In the last several years, there have been several efforts to increase transparency in health care, particularly around quality and patient safety. Despite similar efforts to make health costs more transparent, many consumers still find health care costs as clear as mud. The issue is becoming more urgent, as a recent survey found that 47% of Americans are more concerned about health care pricing now than they were before the global coronavirus pandemic. In this post, we explore recent federal legislation and rules, as well as state policies that aim to improve health care cost transparency, and we take a look at what’s next for this important issue.
What Steps Has Congress Taken?
In their response to the COVID-19 pandemic, federal lawmakers addressed health cost transparency in two pieces of legislation in 2020: the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Securities (CARES) Act. FFCRA requires that health plans provide benefits for certain items and services related to the diagnosis of COVID-19, while the CARES Act required that the cash price for a COVID-19 diagnostic test be made public on provider websites.
Despite these efforts, many patients with varying levels of insurance coverage have reported experiencing “surprise billing” of up to $1,000 for a COVID-19 test. "Surprise billing” occurs when patients unknowingly receive out-of-network care and then are issued a large bill for the care they received. In many states, patients can obtain testing and services for COVID-19 at public testing sites without incurring unexpected bills. However, the burden is on the patients themselves to ask providers what services are being billed to their insurance, find public testing sites, or appeal bills.
In December 2020, Congress included a measure to curb surprise billing in its most recent COVID-19 relief bill.
How Have Federal Agencies Addressed Price Transparency in 2020?
Besides congressional action, federal agencies also have taken steps to improve price transparency. On Oct. 29, 2020, the departments of Health and Human Services (HHS), Labor, and Treasury finalized the Transparency in Coverage rule to require health insurers to increase price transparency for most employer-based group health plans and health insurance issuers offering group or individual health coverage. The new rule is intended to expand upon the Trump administration’s efforts to empower consumers to make informed decisions by giving them detailed pricing information. This rule comes after an earlier rule requiring hospitals to provide clear pricing information about their services on their websites was finalized in Nov 2019.
Under the Transparency in Coverage final rule, entities offering group or individual health insurance must list the out-of-pocket cost and negotiated rate for 500 covered “shoppable” items or services by Jan. 1, 2023. This excludes any emergency services, which are not available for patients to “shop” prior to seeking services. All additional services or items must be added for plan years starting Jan. 1, 2024. Health plans must display this real-time information in a user-friendly format through an online self-service portal, or in paper form if participants or enrollees request it, in plain language.
The rule also requires health plan issuers to make three different machine-readable files available to the public (various stakeholders such as consumers, researchers, employers and third-party developers) by Jan. 1, 2022. The first file must detail the negotiated rate for all covered items or services between the plan and in-network providers. The second file will outline the historical payments to out-of-network providers, as well as historical billed charges from out-of-network providers. The last file will show the in-network agreed upon rates and historical net prices for all prescription drugs covered by the plan or issuer.
CMS hopes that the inclusion of detailed pricing information will encourage innovation among issuers. Officials also say that this final rule will equip consumers with the tools they need to make the best health care decisions and will address the fact that the current system benefits large structures, such as large hospital networks and insurance companies, instead of consumers.
Key Dates Associated with Final Rule
How Did Stakeholders React to the Final Rule?
Consumer advocacy groups have come out in support of the rule, calling it a “necessary step to enable consumers to make more price-conscious decisions, increase competition, and prevent arbitrary or unreasonable price increases.” Cynthia Fisher, founder and chairman of Patient Rights Advocate, asserted that the rule reveals the real prices in the health care industry, noting that hospitals and health plans have wanted to keep their negotiated deals secret. Insurers have objected to the rule, in part because they believe the estimated costs associated with proposed changes are too low. The Blue Cross Blue Shield Association (BCBSA) charged that the cost of implementation would be approximately $13.6 million, an estimated 26 times higher than what HHS, Labor, and Treasury estimated. Such costs would be particularly burdensome for small health plans. BCBSA also expressed concern about the volume of data coordination. If implemented as planned, enrollees could access a potentially overwhelming 94,000 codes for services, according to BCBSA.
The Association for Community Affiliated Plans, representing 67 nonprofit and community-based safety net plans, also asserted that providing this data without proper education and context, such as care quality data, could be harmful to consumers. Representatives from the association expressed concerns that consumers might believe higher prices are synonymous with higher quality care, potentially leading to higher health care costs and misguided care decisions.
What are the Lessons Learned From State Transparency Experiments?
Several states have comprehensive health care transparency laws of their own. For instance, Massachusetts is one of six states that requires all providers and health plans to disclose costs to patients. However, only 2 to 7 percent of health care consumers in the state reported having used an online pricing tool. It is difficult to meaningfully display the multiple factors that make up health care pricing: provider charges, negotiate rates, and consumer copayments.
Lori Pellegrini, president of the Massachusetts Association of Health Plans, said transparency is essential, but health care does not operate as a typical market. “Consumers rely on their providers to make informed decisions when seeking health care services,” she noted. Massachusetts Attorney General Maura Healey told the Boston Globe that the state’s online price transparency tools have failed to lower health care spending. Healey warned, “We need to be honest about the limitations of these tools and take this opportunity to develop better mechanisms to reduce health care spending while maintaining high quality.”
Consumer advocates also acknowledge that while price transparency is not a cure-all, it is a step worth taking. Francois de Brantes of the Center for Payment Innovation said transparency will not immediately or vastly change consumer decision making, but it provides a “better shot at more people making value-based decisions if they have access to pricing information at the right time, at the right place.” A study of New Hampshire’s price transparency tool in the Journal of Health Care Organization, Provision, and Financing revealed that while only 1% of the state’s residents used the tool, it was particularly popular among “shoppable” services, such as outpatient and imaging services.
President Joe Biden campaigned on the expansion of quality health care to all Americans, and it is unlikely that his administration will reverse this price transparency momentum from 2020. However, transparency could be a secondary priority, with pressing issues such as vaccinating all Americans against COVID-19, increasing subsidies, and expanding access to insurance taking precedence in 2021.
Like the Trump administration, Biden has promised to put an end to surprise billing and has vowed to bar health care providers from charging patients out-of-network rates when the patient has little control over which provider is seen. The incoming Biden administration will be responsible for creating new rules to implement the surprise billing legislation that recently became law and navigating how it interacts with these new CMS transparency rules.
In Dec 2020, CMS finalized an interoperability rule to enforce new requirements on Medicaid and Qualified Health Plans to improve the electronic exchange of data between providers and payers, and enhance patient access to health information. Building on price transparency, this new rule gives patients more power in understanding their own care and making more informed health care decisions. IMPAQ will explore CMS interoperability rules in an upcoming blog post.
Your Source for Solutions
IMPAQ, an affiliate of the American Institutes for Research, is a policy research and analytics firm committed to tracking these two health care price transparency rules and the effects of these policies on patients, providers, health insurers, and the broader health care industry. Through cutting-edge research, advanced analytics, and technology capabilities, our experts bring deep policy expertise to help our partners understand and comply with new regulations. This is a second in our series on price transparency rules. You can find the first blog here.
Casey Alexander, Senior Research Analyst
Nakitah Hodge, Senior Research Analyst
Kevin Van Dyke, Managing Director