Nov 27, 2018

You Have the Right to Know the Price

Seema Verma
Administrator of the Centers for Medicare & Medicaid Services

You Have the Right to Know the Price

When facing any policy issue, it helps to take a step back and run it through the lens of common-sense. Can you imagine going to the grocery store, getting the groceries you need for the week, but never knowing the price of your items until a week later when the store sends you a bill? Sadly, that’s how health care works every day.

As spending on health care increases to 1 in 5 of every dollar spent in our country, patients’ deductibles and copays are growing. As a public official, and as an American, this impending crisis is something that cannot be ignored. We must do something about rising cost, and a key pillar is to empower patients with the information they need to drive cost and quality by making our health care system evolve to one that competes for patients. This is why price transparency in health care is a priority for the Trump Administration.

In two short years we have already accomplished a lot. President Trump recently signed legislation to end the practice of gag clauses and CMS proposed to require pharmaceutical companies to disclose the list price of drugs in direct-to-consumer ads. Just yesterday, we proposed requiring each Part D plan to adopt a real-time prescription benefit tool of its choosing by January 1, 2020. Pricing information and formulary alternatives would also be required in the explanation of benefits that plans provide to beneficiaries. These proposals enhance our recent proposed rule that would require drug manufacturers to post their list prices in television ads. Also this year, we launched a patient-oriented, overhauled version of our drug pricing and spending dashboards, which provides patients with Medicare and Medicaid spending information for thousands more drugs than ever before and, for the first time, listed the prescription drug manufacturers that were responsible for price increases.

We’ve also improved the accessibility of hospital standard charge information by updating our guidelines to require hospitals to make available a list of their current standard charges in a machine readable format, making it easier for patients to know the cost of services before they commit to them, and allowing them to shop for the best value. We know this is just a first step, and we have actively sought input on how we can make this data easier for patients to use.

In addition, CMS recently launched the eMedicare initiative to empower beneficiaries with cost and quality information. This announcement included the launch of an enhanced interactive online decision support feature to help people better understand and evaluate the cost differences between Medicare Advantage and traditional Medicare. eMedicare also offers a mobile-optimized out-of-pocket cost calculator to provide beneficiaries with information on overall plan costs and prescription drug costs.

Today, to advance CMS’ commitment to price transparency, and as Congress required in the 21st Century Cures Act, we are releasing for the first time a new consumer resource—Procedure Price Lookup. This tool allows consumers to compare Medicare payments and copayments for certain procedures that are performed in both hospital outpatient departments and ambulatory surgical centers. The tool displays national averages for the amount Medicare pays the hospital or ambulatory surgical center and the national average copayment amount a beneficiary with no Medicare supplemental insurance would pay the provider.

Working with their clinicians, Procedure Price Lookup will help patients with Medicare consider potential cost differences when choosing among safe and clinically appropriate settings to get the care that best meets their needs.

This Procedure Price Lookup tool is needed because the law requires that Medicare maintain multiple separate payment systems for different types of health care providers, meaning both CMS and patients pay vastly different amounts for the same service, depending on the site of care. This is also a prime example of Medicare’s misaligned financial incentives, under which providers can make more money if they treat patients at one location as opposed to another. For example: a Medicare beneficiary needs knee surgery, and her surgeon offers her the choice to have the surgery in the local hospital’s outpatient department or at an independent surgery center. With this tool, the beneficiary can type in the type of surgery and see an estimate of the difference in out-of-pocket costs between the two settings.

Unfortunately, it would take an act of Congress to change the payment systems within Medicare that charge patients different prices for the same services based on the care setting, but in the meantime patients have the right to at least know what they will be charged. The tool released today makes that information easy to use, so consumers have the information they need to make decisions that work for them.

While the work we have done to empower patients by increasing the transparency of the Medicare program is unprecedented, we are just getting started as we work to increase price transparency throughout the health care system. 

Giving patients access to data is just the first step – we also need to drive towards consumer-friend tools presenting information that is both personal and actionable at the time people seek care.  We need to meet patients where they are and integrate cost information into their health care decision making, making it easy for patients to analyze cost differences across all care options.  The case for price transparency throughout the health care system is clear, and the need to shop is growing ever more compelling as high deductible plans become the norm. Putting patients in the driver’s seat means we also need to integrate quality information with price transparency – once consumers can see the whole picture, they will be truly empowered to seek out high value care among providers competing on both cost and quality.


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