Earlier this year, as part of a proposed rule, the Centers for Medicare & Medicaid Services (CMS) issued a Request for Information that invited feedback on implementing the Affordable Care Act’s requirement that hospitals make public a list of their standard charges. A key issue is how best to address barriers to patients’ access to price information from providers. Based on what we have learned through our work to empower health care consumers by advancing price transparency in health care, NYSHealth submitted the following comments highlighting approaches to make health care price and quality information more transparent, meaningful, and actionable for consumers. 

June 20, 2018
RE: CMS-1694-P

Dear Administrator Verma:

On behalf of the New York State Health Foundation (NYSHealth), a private, independent philanthropy, I am writing to provide comments on the proposed rule and RFI (CMS-1694-P), specifically on Section X: Requirements for Hospitals to Make Public a List of Their Standard Charges via the Internet.

NYSHealth believes that information transparency is a gateway to improving affordability, quality, and competition in the health care system and a better health care system for all Americans. Our program on Empowering Health Care Consumers is focused on promoting transparency of health care price, quality, and patient experience information.[1] We support projects to develop information resources for patients, expand access to and uptake of those resources, and encourage diverse stakeholders such as plans, providers, policymakers to advance transparency in health care.

A national survey by Public Agenda that NYSHealth co-funded found that the majority of Americans are searching for price information in health care.[2] It dispels misconceptions that people are not interested in this information. The survey provides credible data on how people seek out health care price information, sources they view as trustworthy, and their expectations of providers, health plans, and state governments to provide this information.

We applaud CMS’s efforts to address this important issue and support broad-based federal policies to make health care price and quality information more transparent, meaningful, and actionable for consumers. Absent such federal guidance, access to robust health care price information varies by state, market, and plan. The state-level price transparency report card issued annually by Catalyst for Payment Reform determined that the “availability and accuracy of price information varies widely by market.”[3] The type of price information also varies by health plan. According to a 2016 study in the American Journal of Managed Care, reported in Modern Healthcare, “Of the health plans with cost-estimator tools, less than half use negotiated rates with providers to produce the estimate.”[4]

We suggest that you consider the following themes:

  • Consumers both want and need price information. Information on price must be meaningful to consumers, reflecting real prices by provider and insurer so that they can comparison-shop and make informed choices. Information should be sufficiently public and accessible to put downward pressure on market outliers.
  • There is much the federal government can do to expand consumer access to meaningful price information, such as removing gag clauses and trade secret restrictions, instituting mandatory reporting, and supporting and funding state efforts to develop All-Payer Claims Databases (APCDs) for consumer transparency purposes.
  • Providers and health plans can also play a role by providing consumers with out-of-pocket cost information and good faith estimates for services. Stronger federal rules and enforcement will help ensure this happens.
  • We strongly support CMS’s move to create a smaller set of meaningful measures that minimize reporting burden on providers and reflect measures that are patient-centered and that matter to consumers. We encourage CMS to be attentive to feedback from patient groups about whether those measures identified as patient-centered resonate with this key stakeholder group.

Below, we respond to your specific questions:

Question: Should “standard charges” be defined to mean:  average or median rates for the items on the chargemaster; average or median rates for groups of services commonly billed together (such as for an MS-DRG), as determined by the hospital based on its billing patterns; or the average discount off the chargemaster amount across all payers, either for each item on the chargemaster or for groups of services commonly billed together?  Should “standard charges” be defined and reported for both some measure of the average contracted rate and the chargemaster?  Or is the best measure of a hospital’s standard charges its chargemaster?

Charges from a chargemaster are of no or limited benefit. In the proposed rule, CMS states “We also are concerned that chargemaster data are not helpful to patients for determining what they are likely to pay for a particular service or hospital stay.” We agree with this assessment. While New York State’s Patients’ Bill of Rights[5] includes the right to see a hospital’s chargemaster, such access has not had a measurable effect on patient access to affordable care in New York.

Catalyst for Payment Reform has stated that, “For a consumer, a paid amount is a more consequential price than a charged amount” and that charges are “significantly less useful for comparisons” than the actual paid amounts provided in claims data. It has pointed to the release of Medicare charge data and paid amounts in 2013 as exemplifying this disconnect, noting that the Medicare data release showed that “a joint-replacement charge ranged from $5,300 to $223,000 depending on the hospital. However, there was much less variation in what hospitals are actually paid, which is the relevant figure for consumers, as the paid amounts are set by statute.” [6] Catalyst for Payment Reform concludes that “paid amounts, not charges, are the most useful for consumers.”

