Tennessee General Assembly Passes ‘Right to Shop’ Price Transparency Bill

Published June 4, 2019

The bill, sponsored by Rep. Robin Smith (R-Hixon), is part of the Republican-backed CARE plan, which stands for increasing consumerism, expanding access, improving rural health systems, and empowering patients.

“This bill will create a statewide database that makes the price of services public,” Smith told Health Care News. “Right now, insured people belong to a network from which they can choose doctors and providers. But we would create a portal where people can shop for the best prices within their own network.” As of mid-May, the bill awaits the governor’s signature

Opponents of Transparency

The CARE plan, including the Right to Shop bill, has faced fierce opposition from insurance lobbyists, says Devon Herrick, a policy advisor to The Heartland Institute, which publishes Health Care News.

“The insurance industry considers its negotiated discounts to be proprietary,” Herrick said. “For enrollees to shop around for the best prices, they have to know what the prices are. Insurers are loath to reveal what they pay, afraid their competitors will ask for the same discounts.”

Part of the problem is that insurers manage plans for employers, Herrick said.

“Plan administrators may worry their clients—larger employers—will wonder why they reimburse expensive services when cheaper ones exist nearby,” Herrick said.

Smith says forcing insurance companies to compete with one another offers consumers the most benefit.

“The insurance industry has perverted market forces,” Smith said. “Many people, especially in rural areas, are discovering that increased access to health insurance does not necessarily improve access to health care. It also doesn’t improve the quality or affordability of care. Obamacare resulted in more people having insurance, but prices and availability didn’t improve because of it. We’re working to take back the idea of health care.”

Incentives to Cut Prices

When prices are transparent, insurance companies have more incentive to offer the best prices, Smith said.

“We are hoping insurers will develop their own incentive plans,” Smith said.

The CARE plan would also reform the state’s certificate of need (CON) laws, which require new medical facilities and practices to prove to the government there’s a need for their services in the community, which decreases innovation and access to services and drives up prices because of a lack of competition.

“The push for certificate of need reform is ongoing,” Smith said. “Our CON reform bill is moving through the House. In 2016, we passed a series of CON exemptions for facilities that provide medical imaging services, such as CT scans, x-rays, and MRIs. However, there’s still more that needs to be accomplished on that front.”

Smith says CON laws do particular harm to rural communities, where a dearth of providers and medical facilities makes it difficult for residents to shop around for the best prices.

“We want people to be able to shop,” Smith said. “Especially in rural areas, having the opportunity to compare prices and choose the best deal empowers patients.”

Unleashing Consumer Power

Price transparency enables consumers to place pressure on providers to decrease costs, Herrick says.

“Consumers benefit from transparency by being able to shop smarter for medical care,” Herrick said. “For example, when consumers know a radiology clinic is hundreds of dollars cheaper than a similar clinic, over time providers have an incentive to lower prices.”

Herrick said the benefits of transparency compound over time.

“Consumers who are cost-savvy and know how to shop for the best deals will encourage insurance companies to lower prices,” Herrick said. “Consumers also benefit from prudent behavior, which sends a message to the suppliers of services that they have to compete for business.”

Ashley Herzog ([email protected])writes from Avon Lake, Ohio.

Official Connections:

TN State Rep. Robin Smith (R- Hixon)