Feds propose new price transparency rules in health care


Three federal agencies have jointly issued a price transparency proposal that would require most employer-based health plans and health insurance issuers to disclose price and cost-sharing information up front.

Paper money spread out. utah778/Thinkstock

The goal behind the proposal is to give consumers accurate estimates about the out-of-pocket costs they may incur for medical services, giving them the opportunity to shop around for medical treatment.

“Under the status quo, health care prices are about as clear as mud to patients,” Seema Verma, administrator of the Centers for Medicare & Medicaid Services said in a statement, adding that “we are throwing open the shutters and bringing to light the price of care for American consumers. Kept secret, these prices are simply dollar amounts on a ledger; disclosed, they deliver fuel to the engines of competition among hospitals and insurers.”

The “Transparency in Coverage” proposed rule, was released online on Nov. 15 jointly by the Department of Health & Human Services, the Department of Labor, and the Department of the Treasury. If finalized, it would give consumers “real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered health care items and services through an online tool that most group health plans and health insurance issuers would be required to make available to all of their members, and in paper form, at the consumer’s request,” a fact sheet outlining the features of the proposed rule states.

Health plans would also “be required to disclose on a public website their negotiated rates for in-network providers and allowed amounts paid for out-of-network providers,” the fact sheet continues.

The proposal comes as the CMS finalized transparency-related rules in the 2020 update to the hospital outpatient prospective payment system (OPPS). The price transparency portion of the OPPS is scheduled to go into effect on Jan. 1, 2021.

A fact sheet on the OPPS states that each hospital in the United States will be required to “establish (and update) and make public a yearly list of the hospital’s standard charges for items and services provided by the hospital.”

That list must include all standard charges, including gross charges, discounted cash prices, payer-specific negotiated charges, and deidentified minimum and maximum negotiated charges for all hospital items and services, as well as cash prices, payer-specific negotiated charges, and deidentified minimum and maximum negotiated charges for 300 shoppable services (70 identified by CMS and 230 selected by the hospital). A shoppable service is a service that can be scheduled in advance.

“This final rule and the proposed rule will bring forward the transparency we need to finally begin reducing the overall health care costs,” Ms. Verma said. “Today’s rules usher in a new era that upends the status quo to empower patients and put them first.”

America’s Health Insurance Plans said in a statement that it is evaluating the proposal and the final OPPS rule through a lens of three core principles: that consumers deserve transparency about out-of-pocket costs to help them make informed decisions; that transparency should be achieved in a way that encourages, not undermines, competitive negotiations to lower costs; and that public programs and the free market work together to deliver on our commitments to affordable, quality, and value.

“Neither of these rules, together or separately, satisfies these principles,” AHIP stated.

The Federation of American Hospitals is already anticipating a legal challenge to the rules.

“Patients should have readily available and easy-to-understand cost-sharing information when they need to make health care decisions,” FAH President and CEO Chip Kahn said in a statement. “Health care pricing transparency ought to be defined by the right information at the right time. This final regulation on hospital transparency fails to meet the definition of price transparency useful for patients. Instead, it will only result in patient overload of useless information while distorting the competitive market for purchasing hospital care.”

Mr. Kahn said FAH plans “on joining with hospitals to file a legal challenge,” asserting that CMS has exceeded it’s authority with these rules.

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