We’ve been hearing a lot lately about a recently released ruling known as the Transparency in Coverage rule. What exactly is it? The intent of the rule is multi-fold:
- To put health care price information in the hands of consumers and other stakeholders
- To ensure consumers are empowered with the critical information they need to make informed healthcare decisions
- To empower consumers to shop and compare costs between specific providers before receiving care
- To increase price transparency by giving patients access to hospital pricing information
- To reduce the secrecy behind healthcare pricing with the goal of bringing greater competition to the private healthcare industry
The rule was issued jointly by the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury in response to President Trump’s executive order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.
It is expected that the enhanced transparency from making healthcare cost information available to the public will drive innovation, support informed, price-conscious decision-making, and promote competition in the healthcare industry.
The Problem of Not Knowing the Cost
The problem many consumers face when needing healthcare services is that they never know the cost until after the fact. Pricing information is typically not available to consumers and thus consumers lack the ability to compare providers and services based on projected cost.
How does this rule fix the problem?
This rule will require most group health plans and health insurance issuers in the group and individual markets to disclose price and cost-sharing information to participants, beneficiaries, and enrollees. While not fully completed, the Departments are finalizing a requirement to give consumers real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability, through an internet based self-service tool.
What pricing disclosures are required?
Plans and issuers will be required to disclose the following information on a public website:
- In-network negotiated rates
- Billed charges and allowed amounts paid for out-of-network providers
- Negotiated rate and historical net price for prescription drugs
Two Approaches for Comparison Shopping
This final rule includes two approaches to make healthcare price information accessible. These rules apply to most non-grandfathered group health plans and health insurance issuers in the group and individual markets.
For Participants and Beneficiaries: Provide personalized out-of-pocket cost information, and the underlying negotiated rates, for all covered healthcare items and services, including prescription drugs, through an internet-based self-service tool and in paper form upon request.
- An initial list of 500 shoppable services as determined by the Departments will be required to be available via the internet based self-service tool for plan years that begin on or after January 1, 2023.
- The remainder of all items and services will be required for these self-service tools for plan years that begin on or after January 1, 2024.
For the Public: (including stakeholders such as consumers, researchers, employers, and third-party developers) Provide three separate machine-readable files that include detailed pricing information:
- File #1 must show negotiated rates for all covered items and services between the plan or issuer and in-network providers.
- File #2 must show both the historical payments to, and billed charges from, out-of-network providers.
- File #3 must detail the in-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level.
Plans and issuers must display these data files in a standardized format and provide monthly updates. This data will provide opportunities for detailed research studies, data analysis, and offer third party developers and innovators the ability to create private sector solutions to help drive additional price comparison and consumerism in the health care market. These files are required to be made public for plan years that begin on or after January 1, 2022.
Expect health plans to work on developing data file disclosures over the next year and consumer transparency tools over the next two years. For the immediate future, participants in group health plans will not experience any changes, but in the future, enhanced pricing transparency can be anticipated.