A Response to the CY20 Opps Proposed Rule (CMS-1717-P)

20 January 2022

Cleverley

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Categories: Blog, Hospital Finance Research

A Response to the CY20 Opps Proposed Rule (CMS-1717-P) For Increased Price & Payment Disclosures

1) BACKGROUND

The CY20 OPPS Proposed Rule contains additional information and requirements regarding hospital price transparency. The proposal, which can be traced to guidelines provided in the Affordable Care Act, primarily follows several recent important government communications regarding this issue:

1) CURRENT DISCLOSURE REQUIREMENTS:

The FY19 IPPS Final Rule and subsequent responses to frequently asked questions:

a) The original FY19 IPPS Final Rule language, which reads:

“as one step to further improve the public accessibility of charge information, effective January
1, 2019, we announced the update to our guidelines to require hospitals to make available a list
of their current standard charges via the Internet in a machine readable format and to update
this information at least annually, or more often as appropriate. This could be in the form of the
chargemaster itself or another form of the hospital’s choice, as long as the information is in
machine readable format.”

b) The first responses to frequently asked questions posted at the end of September 2018
(https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/FAQs-Req-HospitalPublic-List-Standard-Charges.pdf)

c) A second responses to frequently asked questions posted in December 2018
(https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ProspMedicareFeeSvcPmtGen/Downloads/AdditionalFrequently-Asked-Questions-Regarding-Requirements-for-Hospitals-To-Make-Public-a-List-of-Their-Standard-Charges-via-theInternet.pdf)

2) PROPOSED DISCLOSURE REQUIREMENTS:

President Trump’s Executive Order on June 24, 2019 which was intended to provide patients access to pricing information for scheduled services and the out-of-pocket costs they may incur,
as well as to eliminate barriers to price and quality transparency, to increase the availability of meaningful price and quality information for patients and to enhance patients’ control over their own healthcare resources.

The order had three key dates for action and comment:

a. Within 60 days the Secretary of Health and Human Services would propose a regulation to require hospitals to publicly post standard charge information and negotiated rates for common or shoppable services in a consumer-friendly and machine-readable format

b. Within 90 days an advanced notice of proposed rulemaking would be made available for
comment on the proposal.

c. Within 180 days a report would be issued describing the manners in which the Federal Government or the private sector are impeding healthcare price and quality transparency for patients, and providing recommendations for eliminating these impediments in a way that promotes competition.

As a continuation of the FY19 IPPS Final Rule and to fulfill the requirement of President Trump’s Executive Order, the CY20 OPPS Proposed Rule has introduced additional clarification and requirements for hospitals. In the following pages, we will outline these key proposals with feedback to consider when responding in the comment window which ends on September 27, 2019.

2) CY20 OPPS PROPOSED RULE SUMMARY FOR ADDITIONAL CHARGE DISCLOSURE REQUIREMENTS

Nine areas pertain to the proposed requirements for hospitals to make public a list of their standard charges. Some of the areas represent further clarifications or definitions of terms outlined in the FY19 IPPS Final Rule and others are entirely new components. The nine areas are:

1) A definition of “hospital;”

2) Different reporting requirements that would apply to certain hospitals;

3) Definitions for two types of “standard charges” (specifically, gross charges and payer-specific negotiated charges) that hospitals would be required to make public;

4) A definition of hospital “items and services” that would include all items and services (including individual items and services and service packages) provided by the hospital to a patient in
connection with an inpatient admission or an outpatient department visit;

5) Requirements for making public a machine-readable file that contains a hospital’s gross charges and payer-specific negotiated charges for all items and services provided by the hospital;

6) Requirements for making public payer-specific negotiated charges for select hospital-provided items and services that are “shoppable” and that are displayed in a consumer-friendly manner;

7) Monitoring for hospital noncompliance with public disclosure requirements to make public standard
charges;

8) Actions that would address hospital noncompliance, which include issuing a written warning notice, requesting a corrective action plan, and imposing civil monetary penalties (CMPs) on noncompliant hospitals and publicizing these penalties on a CMS website; and

9) Appeals of CMPs.

We now summarize the key areas above with feedback to be considered by hospitals in their comments to the CMS.

