Benefit News

Proposed Rule Issued To Increase Hospital Cost Transparency; New Action Plan Announced To Import Prescription Drugs

August 07, 2019

Two separate announcements were made by the Trump Administration this week intended to support two important goals of its health care policy.

On Monday, July 29, 2019, the Centers for Medicare and Medicaid (CMS) issued a proposed rule (available here), aimed at increasing price transparency and helping consumers understand the charges they may incur before receiving care.

The second announcement occurred Wednesday, July 31, 2019, in which the Department of Health and Human Services (HHS), together with the Food and Drug Administration (FDA) announced they were publishing an action plan outlining two potential pathways intended to lay the foundation for the safe importation of certain drugs originally intended for foreign markets (available here).

Overview of Proposed Cost Transparency Rule

The proposed rule, referred to as the Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC), would expand the pricing transparency requirements hospitals must comply with. Specifically, it would require all Medicare-participating hospitals to post their negotiated prices for standard health care services, effective January 1, 2020. Since January 1, 2019, Medicare-participating U.S. hospitals have been required to post their gross (list) prices for standard health care services in a machine-readable format. While this has allowed consumers to see what a service could cost, the price listed wasn't often the price that was charged. The newly proposed rule would expand the transparency requirements that were made effective January 1, 2019, by CMS, and are in line with President Donald Trump's June executive order directing HHS to draft rules designed to increase pricing transparency and quality in health care.

Applicable hospitals would be required to post a list of their payer-negotiated prices and plan for a set of "shoppable" services. Hospitals would be required to display negotiated charges online in a machine-readable format for at least 300 services, including 70 selected by the CMS and 230 selected by hospitals. Furthermore, such posting must be done in a consumer-friendly format. This means that the hospital charge information will need to be displayed prominently on a publicly available webpage that clearly identifies the hospital (or hospital location), is easily accessible without barriers, and searchable.

Annual updates to this list would be required, and hospitals that don't comply could be subject to hefty civil monetary penalties of more than $100,000 per year. Other changes in the proposed rule include encouraging site neutral payment between certain Medicare sites and services and making certain policy updates to OPPS and ASC payment systems.

This is just a proposed rule at the moment, which means no changes will be made effective until the rules are finalized. The agency is currently asking for comments on the proposed rule. The deadline for submitting comments is September 27, 2019. It is anticipated that there will be significant push-back from hospitals especially, given the expected costs associated with implementing these changes.

Action Plan For Safe Importation of Prescription Drugs

The action plan announced today outlines two potential pathways that would lay the foundation for the safe importation of certain drugs originally intended for foreign markets, with the goal of lowering drug prices and reducing out of pocket costs for Americans. One pathway would be through a notice of proposed rule-making that will ultimately authorize pilot, or demonstration, projects, outlining how they would import certain drugs from Canada that are versions of FDA-approved drugs manufactured consistent with FDA approval.

Under the second pathway, manufacturers of FDA-approved prescription drugs would, through FDA guidance, be able to import versions of these drugs that they sell in foreign countries. To use this pathway, the manufacturer or entity authorized by the manufacturer would establish with the FDA that the foreign version is the same as the U.S. version and appropriately label the drug for sale in the U.S.

For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or inquiries@burnhambenefits.com.


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