Increasing price transparency in healthcare is a highly contested topic that’s been debated among providers, insurance carriers, plan sponsors, benefit consultants, and legislators for years.
It is no secret that determining the true cost of a medical procedure remains a difficult task for consumers. Hospitals and providers have historically held their fee schedules close to the vest while carriers have also largely kept negotiated rates and network discounts out of the public eye.
New legislation has emerged over the last several years aimed at compelling providers and carriers to reveal this information to provide patients and plan sponsors with pricing information that empowers them to make better purchasing decisions.
The Consolidated Appropriations Act of 2021 (CAA) was one major piece of legislation designed to empower consumers with more access to information. This law required health plans to publicly post machine-readable files for in-network rates, out-of-network allowable amounts and billable charges, and prescription drug negotiated rates and historical prices. The law also included the “No Surprises Act,” which was designed to protect individuals who receive care from an out-of network provider in situations where the individual has little or no choice to use one.
The CAA also prohibits group health plans and health insurance companies from making agreements with healthcare providers that restrict cost and quality information – commonly known as the “gag clause.” The U.S. House more recently passed the Lower Costs, More Transparency Act with the goal of strengthening enforcement and broadening price disclosure requirements to ambulatory surgical centers, laboratories, and imaging centers.
Pros and Cons
These new rules have made strides in increasing transparency throughout the healthcare industry. Thanks to these laws, there is more information available on pricing today than ever before – which is a positive development for consumers and plan sponsors seeking to make more informed healthcare decisions.
However, there’s still more work to be done. To start, the pricing information available today is highly complex and difficult to access. Many of the machine-readable files that contain pricing information are many pages long and tough to navigate. They are so difficult to read that the average consumer has little chance of being able to discern any useful information from them. In many instances, trained data scientists are required to translate these files into layman’s terms before they can be used for price comparison.
Additionally, these files contain no information about the quality of the healthcare provider. Even if a consumer can compare prices between providers, they are still unable to distinguish a high-quality provider from a low-quality provider, which adds to the difficulty of making an informed decision on where to receive care. Not to mention, many providers and health plans have simply failed to comply with the new transparency rules.
The Catalysts for True Transparency
The legislation in place today is a solid start and has placed the industry on the right track toward true cost transparency. However, more needs to be done to make comprehensive pricing and quality information available at all times, without caveats, limitations, or complications.
Getting there will be no small task. In our view, here are four catalysts that will continue to promote greater transparency:
1. Continued pressure from benefit consultants, employers and plan sponsors: Large purchasers like employers and plan sponsors, as well as the industry experts that advocate for them, must continue calling for greater transparency on pricing and quality. Doing so will keep the pressure on providers and health ns to offer up this information.
2. Providers willing to break the mold: The industry is yet to see a meaningful number of healthcare providers willing to lead by example and freely make available their pricing information. Once one or two large leaders emerge, it could prompt more providers to follow suit, creating a cascade effect of newly available pricing information.
3. The emergence of technology-enabled disruptors: The employee benefits industry is ripe for technological disruption, especially as it pertains to provider price and quality comparison tools. New disruptors are beginning to emerge that aggregate industry data and boil it down to terms consumers and plan sponsors can understand. Healthcare Blue Book and the LeapFrog Group are two examples of comparison technology, but there is plenty of room for more disruptors who can create easy-to-use consumer-facing tools.
4. Additional hard-nosed legislation: So far, many providers have found ways around today’s healthcare transparency rules. Some just accept the penalties, while others have found loopholes enabling them to continue safeguarding pricing information. To make additional progress, industry leaders and lawmakers in Washington D.C. need to keep applying pressure by increasing enforcement and penalties for violations of current rules while creating more legislation that leads to improved transparency.
Improving the Greatest Healthcare Industry in the World
In the U.S., we’re fortunate to be the home of the greatest healthcare industry in the world where innovation thrives and patients have access to some of the best care possible. Increasing transparency will only strengthen our current system by promoting competition and empowering consumers to make more informed decisions. We’re excited about the progress made so far, and look forward to what the future holds.
Vice President, Senior Benefits Sales Leader