3) A DEFINITION OF “HOSPITAL” & REPORTING REQUIREMENTS FOR DIFFERENT TYPES OF HOSPITALS

Summary: The transparency requirement in the FY19 IPPS Final Rule stated that “hospitals” needed to provide pricing information via the internet, but, did not define what organizations were “hospitals.” In the CY20 OPPS Proposed Rule, the CMS proposes to define a “hospital” very broadly to include most types of hospitals from all areas of the US and US territories. The only exceptions to the reporting requirements would be “Federally-owned or operated institutions (for example, hospitals operated by an Indian Health Program, the US Department of Veterans Affairs, or the US Defense Department)” as these facilities “are not accessible to the general public, except in emergency situations, and already make their charges publicly available are deemed to have met the requirements of Section 2718(e).” Ambulatory Surgical Centers (ASCs) or other non-hospital sites-of-care (lab, imaging centers) are also excluded.

Comment: After the FY19 IPPS Final Rule, there was some confusion of what constituted a hospital. A case could to be made that non-enrolled Medicare institutions as well as institutions not paid
prospectively could take issue with parts or all of the reporting requirements. As an example, those hospitals not paid prospectively via Medicare MSDRGs could take issue with having to report charges based on this grouping methodology. We would encourage hospitals that feel strongly that these reporting requirements should not apply to them for these reasons to comment along these lines.

4) A DEFINITION OF “STANDARD CHARGES” & “ITEMS AND SERVICES”

Summary: The CMS proposes defining standard charges as both GROSS charges, as well as “payerspecific negotiated charges.” Essentially, the latter refers to the payment rates that are agreed to by the hospital and the payer.

In addition, the CMS is defining what is meant by providing pricing information for “all items and services” to be inclusive of:

1) All items in the chargemaster and/or provided to patients, including drugs and supplies

2) Charges for “Service Packages” – meaning, all other types of “aggregation of individual items and services into a single service with a single charge” the hospital could be paid under – including, MSDRGs, per diems, and other packages including those in outpatient settings

3) Charges for employed physicians and non-physician practitioners

Comment: The combination of these definitions pose significant challenges for reporting and in many cases are not technically possible. While we understand the intent of each request, we believe additional information will be helpful in refining the requirements to something that will meet the spirit of the rule in a way that is also technically feasible for hospitals.

1) SERVICES: Chargemaster (CDM) information – gross charges reporting are entirely possible at the line level and are already a part of the FY19 IPPS rule disclosure requirements. However,
payer-specific negotiated charges cannot be reported for a majority of hospital contracts at the CDM line level. Our firm represents over 400 hospitals annually for pricing defensibility and
viability projects and in those projects, we model all hospital contracts and payment terms. We have found that less than 40% of payment terms are entirely percentage of charge (POC) based
where this type of payer-specific negotiated charge reporting would be possible at the CDM line level. And, that rate is highly variable depending on the payer. The table below provides a
distribution of the POC-based contracts for five of the most prevalent national payers, as well as our national all-commercial payment term average.

2) SERVICE PACKAGES: Item aggregations – we completely agree that aggregated information will be more useful to patients than CDM line information. We also agree, in part, with the CMS’
definition of service packages to be an “aggregation of individual items and services into a single service with a single charge.” However, some of the examples provided do not always represent a single charge (“common procedure” schedules and “per diems” commonly include additional carveouts, hierarchy rules, and multiple payment logic that prohibit “single charge” establishment). In addition, while hospitals have payer-specific negotiated rates for these service packages, they do not set GROSS charge rates for them. Gross charges are ONLY established at the CDM line level. All other gross charge reporting would need to be representative of averages. There is a more significant issue, though, with the current definition: these service packages will still not provide the patient with an understanding of their total charge responsibility because there would be a combination of service packages to equal their total gross charge for their entire encounter. That is why we believe the CMS is really trying to provide patients with an understanding of their total claim or encounter charge responsibility. In that way, the only STANDARDIZED and SINGLE payment per claim payment methodology is Medicare’s MSDRG system. Gross charge averages could be provided for all MSDRGs. In addition, because the Medicare grouping logic is publicly available, an AVERAGE payment across all payers could be provided. We would caution against payer-specific disclosure for three primary reasons:

a. Outlier cases and patient demographic variation could impact the averages significantly using this average as a complete basis for comparison could lead to faulty conclusions.

b. In most payer contracts, the payment terms/rates are proprietary and protected. Disclosing specific rates could lead to significant legal challenges and costs for local and national stakeholders. An average across all payers would permit an understanding of the gross to net reimbursement relationship for patients and would be far less likely to be challenged legally. Similarly, the disclosure of specific payment information would guard against anti-competitive behavior noted by the CMS.

c. Disclosing the entirety of this information would be highly burdensome for hospitals and ultimately is best suited to be provided by the payers through transparency tools they are creating to drive down member costs. Payers have the most current payment terms for all providers and can do the comparison evaluations for the patients – and – are incented to do so. Further, payers have the most up-to-date information on patient payment responsibility and can provide the most accurate estimates for proposed care.

