While most Americans were setting up their out-of-office emails and getting ready to fire up the grill for the July 4 holiday weekend, the rules governing their health insurance were probably not a priority.
But on Friday, July 1, 2022, after months of implementation delays, a new rule took effect that could shake up how Americans buy healthcare services and how much they pay.
The Transparency in Coverage Final Rule, issued by the Centers for Medicare and Medicaid Services (CMS), requires health insurers to disclose prices for covered services and items. Insurers must include the rates they have negotiated with participating providers for all covered services and items, as well as authorized and billed amounts for out-of-network providers. The authorized amounts are the maximum rates that insurers will pay for a given service and the amounts charged are those that the providers have actually charged.
Taken together, this information should provide consumers with a clearer idea than they can get today of what their health insurance plan will pay, even if they see doctors who are not part of their provider network. health insurer. With this information, people can theoretically make informed trade-offs about which health care providers to consult.
The information should also allow Americans to more accurately predict their out-of-pocket expenses, as it should no longer be a mystery how much the insurer will reimburse. Knowing reimbursable expenses before incurring them is a level of visibility that Americans sorely lack.
The new insurance transparency rules follow the implementation on January 1, 2022 of the law without surprises, which protects consumers against unexpected charges for certain services. The No Surprises Act requires private health insurers to cover certain out-of-network bills at the same rates they would if the services had been provided within the health plan’s network.
In theory, this level of transparency could lower health care prices (although some economists warn it could also encourage some providers to raise their prices if they feel they have been underpaid). When the rates that health insurers negotiate with health care providers are fully exposed, companies that pay for employer-sponsored health benefits may find reason to question the effectiveness of insurers’ negotiations.
A recent RAND study showed that the rates paid by private insurers and employers to hospitals varied widely and were on average more than double what Medicare paid for the same services. Other research showed that paying cash instead of using insurance can save consumers money on prescriptions almost a quarter of the time. This kind of data at a more granular level can give businesses leverage to demand lower rates.
But all of these benefits will only materialize if health plans first comply with the new rules.
The results of the previously implemented hospital price transparency final rule may offer a cautionary tale on this front. Hospital Transparency Rules require hospitals to publish standard prices for all of their services and items and to make prices for the 300 most common services available in a user-friendly format. The rule came into effect on January 1, 2021 but a year later, only 14% of hospitals were in compliance.
CMS has set higher fines this time around, so insurers who don’t provide the required data will have to pay $100 per day per violation for each affected member, which could quickly add up for large plans.
Many insurers have already posted the required files, although they may be difficult to find. In at least a casethe page was open but no files were there.
But even full compliance with the health plan will not automatically provide consumers with the information they need. The format required for this data (machine-readable files) is nearly impossible for a typical consumer to interpret. These files may provide a user-friendly presentation of data, but are anything but user-friendly on their own.
Nate Maslak, CEO and co-founder of Ribbon Health, a healthcare data company, thinks the data provided is far too complex for patients to understand and says the data is filled with inconsistent and outdated numbers.
“Price transparency regulation alone will not allow patients to access more affordable care decisions unless this information is provided to patients in a user-friendly way,” Maslak said.
Instead, the new rule creates conditions for tech and other companies to enable consumer-grade price transparency.
Maslak’s company works with Turquoise Health to help healthcare organizations make it easier for consumers to access and interpret data. Together, they combine pricing data with physician location, specialty, expertise, and quality data.
“That way, when a patient seeks care, they can actually ‘shop around’ the same way they would shop for another big purchase,” Maslak said. “I’m excited for a future where patients can have the same confidence in booking care as booking a hotel room, with clear and accurate information on how to get there, what it will cost and what to expect. We are building a world where everyone can simply find affordable, high-quality care, and this regulation is essential to that vision.