Comments to CMS on Hospital Transparency Regs in 2019 IPPS Proposed Rule


Comments on 2019 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System Proposed Rule, and Request for Information

 File Code CMS-1694-P

June 23, 2018

Dear Administrator Verma:

The Association of American Physicians & Surgeons (“AAPS”) is a non-profit membership organization of physicians and surgeons who are mostly in small, independent practices.  Founded in 1943, AAPS defends and promotes the practice of private, ethical medicine.  AAPS has members in virtually every specialty and State, and AAPS speaks out frequently about issues concerning patients and medical practice.  HHS favorably cited a comment by AAPS in connection with the landmark Privacy Rule.  65 FR 82462, 82468 (Dec. 28, 2000).  Our legal filings have also been cited favorably by the U.S. Supreme Court and appellate state and federal courts.

Thank you for the opportunity to submit comments on the proposed IPPS and LTCH rules for 2019.

We will focus chiefly on the Request for Information (RFI) regarding the proposals to encourage price transparency by hospitals.

Access to honest and straightforward information about costs and prices is critical to putting patients back in the driver’s seat and increasing their access to high-quality, lower-cost care. Transparency not only pushes down prices, but increases overall patient and physician satisfaction, as shown in a recent study from Johns Hopkins University (

CMS proposes, in the rule, to encourage the online posting of “standard prices” by hospitals. We suggest that CMS should examine how decades of federal policies have compounded to contributed to the epidemic of price-opaqueness in medical care.

For our view of what has gone wrong, and steps to correct past policy failures, we urge CMS to review our “White Paper on Medical Financing” available at and White Paper on Repeal and Replacement of ACA available at

Ultimately correcting these past missteps is crucial to lasting change, but if CMS is considering interim measures, we would like to offer a few comments for consideration:

1) The Surgery Center of Oklahoma (SCO) is proof-in-concept that price transparency increases access to lower cost, high quality medical care.  Time recently featured this pioneer offering cash prices directly to patients:

SCO’s model is being successfully replicated at other facilities despite overregulation impeding physicians from opening and operating surgical facilities.

Anti-competitive Certificate of Need (CON) laws, and prohibitions against physician-owned hospitals are two examples of policies thwarting the growth of similar facilities, that need to be revisited and repealed.

2) Transparent pricing at SCO and other similar facilities are not a result of government mandated transparency.  We urge CMS to carefully consider the consequences of mandated transparency. For example, large “stakeholders” are often able to influence policy and rulemaking to their advantage.

A case in point is the Ohio “Healthcare Price Transparency Law,” O.R.C. 5162.80. In Ohio, insurers succeeded in pushing much of the burden on physicians and facilities to determine what any given patient’s payment responsibility will be. Yet physicians may be unable to obtain the information from insurers or from facilities that they need to provide to patients!

While the physician and facility can and should inform the patient of their fee, it should be incumbent upon insurers to make information about contracted rates readily available to their enrollees. How can enrollees make informed choices without knowing ahead of time, as much as practical, what their insurer will pay for a given procedure at a given facility?

We would go even a step further and suggest that in robust free market, patients would demand to see a schedule of contracted rates before enrolling in a plan. Or, free markets would likely increase demand for alternate benefit design like plans with reference-based pricing and no networks, i.e. reimbursement to the enrollee of a set amount for any given procedure, regardless of the entity that performs it. Reference-based pricing frees the patients to seek the facility and price most suitable to the patient’s individual preferences. This would unleash real market forces and encourage price transparency. Such a marketplace would even likely foster protections and innovative solutions for situations where shopping around in advance is not possible.

An innovative project,, is another example of how transparency can be increased apart from federal mandates. This grassroots database presents cash prices identified for about 30 “shoppable” procedures in areas where the team focuses its work, and also the Medicare rate for all 8,400 codes in the Healthcare Common Procedure Coding System (HCPCS) database. The searchable website also allows people to share prices and experiences. Many people report substantial cost savings enabled by the price information obtained through this project.

3) CMS needs to recognize another legislative tactic that insurers and hospitals use to squash competition and free market pricing. Laws ostensibly passed to stop “surprise billing” in reality give improper leverage to insurance companies to set prices below cost, and also become a tool enabling large health systems to limit competition, especially competition from independent physicians and facilities.

4) Another example of industry special interests rigging regulations and laws to their advantage (and to the detriment of transparency) is found in the Group Purchasing Organization safe harbor to Medicare Anti-Kickback law. This safe harbor, established by the “Medicare and Medicaid Patient and Program Protection Act of 1987,” (statute: 42 U.S.C. 1320a-7b(b)(3)(C) and regulation: 42 CFR 1001.952 (j)) ostensibly facilitates greater bargaining power and thus lower costs for hospital purchasing of supplies and drugs.  However, the safe harbor has in practice driven up costs and scarcity by perpetuating a system rife with hidden kickbacks and rebates. Pharmacy Benefit Manager (PBM) pricing abuse is also protected under this safe harbor.  It is time to revoke and repeal it. For more details see

Thank you again for the opportunity to enter this crucial discussion on price transparency. As we state in our white paper, lasting solutions are not going to be achieved by minor changes to the status quo. True reform must include freeing patients and doctors to buy and sell goods and services without government interference, as reflected in honest prices. They should not be rationed according to a political formula.

We would also like to briefly address two other aspects of the proposed rule:

  • Hospitals continue to see increases in Medicare-fixed prices as compared to the physician payment under the Medicare Physician Fee Schedule (MPFS). Shockingly, the AAOS reports: “The inflation adjusted decrease in the MPFS was more than 20 percent from 2007 to 2017. The other four provider stakeholders studied—hospital inpatient and outpatient, ambulatory surgical centers, and clinical laboratories—all had fee schedule adjustments that were nearly equal to and typically greater than inflation for the period studied.” While we advocate that Medicare end price fixing altogether, as long as it continues, policies must be fairly enacted instead of apparently favoring the stakeholders with the most clout. Current policies clearly favor the large health systems and hospital-based care, at the expense of independent physicians and facilities offering better quality at lower prices.
  • CMS asked for feedback on future policies to make data interoperability a condition of participation in Medicare.  We urge great caution with any such requirement, especially given the problems inherent in the current implementation of Health Information Technology as influenced by flawed federal policy. There is an epidemic of data breaches and incapacitation of EHR systems by hackers and ransomware. In addition, EHRs divert the physician’s attention from patient care to government recordkeeping. There is a growing body of evidence demonstrating the medical harm caused by EHRs that are focused more on collecting data for payers and government than on serving the medical needs of the patient and doctor. In the event CMS does implement an interoperability requirement, data-sharing should require the affirmative permission of the patient via an “opt-in” not “opt-out” process.

Thank you again for the opportunity to submit comments on behalf of independent physicians and their patients.

Please feel free to reach out to us with questions. We would welcome a continued dialog.


Jane M. Orient, MD
Executive Director
[email protected]