3) EMPLOYED PHYSICIAN & NON-PHYSICIAN PRACTITIONER FEES: Employed physician and nonphysician practitioner fees should be excluded from the definition of all items and services for
three primary reasons:

a. Substantial variation exists among hospitals for the level of employment of professional services. This would present significant issues for the patient when they are trying to compare charges (there could be an assumption that a hospital without employed physicians will have lower charges) or trying to understand their charges for a service at a single hospital (certain specialties could be employed but others not, making disclosure and understanding highly challenging for the patient).

b. In many instances, the employment of physicians and non-physician practitioners represent complicated legal organizational structures where the hospital does not technically employ these professionals, but rather other separate legal entities.

c. Disclosure of payer-specific negotiated charges for these services also has a high degree of probability for legal challenge and anti-competitive behavior. We again believe the disclosure of payer-specific negotiated charges should be done by payers through member tools.

In summary, we present the table below to highlight what is possible for reporting under each proposed scenario:

5) REQUIREMENTS FOR DISCLOSING STANDARD CHARGES FOR ALL ITEMS AND SERVICES IN A MACHINE READABLE FORMAT

Summary: The CMS is seeking uniformity in the way that hospitals post their standard charges and proposing that the disclosure include the following elements:

1) Description of each item or service (including both individual items and services and service
packages).

2) The corresponding gross charge that applies to each individual item or service when provided in,
as applicable, the hospital inpatient setting and outpatient department setting.

3) The corresponding payer-specific negotiated charge that applies to each item or service (including charges for both individual items and services as well as service packages) when provided in, as applicable, the hospital inpatient setting and outpatient department setting. Each list of payer-specific charges must be clearly associated with the name of the third-party payer.

4) Any code used by the hospital for purposes of accounting or billing for the item or service, including, but not limited to, the Current Procedural Terminology (CPT®) code, Healthcare
Common Procedure Coding System (HCPCS) code, Diagnosis-Related Group (DRG), National Drug Code (NDC), or other common payer identifier.

5) Revenue code, as applicable.

Other key reporting components include:

1) Machine readable formats: including, but not limited to, .XML, JSON and .CSV formats. A PDF would not meet the definition because the data contained within the PDF file cannot be easily
extracted without further processing or formatting.

2) Location: while the hospital has discretion of where to post the disclosure, it must be on a publicly-available webpage, displayed prominently and easily accessible, without barriers, but with the ability to be digitally searched.

3) Updates: at least annually and date of last update must be clearly labeled. Comment: It likely was only a matter of time for the CMS to include a HCPCS/CPT® value to the disclosure as it will permit the ability for comparison. Because of the variation among hospitals with price bundling and utilization differences, the importance of having a disclosure of average charges by encounter is likely more relevant than ever to help better communicate gross charge comparisons.

Comment: It likely was only a matter of time for the CMS to include a HCPCS/CPT® value to the disclosure as it will permit the ability for comparison. Because of the variation among hospitals with price bundling and utilization differences, the importance of having a disclosure of average charges by encounter is likely more relevant than ever to help better communicate gross charge comparisons.

6) REQUIREMENTS FOR CONSUMER-FRIENDLY DISPLAY OF PAYER-SPECIFIC CHARGES FOR SELECTED SHOPPABLE SERVICES

Summary: The CMS proposes to have an additional disclosure document that would be made available on the internet for patients to access payer-specific negotiated charges for a set of 300 services (70 identified by CMS and 230 at the discretion of the hospital) that are deemed to be shoppable. Shoppable is defined as a service package that can be scheduled by a patient in advance. In addition to the disclosure of the payer-specific negotiated charges for the specific service, all charges for ancillary services associated would need to be provided as well. Specifically, the CMS is proposing that the consumer-friendly display of payer-specific negotiated charge information contain the following corresponding information for each of the 70 CMS-selected and at least 230 hospital-selected shoppable services:

1) A plain-language description of each shoppable service.

2) The payer-specific negotiated charge that applies to each shoppable service. If the hospital does not provide one or more of the CMS-selected shoppable services, the hospital may indicate
“N/A” for the corresponding charge or otherwise make it clear that the service is not provided by the hospital. Each payer-specific charge must be clearly associated with the name of the third-party payer.