Other expert sources agree. The U.S. Government Accountability Office (GAO) issued a report on meaningful price transparency that defined price as an estimate that (1) reflects negotiated discounts; (2) is inclusive of all costs to the consumer associated with a service or services, including hospital, physician, and lab fees; and (3) identifies the consumer’s out-of-pocket costs.[7] Charges from a chargemaster do not reflect negotiated discounts. The Healthcare Financial Management Association, which has published price transparency guidelines, also points to the limited utility of charges for consumer-facing price transparency calling for a focus on “actual payments hospitals receive and what patients are responsible for.”[8]

We favor the third option presented by the RFI to define standard charges as “the average discount off the chargemaster amount across all payers, either for each item on the chargemaster or for groups of services commonly billed together.” This option appears to incorporate negotiated discounts, and by presenting it as an average rate across payers, addresses any proprietary concerns. However, providing charges across all payers, rather than by payer and by provider, will not necessarily be useful for consumers to make choices. We encourage CMS to be bolder on behalf of consumers.

Question: What types of information would be most beneficial to patients, how can hospitals best enable patients to use charge and cost information in their decision-making, and how can CMS and providers help third parties create patient-friendly interfaces with these data?

Useful price transparency reflects the common prices paid in the market for a specific service. The types of information that would be beneficial to patients include:

  • A median of the aggregated prices paid by a health plan/product to a provider for a defined service. Specific negotiated rates are masked, so it should not evoke any proprietary conflicts. Prices based on claims data, such as from a state APCD, can provide this information for consumers.
  • A good faith estimate of the price the patient’s health plan will pay, as in the law passed in Ohio.[9]
  • A good faith out-of-pocket cost estimate for the patient, for the service without complications (provided the service is non-emergent and can be estimated in advance).
  • The Medicare rate for that service for that provider or the provider’s price for that service displayed as a multiplier of the Medicare rate for that service, to ease comparisons by consumers.

CMS can help expand access to this price information through states or third parties by addressing the following barriers:

  • Price information should be available for the broadest possible range of health services, not only hospital-based care. Furthermore, price information should be available to all Americans, regardless of their source of insurance coverage. For this reason, it is critical that uniform standards be developed for how prices are measured and reported. This will facilitate a consistency of available information as additional tools are developed by states and other third parties, covering information not only from Medicare and hospital services, but also for private and other public payers, as well as physician and other services. Standardization of how prices are defined and reported will benefit and ease burdens on consumers, providers, and payers.
  • CMS can help clarify the legal standards for what is and is not considered proprietary in this context, to address misconceptions that may be held by providers, states, and third parties about permissible use of the data. This is explored in a recent legal analysis that stated, “the proprietary nature of pricing information in the healthcare context remains unresolved.”[10] Beyond clarifying what is and is not considered proprietary, CMS can support a public interest exemption to enable states to prohibit the claim of trade secrets when doing so harms the public.
  • CMS can explore prohibiting gag clauses in provider-payer contracts that bar sharing of prices with patients or on price transparency websites hosted by a health plan. Massachusetts addressed this with legislation prohibiting such gag clauses.
  • CMS can facilitate the use and impact of APCDs by reinforcing states’ authority to collect and report masked price information in their APCDs or for a state to share that information with third-party developers to create public-facing websites.
  • Information transparency efforts require financial resources. HHS CCIIO Cycle III funding was a brief source of funding for consumer health transparency, and those federal grant funds are being used in New York State for its APCD and consumer portals. Additional federal funding support can help states pursue opportunities to launch APCDs and build and sustain consumer-facing sites. A grantmaking program for developers can also enable third parties to create, market, and sustain publicly-accessible transparency websites without the need to charge fees to public users.

Question: Should health care providers be required to inform patients how much their out-of-pocket costs for a service will be before those patients are furnished that service? What changes would be needed to support greater transparency around patient obligations for their out-of-pocket costs?  What can be done to better inform patients of these obligations?  Should health care providers play any role in helping to inform patients of what their out-of- pocket obligations will be?

Providers should be required to furnish an estimated out-of-pocket cost for the patient or an estimated total amount the plan will pay prior to the provision of service. Health care providers can play an important role in helping to inform patients of prices, including out-of-pocket costs. They have the routine contact with patients in need of health care. A survey by Public Agenda found that 70% of Americans want their doctor or their staff to discuss prices with them before ordering tests, procedures, or referrals.[11] In fact, some hospitals are already providing this information on a voluntary basis.[12]

However, stronger federal rules and enforcement would be beneficial to ensure implementation. As the CEO of the Healthcare Financial Management Association has said, it can be done, but it is an issue of willingness: “It’s a desire problem on the both sides. If the hospital and the health plans want to do it, the technology is there.”[13]

Experience in Ohio is instructive on this point. A state law was to go into effect January 2017 requiring providers to give patients a good faith estimate in advance of a procedure of the costs to the health plan as well as the patient’s estimated out-of-pocket costs. However, the law has faced opposition and the Ohio Hospital Association has pursued legal action to block the law’s implementation. Similarly, a state law in Colorado requires providers to share with patients estimates of anticipated charges for selected “shoppable” services upon request. Yet a secret shopper study by the GAO found that responses to such requests varied, with many providers not responding at all.[14]

The provision of such out-of-pocket estimates should not be the purview of providers only, as it may be too late for patients to shop around at the point of a medical visit. For this reason, it is important that other actors, such as state APCDs or private third-party sites, have access to information that will inform consumer decisions as to which provider to go to in the first place. Ensuring that available tools are based on accurate, “true prices” information from insurance claims data or come from a source with clear authority, such as a state agency, can help build trust and uptake in these tools among providers and patients.

