Healthcare pricing transparency is the gateway to consumer autonomy. If consumers know how much a procedure will cost, they can compare prices at different hospitals and under different health plans. If they can calculate their annual healthcare expenses, they can better plan their finances.
However, healthcare pricing has been continuously obscured, even as costs rise annually (overall healthcare costs are expected to reach $6 trillion by 2027). It’s no wonder then, that transparency has been a hot topic for years—from conferences, to white papers, to political debates.
As rising healthcare costs have amplified calls for change, new federal policies and transparency tools have emerged—all which signal a radically new world for hospitals, health carriers, employers and consumers. Pricing transparency is happening now, and stakeholders must ready themselves for a rapidly changing healthcare landscape. Those who don’t will quickly become obsolete.
Three catalysts for transparency in healthcare costs
Hospital Price Rule:
In January, the first of two recent healthcare transparency rules from the federal government went into effect. The hospital price rule, (Code of Federal Regulations 180 or CFR180) requires hospitals to list standard charges for all services and items. Pricing needs to be available online in a machine-readable file, and through a consumer-friendly display of at least 300 shoppable services that a consumer can schedule in advance.
Previously, patients didn’t find out the cost of services until after they received care. Now, patients can review this information in advance so they can make informed decisions about their healthcare and compare prices between different hospitals.
“It’s kind of crazy that hospitals didn’t already have to provide this transparency,” says Dr. Elizabeth Cote, MyHealthMath Chief Medical Officer. “Until now, we’ve just had to blindly receive care without any idea of what we will be charged. Can you imagine that happening with any other major purchase?”
Transparency in Coverage Rule:
In October, the Departments of Health and Human Services, Labor, and the Treasury issued a rule (Transparency in Coverage 9915F) that requires most private sector health insurance companies and self-insured health plans to publicly disclose healthcare pricing and cost-sharing information. Specifically, insurers will need to provide cost-estimates of how much individual patients will pay out-of-pocket for specific services based on their coverage terms (the cost-sharing), and insurers must share how much they pay healthcare providers for specific services (the negotiated rates).
The Transparency in Coverage Rule is set to go into effect in stages:
- 2022: insurers will need to disclose detailed pricing information—including negotiated in-network rates for covered services, historical payments for out-of-network providers, and prescription drug pricing—in machine-readable files
- 2023: using an online shopping tool, health plans must provide cost-sharing estimates and negotiated rates for the 500 most “shoppable” services and items (e.g., mammograms, colonoscopies, physician visits)
- 2024: All remaining items and services will be added to the online tool
Both rules are meant to empower consumers through unprecedented transparency in healthcare pricing. Whether the rules will have their intended effect remains to be seen, but one thing is indisputable: Together, they signal a growing transparency initiative that cannot be overlooked.
A call for health plan decision support:
True pricing transparency depends on helping consumers choose the most cost-effective health plan, not just the best-value services. This is where decision support companies like MyHealthMath come into play. Advanced decision support helps consumers choose their optimal health plan based on their predicted health needs for the coming year.
In yet another indicator of the accelerated drive toward transparency, consumers are already calling for decision support. A recent Aflac workplace study found that nearly 50 percent of employees want to spend more time learning about and selecting their health plan, and 45 percent are interested in a cost-estimate tool. People know that they need help choosing an optimal health plan and they’re asking for tools that increase transparency by estimating their future expenses.
Importantly, decision support can help address calls for transparency until the new pricing rules go into effect.
“It’s going to take time and require the translation of these rules and regulations into consumer-friendly tools before they generate value for consumers,” says Cote. “In the meantime, pricing transparency will continue to permeate the public discourse. Employers and insurers can get ahead of this conversation by providing health plan decision support, and planning how they will deliver on the aims of the new rules.”