3) A list of all the associated ancillary items and services that the hospital provides with the shoppable service, including the payer-specific negotiated charge for each ancillary item or service.

4) The location at which each shoppable service is provided by the hospital (for example, Smithville Campus or XYZ Clinic), including whether the payer-specific negotiated charge for the shoppable service applies at that location to the provision of that shoppable service in the inpatient setting or the outpatient department setting or both. If the payer-specific negotiated charge for the shoppable service varies based upon location or whether the hospital provides the shoppable service in the inpatient setting versus the outpatient setting, the hospital would be required to
identify each payer-specific negotiated charge.

5) Any primary code used by the hospital for purposes of accounting or billing for the shoppable service, including, but not limited to, the Current Procedural Terminology (CPT®) code, the Healthcare Common Procedure Coding System (HCPCS) code, the Diagnosis-Related Group (DRG), or other commonly used service billing code.

Comment: We agree a separate disclosure of highly shoppable services could be more beneficial for consumers than the current disclosure requirements for the entire price list of all CDM items. However, we do not believe the current requirement will be technically possible for hospitals to provide for several key reasons:

1) Payer-specific negotiated charges do not exist for most – if not all – of the items currently on the list. Payment is at the claim level for patients and most of the items on the list are line/procedure level items. Unless the contract is completely percent of charge based, the hospital could not provide this information.

2) Gross charges are not established for a number of codes on the proposed list. As a primary example, surgical procedure codes typically do NOT have hardcoded lines and prices in the CDM. Instead, operating room prices (on a basis of charge per minute, as example) are utilized and HIM professionals later “soft code” the CPT® based on the utilization of time and the type of
procedure(s) performed on the patient.

3) Associated ancillary service charges could be provided under the MSDRG system, but, not for most other payer payment structures as it would be highly variable. To highlight this, we provide
a case example hospital and the national hospital average for average GROSS charge and utilization per claim for associated items during an outpatient colonoscopy. The example is built using Medicare claims data and highlights several key challenges for reporting this information for the entire list of proposed codes for each individual payer:

a. In total, the case hospital had more than 60 codes for Medicare alone for this one CPT®example. Providing this for every code on the proposed list for every payer would be a significant administrative burden for hospitals and would not make the list consumer friendly.

b. The case hospital – and many in the US – do not have a hardcoded CDM price for CPT® 45385. To illustrate, we sampled 174 hospital CDMs from 2019 and found that only 36% have a hardcoded price for this CPT®.

c. Payment for the case hospital – and many in the US – can include multiple procedure payment rules (note that there can be multiple procedures performed) and provision of this information would be challenging and potentially highly misleading. Again, we believe payer negotiated charges should be provided by the payers.

d. At what point would a hospital not need to provide information on an associated code? 5% utilization, 1% utilization, ANY utilization? Note in the example below that the case hospital will include a CT of the abdomen & pelvis 1% of the time with a charge of $1,520. That could be an important element for patients to know, but, if rules are established on a “posting threshold” then these could be missed. And yet, if the threshold is set too low, a vast amount of data could need to be provided that would not make the disclosure consumer friendly.

HCPCS 45385 Associated Ancillary Charge Example Under Proposed Requirements

As a result of the above information, we would recommend the following be adopted for the consumer friendly disclosure:

1) MODIFY: 70 CMS selected and at least 230 hospital-selected shoppable services. MODIFY TO 70 CMS SELECTED AND AT LEAST 30 HOSPITAL-SELECTED SHOPPABLE SERVICES. This figure could be expanded in the future, however, we propose beginning with a smaller number to make the disclosure more manageable for patients.

2) MAINTAIN: A plain-language description of each shoppable service.

3) MODIFY/REMOVE: The payer-specific negotiated charge that applies to each shoppable service. If the hospital does not provide one or more of the CMS-selected shoppable services, the 9 A Response to CY20 OPPS Proposed Rule for Additional Price & Payment Disclosures hospital may indicate “N/A” for the corresponding charge or otherwise make it clear that the
service is not provided by the hospital. Each payer-specific charge must be clearly associated with the name of the third-party payer. MODIFY TO AVERAGE GROSS CHARGE DISCLOSURE ANDREMOVE PAYER-SPECIFIC CHARGES AS THESE DO NOT EXIST FOR MOST HOSPITALS AT THE CODE LEVEL FOR THE PROPOSED CODES.