Meaningful Measures: Proposed rule would reduce the number of measures acute care hospitals are required to report across 5 quality and value-based purchasing programs in an effort to create a smaller set of more meaningful measures. 

We agree with the goals of the Meaningful Measures initiative. In particular, we support measures that are “patient-centered and meaningful to patients” and the quality priority that focuses on “strengthening person and family engagement as partners in their care.” This is an important direction for CMS to take to ensure that how patients experience care is viewed as a valid measure of quality and that patients are not seen as bystanders to their care, but rather are engaged as equal partners in their own care.

We recommend retention of the measure related to emergency room (ER) wait times. Lengthy wait times, especially in ERs, have been common and are important measures of patient experience.  ProPublica’s ER Wait Watcher, which reports ER wait times for hospitals by state, is based on CMS’s measures on Timely and Effective Care. Yelp, which lists patient-generated hospital ratings on quality (ratings that an NYSHealth-funded study showed correlate to more traditional measures of quality, such as hospital readmission rates[15]), is collaborating with ProPublica to feature ER wait-time information in their hospital profiles, recognizing the importance of this measure to patients. This metric is truly a measure that matters to patients.

Conclusion
As you review and consider comments to your proposals regarding hospital charges and meaningful measures, the priority should be to minimize burdens on consumers and patients. Rising health care costs place an ever-increasing burden on all Americans. The health care market increasingly moves toward “consumer-directed” plans, such as high-deductible health plans, without arming consumers with the information necessary to select providers they can afford or providers with good outcomes.

As you move forward with transparency efforts, it is essential to have patient and consumer advocates directly at the table. This representation will provide vital feedback on ways to develop and tailor tools and resources that are genuinely responsive to consumer needs.

Thank you for the opportunity to provide input on this important matter.

Respectfully submitted,

David Sandman, Ph.D.
President & CEO
New York State Health Foundation

 

[1] New York State Health Foundation, “Empowering Health Care Consumers,” https://nyshealthfoundation.org/what-we-fund/empowering-health-care-consumers/, accessed June 2018.

[2] Public Agenda, “Still Searching: How People Use Health Care Price Information in the United States,” https://www.publicagenda.org/pages/still-searching, accessed June 2018.

[3] Catalyst for Payment Reform, “Evaluating Transparency Tools,” https://www.catalyze.org/product/evaluating-transparency-tools/, accessed June 2018.

[4] Maria Castellucci and Shelby Livingston, “Achieving transparency in healthcare,” Modern Healthcare. http://www.modernhealthcare.com/reports/achieving-transparency-in-healthcare/#!/, accessed June 2018.

[5] New York State Department of Health, “Patients’ Bill of Rights,” https://www.health.ny.gov/publications/1449/section_2.htm, accessed June 2018.

[6] Catalyst for Reform. Price Transparency Report, July 14, 2016. http://www.health.pa.gov/Your-Department-of-Health/innovation/Documents/Price%20Transparency%20in%20the%20Commonwealth_FINAL_071416.pdf, accessed June 2018.

[7] U.S. Government Accountability Office. Health Care Transparency: Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care, September 2011. https://www.gao.gov/assets/590/585400.pdf, accessed June 2018.

[8] Harris Meyer, “CMS proposal for hospitals to publish prices raises tricky issues,” Modern Healthcare, April 25, 2018. http://www.modernhealthcare.com/article/20180425/NEWS/180429939, accessed June 2018.

[9] David Grandouiller, “Ohio to require medical provider price transparency in 2017,” The Heartland Institute, September 12, 2016. https://www.heartland.org/news-opinion/news/ohio-to-require-medical-provider-price-transparency-in-2017, accessed June 2018.

[10] Muir, M.; Alessi, S.; and King, J.S. (2013). Clarifying Costs: Can Increased Price Transparency Reduce Healthcare Spending? UC Hastings Research Paper No. 38., https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2224151, accessed June 2018.

[11] Public Agenda, “Still Searching: How People Use Health Care Price Information in the United States.”

[12] Harris Meyer, “Blog: Some hospital systems pioneer transparent pricing, but industrywide progress is slow,” Modern Healthcare, October 27, 2016. http://www.modernhealthcare.com/article/20161027/blog/161029916, accessed June 2018.

[13] Maria Castellucci and Shelby Livingston, “Achieving transparency in healthcare,” Modern Healthcare.

[14] U.S. Government Accountability Office. Health Care Transparency: Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care, September 2011.

[15] Howard, P. and Feyman Y. (2017). Yelp for Health: Using the Wisdom of Crowds to Find High-Quality Hospitals. Manhattan Institute. https://www.manhattan-institute.org/sites/default/files/R-PHYF-0417.pdf, accessed June 2018.

 

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