Health Insurers Join Price Transparency Disclosure Mandates

The latest stage in government policy designed to promote greater healthcare price transparency now requires commercial health insurance plans and self-insured companies to post in giant “machine-readable” electronic files their actual contractual payment rates for a range of services purchased from healthcare providers.

Effective July 1, the Transparency in Coverage Final Rule requires most group health plans, along with companies that pay directly for their employees’ medical care, to disclose on an accessible public website information about in-network negotiated prices and out-of-network allowed rates and billed charges for hospitals, doctors, and other covered items and services. There are hefty fines — up to $100 per day per covered person — for failure to post the required data.

The government’s commitment to healthcare price transparency was initiated through the Affordable Care Act in 2010 and advanced with a June 2019 Trump Administration executive order on price and quality transparency. A requirement for hospitals to post the prices they have negotiated with insurers has been in effect since January 1, 2021. Plans for similarly reporting pharmacy costs are currently on hold while the government considers whether this requirement is still needed.

The health plan transparency requirement, developed jointly by the federal departments of Health and Human Services, Labor, and Treasury, was scheduled to go into effect January 1, 2022, but was deferred by the Biden Administration until July 1.

But while the goal ultimately is to empower consumers with the tools to access pricing information from their health plans to make healthcare purchasing decisions, the new disclosure is only a first step, said Mike Gaal, EMBA, FSA, MAAA, Chicago-based principal and consulting actuary for Milliman. Milliman consults with payers and providers on price transparency.

Gaal called this first step, which comes after a long process of development, “incredibly important,” making a lot of previously guarded data from contracts between payers and providers publicly available. A tremendous amount of data has been posted. “But in its current format, it is largely inaccessible and uninterpretable by consumers,” he said. Only the most determined — or those with the greatest financial exposure to deductibles and copays — are likely to find their way through the maze of data.

Comparisons With Competitors

At least initially, health plans and providers are more likely to access the data, largely for making comparisons with their competitors and checking their own standing in local markets, he said. Because the data sets are so large and complex, they likely will turn to third-party clearinghouses and benefit consultants to help process and interpret the data. Companies like Turquoise Health, which already posts the required price data for hospitals and consults with insurers on the requirements they face, are springing up to fill this need.

Employers have also tried to share some price data with their covered employees, to make this kind of data helpful for making better-informed healthcare purchasing decisions, Gaal said. “You’ll see employers partner with entities that are able to make the data useable for consumers.”

Health plans are reporting the data as required, said Kelley Schultz, vice president for commercial policy at the health insurance company trade group America’s Health Insurance Plans (AHIP). But these raw numbers won’t necessarily help individual consumers obtain healthcare that adds value to their lives.

What’s needed instead, she said, are user-friendly cost estimators that can incorporate an individual’s particular coverage, deductibles, and out-of-pocket exposure, which the price transparency data now being published can’t provide.

As of 2021, most commercial health insurance plans were already offering such tools to their enrollees, whether online or by other means, Schultz said. However, less than half of impacted enrollees have created the credentials that would permit them to log on to the member access portal, where this information is accessed.

Schultz said these consumer-facing online shopping tools can be used by enrollees to estimate actual, personalized, real-time patient out-of-pocket costs for complex medical services and procedures. “Our members have tried to make personalized, actionable information available to beneficiaries to make more informed decisions before seeking care.” These kinds of cost estimators will be required for health plans by the government starting in 2023.

AHIP, along with the Blue Cross Blue Shield Association, filed comments objecting to the new rules when they were first proposed in November, 2020. “We voiced our concerns with the government, but as of now this rule is in place,” she said.

Value-Based Complications

Another complication: the gradual evolution of the American healthcare system toward population-based and value-based payment arrangements doesn’t lend itself to putting a dollar figure on the price of specific health services. The published rules recognized this and tried to accommodate value-based arrangements that don’t utilize fee-for-service reimbursement. The rules summarize general reporting expectations and offer opportunities to describe in an open text field in the public file the “formula, variables, methodology or other information necessary to understand the arrangement.”

Self-insured health plans, although they share many perspectives with commercial health insurers, have supported the new health plan transparency rule from the start, James Gelfand, president of the ERISA Industry Committee, a trade group representing self-insureds, told Medscape Medical News in a recent email. “We don’t anticipate it being a huge amount of work for carriers to produce the required data,” he wrote.

“After all, they already know how much they have agreed to pay providers, and they know what amounts they pay out of network. It was just a matter of writing it down in one place.” Over time, compliance with these rules will become more familiar and easier, almost automatic.

But some in the health industry still resist price and cost transparency, he said. The goal of the federal transparency effort is to create actual, functioning markets. “You cannot have a market when purchasers lack information about prices.”

No relevant financial relationships have been reported.

Larry Beresford is an Oakland, California-based freelance medical journalist with a breadth of experience writing about the policy, financial, clinical, management, and human aspects of hospice, palliative care, end-of-life care, death, and dying.

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