4) MODIFY: A list of all the associated ancillary items and services that the hospital provides with the shoppable service, including the payer-specific negotiated charge for each ancillary item or
service. MODIFY TO AVERAGE CLAIM CHARGE FOR THE PRIMARY ITEM AND ALL ASSOCIATED ITEMS. THIS WILL PROVIDE THE NECESSARY INFORMATION FOR PATIENTS IN A MUCH EASIER SUMMARIZATION AND WOULD ELIMINATE THE ISSUES OF INCLUSION/EXCLUSION OF CERTAIN ITEMS WITH DIFFERING UTILIZATION PERCENTAGES.

PROPOSED CONSUMER FRIENDLY HCPCS 45385 Associated Ancillary Charge Example

5) MODIFY: The location at which each shoppable service is provided by the hospital (for example, Smithville Campus or XYZ Clinic), including whether the payer-specific negotiated charge for the
shoppable service applies at that location to the provision of that shoppable service in the inpatient setting or the outpatient department setting or both. If the payer-specific negotiated charge for the shoppable service varies based upon location or whether the hospital provides the shoppable service in the inpatient setting versus the outpatient setting, the hospital would be required to identify each payer-specific negotiated charge. MAKE THIS COMPONENT OPTIONAL FOR GROSS CHARGE REPORTING (REMOVE PAYER-SPECIFIC NEGOTIATED CHARGES.) THE HOSPITAL MAY NOT HAVE SEPARATE PRICING AND IF IT DOES AND THE PRICING IS LOWER IT WILL LIKELY WANT TO EMPHASIZE THIS FOR PATIENTS.

6) MAINTAIN: Any primary code used by the hospital for purposes of accounting or billing for the shoppable service, including, but not limited to, the Current Procedural Terminology (CPT®)
code, the Healthcare Common Procedure Coding System (HCPCS) code, the Diagnosis-Related Group (DRG), or other commonly used service billing code.

7) NONCOMPLIANCE

Summary: One final key point is that the CMS proposes a penalty of up to $300 per day for noncompliance. This would amount to $109,500 for a hospital that was not compliant for an entire year.

Comment: We understand that it was only a matter of time for the CMS to create penalties for noncompliance. We encourage hospitals that disagree with the proposed penalties to submit comments to the CMS within the feedback window ending September 27, 2019.

8) FINAL THOUGHTS

We certainly support reasonable efforts to continue to help patients understand the financial implications of their care. However, we believe that the amount of additional data being required is not always technically possible to post and could lead to a number of unintended consequences – including legal action and anti-competitive behavior. These elements could cause more patient confusion and potentially drive up the costs of healthcare which are counter to the spirit of the law. We hope that the additional comments provided will be considered in revising the proposed requirements to be technically possible as well as consumer friendly.

We do share some concern that much of this additional disclosure information will go unutilized by patients. The introductory narrative provided by the CMS in the Proposed Rule includes a defense for the promotion of additional transparency in healthcare and how that will lead to reduced costs. However, it is interesting to note that one of the referenced sources (Desai S, Hatfield LA, Hicks AL, et al. Association Between Availability of a Price Transparency Tool and Outpatient Spending. JAMA. 2016;315(17):1874-1881. Concludes the opposite, finding:

In this analysis, offering a health care services price transparency tool to employees was not associated with lower outpatient spending. This was also true in sub analyses focused on employees with higher health plan deductibles and those with comorbidities at baseline. Furthermore, those offered the price transparency tool did not shift their care from higher-priced HOPD settings to lower-priced ambulatory settings.

The same article also runs counter to other “benefits” the CMS believes will occur with increased reporting of the newly proposed requirements:

A series of factors may underlie the lack of a negative association between offering the price transparency tool and outpatient spending. First, despite selecting 2 employers with the highest uptake and substantial marketing from the employers, use of the tool was relatively low, with only 10% of employees logging on in the first year of its introduction. Such low use rates have been reported for other price transparency tools. Moreover, low utilization is the most commonly reported challenge to price transparency initiatives by insurers who offer tools. Patients may not find the information compelling or may simply forget about the tool if they seek health care infrequently.

Second, there may be limited opportunities for patients to save money via the tool. Price shopping is most useful for care that is nonemergent and of lower cost, and there may be a limited set of services that meet those criteria. A recent report found that only 40% of spending is attributable to shoppable services. In this study, a substantial fraction of searches were for services whose prices exceeded the employee’s deductible, so that out-of-pocket amounts would be the same regardless of which clinician or hospital was chosen. Also, approximately half of employees met their deductible within the year. After reaching their deductible, patients may have little incentive to price shop. Third, a common service through which patients could benefit from price shopping is clinician office visits. However, many patients have established relationships with their clinicians that they may wish to maintain regardless of price.

