the Trump administration issued regulations requiring hospitals and insurers to disclose hitherto hidden information on the prices they negotiate with one another.
The proposed Transparency in Coverage rule from HHS and the Departments of Treasury and Labor would require most employer-based group health plans and health insurance issuers offering group and individual coverage to disclose price and cost-sharing information to participants, beneficiaries, and enrollees up front.
The rule would require health plans to give consumers real-time, personal access to cost-sharing information. Insurers would have to provide estimates, online and in paper form, of how much policyholders will have to pay out of pocket for covered services. Insurers would also have to reveal the rates they negotiate with their in-network providers and what the allowed amounts are for out-of-network care.
The proposed rule was added to the Federal Register and will go into effect after the public comment period ends on January 14, 2020.
The administration’s action comes in the wake of President Trump’s June 24 executive order instructing HHS to develop rules promoting price transparency and competition among hospitals and insurers.
Biggest Change Yet
“Today’s transparency announcement may be a more significant change to American health care markets than any other single thing we’ve done, by shining a light on the costs of our shadowy system and finally putting the American patient in control,” Health and Human Services (HHS) Secretary Alex Azar said in a statement announcing the new rule on November 15.
“Under the status quo, health care prices are about as clear as mud to patients,” said Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma in the statement.
The goal is to give patients knowledge of costs before they make important health care decisions.
“With this information, patients will have accurate information on out-of-pocket costs they must pay to meet their plan’s deductible, co-pay, and co-insurance requirements,” HHS stated in a press release. “This will make previously unavailable price information available to patients and other stakeholders in a standardized way, allowing for easy comparisons.”
Making this information public will “drive innovation, support informed, price-conscious decision-making, and promote competition in the health care industry,” HHS states in its release.
‘Standard Charges’ Rule Finalized
The Trump administration is also finalizing a rule requiring hospitals to provide patients with clear, accessible information about their “standard charges” for the items and services they provide, and to use standardized data elements that make it easier to shop and compare across hospitals.
HHS calls the posting of such information “shoppable services.” Standard charges hospitals will be required to make public on the Internet include gross charges, payer-specific negotiated charges, the amount the hospital is willing to accept in cash from a patient, and the minimum and maximum negotiated charges for all items and services.
Hospitals will have until January 1, 2021 to comply.
In a November 15 newsletter from the Galen Institute, the organization’s president, Grace-Marie Turner, expressed support for the administration’s decision, citing the example of a woman in Georgia who received a quote of $40,000 for a medical procedure from a Georgia hospital. The woman contacted the Surgery Center of Oklahoma, which gave her a price of $3,500. The patient went back to the Georgia hospital for a better price and was told they would perform the procedure for $3,500.
Hospitals, Insurers Push Back
Hospital associations and insurers lost no time in saying they will take the Trump administration to court over the new policies.
“Instead of helping patients know their out-of-pocket costs, this rule will introduce widespread confusion, accelerate anti-competitive behavior among health insurers, and stymie innovations in value-based care delivery,” the American Hospital Association and the Federation of American Hospitals said in a joint statement.
Directing their ire at the requirement for public posting of rates they negotiate with providers, America’s Health Insurance Plans, the Blue Cross Blue Shield Association, and the Alliance of Community Health Plans issued statements highly critical of the proposed rule.
‘A Baby Step’
The health care industry needs even bolder action, says Russ Carpel, CEO of LevelFunded Health, a national company that helps midsized companies find better-value plans for their self-insurance programs.
“This is a baby step in the right direction,” said Carpel. “The problem is consumers have very little skin in the game and have no power to shop. Health care is the only market where consumers and providers don’t set the price, a third party does.”
Carpel says Congress should address anti-consumer incentives created a decade ago.
“The Affordable Care Act capped profit margins on fully insured health insurance carriers,” Carpel said. “Both hospitals and insurance companies have an incentive to increase volume on claims and to push consumers to the highest-priced services. Networks have lost their original purpose, which was to save consumers money by offering patient volume for discounts. Now networks are a way for hospitals and insurers to look out for themselves.”
Calls for Fiduciary Rule
Government rules on brokers who sell insurance plans to employers also need reform, says Carpel.
“We need brokers who sell employers health insurance plans to work like fiduciaries, much like employer retirement plan providers now have to act in the best interest of employees,” said Carpel. “Health insurance brokers, because they work on commissions, have no incentive to offer employers plans that can save money and provide employees with the best value. Both the employer and the employee get stuck with higher bills.”
Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow.