if they know what procedure they’re looking for.

It’s clear that patients need transparency in healthcare, and the challenges in implementing this rule helped identify better ways to make price information useful to patients.

June 2019: Understanding Trump’s Executive Order

On June 24, 2019, the Trump Administration issued the Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First. 

What’s the Purpose?

The Order introduced the idea of a more transparent system that lets patients understand their medical costs right from the start. Another chief objective of the Administration was to increase competition in the healthcare system as a whole. 

What Are the Goals?

  1. Eliminate unnecessary barriers to price and quality transparency
  2. Increase the availability of meaningful price and quality information for patients
  3. Enhance patients’ control over their own healthcare resources, including through tax-preferred medical accounts
  4. Protect patients from surprise medical bills

What Came Next? 

The CMS, Department of Health and Human Services, and other relevant federal agencies were tasked with making price transparency in healthcare a priority and drafting regulations to enforce it.

November 2019: CMS Issues Final Rule on Price Transparency

On November 15, CMS issued a Final Rule that will go into effect on January 1, 2021 in response to the executive order and lessons learned from the previous rule. 

What’s the Point?

Ultimately, the point of the Final Rule is to increase shoppability, empowering consumers to compare prices across the board.

Also, this new policy aims to increase market competition by promoting price transparency, according to the CMS, which will drive down the overall cost of healthcare services. The hope is that this historic action will ultimately make healthcare costs more affordable for Americans.

What’s New?

Publicize Shoppable Services. Hospitals must post prices online for 300 “shoppable” services – which means procedures that can be shopped for in advance. These prices must be consumer-friendly, and include standard charges, insurance rates, cash rates for patients paying out of pocket, and minimum/maximum negotiated rates, meaning that this information will be relevant to patients regardless of their insurance status. CMS chose 70 of the services to be posted, though individual hospitals can choose the remaining 230 procedures to post. 

Hospital Penalties. If hospitals fail to post their online file of standard charges, they could be fined up to $300 per day.

What Stayed the Same?

Posting Standard Charges. Hospitals must post a complete “standard charges” file online, which will disclose payer-specific charges for supplies, facility fees, and professional charges for employed physicians.

Ongoing Efforts to Ban Surprise Bills

Otherwise known as balance billing, surprise billing describes the gap between what a doctor charges a patient and what the health insurance carrier will pay. According to Forbes, most Americans are unaware of what their insurer will cover and what it won’t. Often the difference is a significant amount of money. 

Why Does This Happen?

Surprise billing can happen whenever a patient receives care from a provider who isn’t covered by their insurance, including: 

  • Receiving care while away from their regular healthcare provider 
  • Receiving care from out-of-network doctors at in-network hospitals
  • Receiving care at out-of-network hospitals
  • Receiving care from consulting physicians along with in-network physicians
  • Receiving emergency care while on vacation or traveling for work

Surprise bills happen when the patient plans to pay the typical in-network prices but instead is faced with an unexpected medical bill.

What is Congress Doing Right Now?

On Sunday, December 8, 2019, both Republicans and Democrats from the Senate Health Committee and House Energy and Commerce Committee announced an agreement on anti-surprise bill legislation that is expected to receive broad support in both chambers.

A Bipartisan Compromise to Prevent Surprise Bills

Banning surprise bills is a priority for both parties, but legislation has been slowed by disagreements over how to compensate doctors caring for patients in emergencies. The new agreement intends to compensate doctors fairly while shielding patients from exorbitant, unexpected balance bills.

  • Balances $750 or less: Patients will be charged a set price that cannot exceed in-network rates, even if their insurance doesn’t cover the procedure.
  • Balances over $750: The bill will go to arbitration, and a third party will settle the balance between the insurer and the provider.

What’s Next?

Collaborators on this agreement are hopeful it will go to a vote before the end of the year, perhaps even as soon as December 20th as part of an end-of-year government spending bill.

Editor’s note, 12/23/29: This surprise bills legislation didn’t make it into the year end congressional funding agreement. But it’s clear that this issue is important to both Republicans & Democrats and we expect to see more in the New Year.

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