We hope that this information has been useful to summarize the numerous proposed disclosure requirements and provide some commentary on the challenges with many of the components.
Given these concerns, we highly encourage hospitals to submit feedback to the CMS within the comment window which ends on September 27, 2019 at 5pm EDT.

RESPONDING TO THE CMS

The following information provides direction from the IPPS proposed rule for commenting:

DATES: Comment Period: To be assured consideration, comments on this proposed rule must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EST on
September 27, 2019.

ADDRESSES: In commenting, please refer to file code CMS-1717-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

1) Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the “Submit a comment” instructions.

**Search for CMS-1717-P and select “Comment Now” from search results

2) By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1717-P,
P.O. Box 8013, Baltimore, MD 21244-1850. Please allow sufficient time for mailed comments to be received before the close of the comment period.

3) By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1717-P, Mail Stop C4-26-05,7500 Security Boulevard, Baltimore, MD 21244-1850.

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What Would Die Hard Cost John McClane (and His Hospital) (This Year)

15 December 2021

Cleverley

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Categories: Blog

Die Hard Cost John McClane

Is Die Hard a Christmas movie? Obviously. Is it the greatest Christmas movie? Well, that’s up for debate. We’ll let your holiday dinner table take up that one.

But we at Cleverley + Associates can weigh in where we’re experts, which is hospital pricing data! Action movies, especially one as hard core as Die Hard, mean injuries and injuries mean hospitals. Sure, John McClane pulled away in style as the music swelled, but we assume his wife talked him into going to an ER to at least make sure he wasn’t still bleeding.

You can read our last two years here and here.

Our first injury is fist-fighting-while-falling-down-the-stairs. There are a lot of injuries that can occur from both a fall and a fight, but since Mr. McClane goes on to punch several other people, we can rule out fractures, spinal injuries, or any injury major enough to take McClane out of the fight.

He’d probably get an MRI and CT scan (Let’s go ahead and do both, since he’s a hero.)

We’d also want to do an ImPACT test.

Here’s what the prices looked like for the last few years. While an MRI will cost Mr. McClane more this year, he’ll save some money on the ImPACT test.

Next, our hero cuts his feet on broken glass. (OW! OW! OW!)

We’re going to need a lot of antiseptics, bandages, and probably stiches. Also, foreign body removal from the wounds.

Again, ow.

It looks like, overall, it’s going to be cheaper this year! Good news! Flex those toes!

Next up, poor McClane is shot in the shoulder! The following scenes, where he still manages to win in hand-to-hand combat with the villain, show that the bullet likely grazed him. Of course, we can’t rule out that the bullet is still there, or a shard of it. So, we’re going to have to explore the wound to make sure it’s clean, and probably take an x-ray to make sure we got all the bullet bits out.

It’s going to be more expensive this year.

Lastly, in the grand finale, John McClane wraps a fire hose around himself and bungee jumps off the building. This is, generally speaking, a terrible idea. He then breaks through a window using his already battered body. Again, do not try this at home…or in an office building.

This could, of course, cause a variety of injuries, but let’s go ahead and just assume the worst – a fracture of the vertebrae and ribs. There would probably also be internal damage as well, but considering he’s still walking around being witty, let’s assume he’s miraculously okay-ish.

The end of the movie seems to suggest that McClane rides off into the sunrise with his wife, triumphant and filled with the Christmas spirit. I assume they didn’t go straight home with the hope that he would survive until morning. More likely they stopped at the ER to at least make sure he wasn’t on death’s doorstep.

Happy Holidays everyone! Yippee-ki-yay!

Would you like to know how well your hospital measures up if an action hero appears in your facility? We can help!

CMS CY22 OPPS Final Rule – Points To Know About Price Transparency

9 November 2021

Cleverley

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Categories: Blog

To encourage hospitals to comply CMS has dramatically increased the penalty for non-compliance. Beginning January 1, 2022, CMS will increase the penalty for some hospitals that are found to not be complying.

Standard Machine-Readable File Recommendations for Hospitals

15 September 2021

Cleverley

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Categories: Blog

Standard Machine-Readable File Recommendations for Hospitals

The CY22 proposed rule covered many topics, but, in our opinion, the guidelines and clarifications surrounding machine-readable files were some of the most critical.

