November 28, 2023

While most Americans were preparing their emails out of the office and preparing for a shootout on the Fourth of July weekend, the rules governing their health insurance were unlikely to be of the highest interest.

But on Friday, July 1, 2022, after months of delays in implementation, a new rule went into effect that will upend the way Americans shop for health care services — and how much they pay.

The Transparency in coverage is the final rule, issued by the Centers for Medicare and Medicaid Services (CMS), requires health insurance companies to disclose rates for covered services and items. Insurers must include the rates they negotiated with participating providers for all covered services and items, as well as the amounts allowed and billed to out-of-network providers. The amounts allowed are the maximum rates that insurance companies pay for a particular service, and the amounts billed are what the providers actually charge.

Taken together, this information should give consumers a clearer idea than they can get today of what their health insurance plan will pay, even if they see doctors who don’t participate in their network of health insurance providers. With this information, people could theoretically make informed trade-offs about which healthcare providers to see.

The information should also allow Americans to predict their out-of-pocket costs more accurately because how much the insurance company will pay is no longer a mystery. Knowing out-of-pocket costs before you incur them is a level of insight that Americans have sorely lacked.

The new insurance transparency rules follow the implementation of the No Surprises Act on January 1, 2022, which protects consumers from unexpected fees for certain services. The No Surprises Act requires private health insurers to cover certain out-of-network bills at the same rates they would if services were provided within the health plan’s network.

In theory, this level of transparency could lead to lower health care prices (although some Economists warn It can also encourage some providers to raise their rates if they feel they are being paid less.) When the rates that health insurance companies negotiate with health care providers are on full display, companies that pay for employer-sponsored health benefits may find reason to question the effectiveness of insurance company negotiations.

newly RAND . Study It showed that the rates that private insurers and employers paid to hospitals varied widely and were, on average, more than twice what Medicare paid for the same services. Other research He showed that paying with cash instead of using insurance can save consumers money on prescriptions nearly a quarter of the time. This type of data at a more detailed level may give companies leverage to demand lower rates.

But all of these benefits will only come about if health plans first comply with the new rules.

The findings from the previously implemented hospital price transparency final rule may provide a cautionary tale in this regard. Hospital transparency rules require hospitals to publish standard fees for all their services and items and to make prices for the 300 most popular services affordable to consumers. The rule went into effect on January 1, 2021 but a year later, Only 14% of the hospitals were in compliance.

The CMS has set higher fines this time around, so insurance companies that don’t provide the required data will have to pay $100 per day per violation for each affected member, which could quickly add up to larger plans.

Several insurance companies have already posted the required files, although they are difficult to find. at least one casethe page was displayed but there were no files.

But even full compliance with a health plan will not automatically give consumers the information they need. The required format for this data – machine-readable files – is almost impossible for the average consumer to interpret. These files can run consumer-friendly viewing of data but are not consumer-friendly on their own.

Nate Maslak, CEO and co-founder of Ribbon Health, a healthcare data company, believes the data presented is too complex for patients to understand, and says the data is littered with mismatched and outdated numbers.

“Price transparency regulation on its own will not give patients access to affordable care decisions unless these insights are presented to patients in a consumer-friendly way,” Maslak said.

Instead, the new rule creates conditions for technology companies and others to enable price transparency at the consumer level.

Maslak is working with Turquoise Health to help healthcare organizations make it easier for consumers to access and interpret data. Together, they pair pricing data with physicians’ location, specialty, experience, and quality data.

“This way when a patient is looking for care, they can actually ‘shop’ for it the same way they would have been shopping for another big purchase,” Maslak said. “I am excited about a future where patients can have the same confidence in booking care as they do in booking a hotel room – with clear and accurate information about how to get there, how much it will cost, and what to expect. We are building a world where anyone can simply find affordable care. Cost and quality, and this regulation is essential to that vision.”

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