CMS IPPS Proposal Draws Scrutiny on Price Transparency Requirements

Along with an increase to Medicare inpatient payment rates, a Centers for Medicare and Medicaid Services (CMS) proposed rule released on Monday is suggesting price transparency requirements that include hospitals disclosing median payer-specific rates negotiated with Medicare Advantage organizations and third-party payers.

CMS is projecting an increase in Medicare spending on inpatient hospital services of nearly $2.1 billion in the next fiscal year with an overall Inpatient Prospective Payment System (IPPS) payment increase of about 1.6 percent. Operating payment rates will also increase for general acute care hospitals by 3.1 percent, despite a $36 million payment reduction.

The agency’s proposal also sets aside $1.9 billion in value-based incentive payments. Incentives are based on a hospital’s total performance score in clinical outcomes, safety, person and community engagement, and efficiency and cost reduction.

But controversy surrounds the transparency requirements included in the 1,600-page proposal asking hospitals to provide data on median rates for inpatient services. CMS said it is considering using the information to set Medicare payment rates. Hospitals have already started to push back.

Following the Hospital Price Transparency final rule released in November, hospitals are pushing back on disclosure requirements. Four hospital organizations, including the American Hospital Association (AHA) have filed suit against the Department of Health and Human Services regarding the requirements.

AHA Executive Vice President Tom Nickels released a statement in response to the proposal saying publishing negotiated rates does not reflect the cost of care.

“We are very disappointed that CMS continues down the unlawful path of requiring hospitals to disclose privately negotiated contract terms,” Nickels wrote.

In it’s proposal, CMS states:

We believe that because hospitals are already required to publicly report payer-specific negotiated charges, in accordance with the Hospital Price Transparency Final Rule, that the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome for hospitals.”

Find the full proposal on the Federal Registrar and view the fact sheet on the CMS site.

Check out Health Leaders Media and RevCycle Intelligence for more on the proposed rule.

Also take a look at MedCity News to read more about the price transparency scrutiny.

For more on incentive payments, check out Bloomberg Law.

Click here for the AHA statement.