The Proposed Rule’s observation that there was a “lack of uniformity in the way that hospitals display their standard charges (84 FR 65556)” wasn’t a great surprise to the industry. The original guidelines required certain data elements but did not specify an exact file structure. Hospitals naturally constructed a file that best fit their data, but these files could be difficult to compare from one hospital to the next.

CMS has been very clear that its goal is to make the data as accessible to the public as possible, so it’s understandable that they saw clarification in this area as a priority. We believe CMS is right that there is a wide variety of file structures out there, and that makes it hard to meaningfully compare hospitals. Our research shows a few challenges to fixing this particular issue.

First is the presence/updates of information. How do we locate and download the files? This issue will improve once hospitals use the CMS naming convention for machine-readable files. Another solution would be for CMS to define “prominently displayed” as requiring two clicks from the hospital or health system home page.

The next challenge is file type and layout difference. There’s a lot of variation between hospitals and systems. Requiring the same file type and standardizing the structure, as well as defining the data elements, could resolve this and will help create a national database.

Relational differences are another hurdle. Hospitals sometimes report payer-specific negotiated charges with HCPCS, MS-DRG, APC, per diems, case rates, and charge codes. This variation can be solved by creating a standardized display.

Payer naming differences also cause issues since there are no standardized naming conventions. Again, a uniform structure can solve this issue.

To this end, we have constructed a proposed standardized single machine-readable file. In December 2019, CMS stated that a single machine-readable file could have different sections but needed to contain all required elements. Here’s how each section could be defined to allow for uniform reporting. What follows is a summary of our recommendations. You can find a more detailed description here.

Section One: Gross Charge Information

This includes six fields. The primary comparison link is CPT®/HCPCS; revenue codes can also be compared on a more manual basis through item descriptions, as well (useful for room rates and operating room associated codes, as primary examples).

Section Two: Discount Cash Price Information

Not all hospitals have established their cash pay policies in the same way. To account for this variation while still permitting standardized reporting, we believe the “Discount cash price” section should have two options, Policy and Price List.

Policy – a text field for an explanation of the hospital’s policy, how it is applied, and contact information for financial assistance.

Price List – for hospitals with an established price list, information could be displayed in the same format as the Gross Charge display.

Section Three: Payer-Specific Negotiated Charge

This is the area that contributes most to the lack of consistency within the files. There is an incredible amount of variability. It is very difficult to compare payers and plans from one hospital to another. Here is how we propose tackling it.

Standardized Payment – Unless all payers utilize the same payment methodologies it isn’t possible to look at payment differences. Standardized payment rates and utilization must be considered in order to understand payment differences. CMS has established payment systems for inpatient and outpatient claims that are utilized by all hospitals subject to the transparency reporting requirements. The solution to standardizing disparate payment systems is for hospitals to determine how the claim would be paid using the specific payer negotiated contractual language and then reported under Medicare-based grouping logic by MS-DRG (inpatient) or primary APC (outpatient). The steps to do this, are:

Derive expected claim payment for all items and services based by consulting the negotiated rates and terms with the specific payers. This would be done for all claims – not using historical reimbursement – but a calculation of payment using current payment terms and rates.
Determine the MS-DRG (inpatient) or primary APC (outpatient) assignment for the particular patient claim. Grouper logic is quite common for hospitals and many already run every claim through Medicare logic to determine a MS-DRG assignment. Each claim would be labeled with a MS-DRG or primary APC designation (more on outpatient grouping later).
Report the standardized payer-specific negotiated charge by MS-DRG or APC for all required payers in a simple format illustrated below. This display would encompass all items and services and service packages and would also be representative of service utilization – the critical element needed to understand payment differences.

Again, further details can be found here. Hospitals could derive the payer-specific negotiated charges with their contracted rate sheets and terms and applying those to actual patient claims. Without patient claim detail the hospital cannot satisfy the requirements of the rule because the number of combinations of items, services, and service packages is nearly limitless on a per-patient basis.

Standardized Payer Mapping – Once payment has been standardized, payers must be compared through common mapping. CMS could create a list of national/regional payers and the hospitals could link to that. This map could be for the top twenty or thirty payers and would allow for easier comparisons.

Standardized Reporting Structure – Here is a simple, standardized format that would accommodate these needs.

Section Four: Payer-Specific Negotiated Charge

The benefit of using the structure identified in Section Three is that minimum/maximum values are very easy to present. A researcher could easily calculate minimum, maximum, and other statistical measures based on the standardized data format presented. Still, this information could be compiled like this:

We believe that if the CMS seeks to standardize the Machine-Readable File it should do so in a way that will meet current requirements while providing meaningful information. The structure we have proposed addresses these requirements and solves for the challenges that stakeholders are experiencing with current disclosed data.

To see a complete summary of the proposed rule, click here! To see our complete response, click here!

To watch our free summit on Price Transparency, check it out here!

Are Hospitals Really Flouting Federal Requirements?

12 August 2021

Cleverley

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Categories: Blog

Are Hospitals Really Flouting Federal Requirements?

A new report by PatientRightsAdvocate.org claims that only 5% of US hospitals are fully compliant with disclosing their prices as required by the CMS. A summary of their report was featured in The Washington Post and has brought several questions from hospitals around the country. You can read The Washington Post article here.

The detailed report can be found here.

We took a close look at the report’s findings and concerns – and have put together our own observations and considerations.

First, we find the overall compliance rate of 5% exceptionally low. While there has been agreement that hospitals have not fully complied with all aspects of the new requirements, this research seems particularly biased and had a lower sample size of 500 hospitals. Our own research found 29% compliance when evaluating approximately 3,400 hospitals. We believe our compliance rate aligns with other national organizations evaluating the transparency disclosures. For example, other key research groups found the following compliance rates:

Kaiser = 33%
Health Affairs = 22%
Milliman = 68%
Guidehouse = 45%

The report says, “We identified a hospital as noncompliant if it omitted any of the five standard charge criteria required by the rule, if it posted blanks or zeros in the data fields, if it did not post all negotiated payer rates associated with specific plans, or if the price estimator tool did not show both the negotiated rates and discounted cash prices to provide pricing for all healthcare consumers, including the uninsured and those desiring to pay cash directly.” However, there are several flaws with this approach:

Discounted cash pricing – some hospitals do not have established cash-pay prices. While CMS requires this to be posted if the hospital has developed cash pricing, this group should not assume the exclusion of this information means the hospital has determined not to post it. In CMS hospital audits, if this data is not present CMS has asked for validation. We believe best practice would be to disclose if this pricing has not been developed to avoid confusion. Still, an assumption of guilt is not fair and is a contributing factor to the lower overall compliance rate.
Blanks/Zeros in data fields – there are numerous examples where a hospital could have a zero or null value for standard charge elements. Again, to assume that the hospital is non-compliant for this reason alone is outside of the CMS requirements and does not reflect an understanding of industry practices. Further, some examples of “compliant” hospitals on their list contained these values in their files. This inconsistency in review casts a large shadow on the credibility of the report.
Payer/Plan – the report found the biggest issue in this piece that “403 hospitals (80.6% of the 500) did not publish payer-specific negotiated charges ‘clearly associated with the names of each third-party payer and plan’ as required by the rule.” However, their review of the files again appears to be lacking industry knowledge. We see from their list of noncompliant hospitals that it appears they have assumed that all hospitals will have multiple negotiated rates for each payer. While this is common it certainly can’t be assumed to exist for ALL payers. The rule requires NEGOTIATED rates to be disclosed. So, if there is only one Aetna plan that has been negotiated than the hospital would only need to list Aetna once. This group seems to be assuming noncompliance based on not finding multiple entries for Aetna.

At the end of the day, the only group judging compliance that truly matters is CMS. While there is still some ambiguity around who CMS has deemed compliant in their reviews we do know that some of the elements this group has utilized do not align with the CMS requirements. Our opinion is that this report was primarily created to generate a headline and to promote their four proposed actions:

Stricter penalties for noncompliance and vigorous enforcement of the rule
Enhanced requirements for the list of 300 shoppable services
Requirements for actual prices, not estimates **Here the group would like to see guaranteed price quotes instead of price estimates in the shoppable tool
Requirements for clear pricing data standards

As for these four proposed actions, stricter penalties could be on the way due to language in the OPPS proposed rule. We also believe CMS will standardize reporting requirements in the future as this was also brought up for comment in the proposed rule. As for requiring price guarantees, hospitals are essentially doing this through many shoppable tools today. We’re not sure if this group is unhappy with the legal language that many tools have suggesting that a patient’s experience at the hospital could require care outside of what is being presented in the results? To convey patient care variability, our tool provides ancillary procedures that are commonly done in conjunction with the selected service and how that would impact their financial obligation. We believe this approach covers the needs of the hospital and the patient.

In sum, we find the report to be lacking industry experience, inconsistent in its application of review criteria to the sample, and intended primarily to paint hospitals in a negative light with proposed actions that are already being considered or implemented. If you have additional questions on price transparency you can watch our free summit here, or contact us here.