Finding out the exact and lowest cost of medical services or items beforehand could be a quite tall order in the complex US healthcare system. Price transparency is one goal that the industry has been trying to achieve for a long. The rule came into effect this January. But is affordable care possible by tweaking some rules or the system is way more complicated than it seems?
The administration and healthcare industry do not seem to have the same opinion on the new Price Transparency rule, leaving its future hanging in the balance. Through a push in the form of rule, the administration has set the ball rolling. In the first of the two-part series on the new rule, we are analyzing the factors from the payers’ point of view that can potentially affect its appropriate implementation.
The Departments of Health and Human Services (HHS), Treasury, and Labor issued the “transparency in coverage” final rule in December. The rule imposes new transparency requirements on group health plans and insurers in individual and group markets.
Under the final rule, plans and insurers must disclose cost-sharing estimates at the request of an enrollee and publicly release negotiated rates for in-network providers, historical out-of-network allowed amounts and billed charges, and drug pricing information. The aim is to enable enrollees to estimate their cost-sharing in advance to encourage shopping and price competition amongst providers.
HHS also amended its medical loss ratio (MLR) methodology to allow insurers to claim credit for “shared savings payments” made to an enrollee who selects a lower-cost, higher-value provider.
The big question is will these rules help shorten customer’s long medical bills?
Contradictory Beliefs: Americas’ Health Insurance Plans and Americans Hospital Association, the two pillars of the USA health system, are not on the same page with the HHS. These entities have expressed strong opinions. The AHA also opted for a lawsuit against what the HHS believes can bring pricing reform in the healthcare industry.
Let’s see the factors that may hamper the delivery of the rule’s objectives.
1. Reduce competition and push prices higher
In a strong reaction to the rule, America’s Health Insurance Plans (AHIP) opined that the final rule will work to reduce competition and push healthcare prices higher – not lower – for American families, patients, and taxpayers. This is precisely the opposite of what Americans want in their healthcare. They are clear they want more affordability – 75% of Americans have said they would not support such federal regulations if they would raise the cost of premiums.
An AHIP survey revealed that the importance of privacy protection outweighs the ease of access to health information. Thinking about their personal health information, 3 in 5 adults (62%) say stronger privacy protections of their health information is more important than easier access to their health information. Three in 4 adults would not support a federal regulation that made it easier to find the cost of medical procedures but raised the cost of health insurance premiums.
2. Commercial payers offer price-transparency tools
Americans should have personalized health care information when they have to make better, more informed decisions before they seek and receive care, said AHIP president Matt Eyles. He added that at least three-quarters of commercial health insurance providers already offer price transparency tools to the more than 120 million people they serve.
3. Transparency is not always good
Healthcare providers (hospitals, outpatient facilities, physician groups, or solo practitioners) compete against each other to be included on a health plan’s list of preferred providers. When networks are selective, providers are more likely to bid aggressively, offering lower prices to ensure their inclusion in the network. But when providers know who the other bidders are and what they have bid in the past, they may bid less aggressively, leading to higher overall prices, according to the Federal Trade Commission.
4. Doubts over lower-cost, high-quality services
There is a flip side to releasing all the data in the public domain. AHIP believes that requiring health insurance providers to publicly release all in-network negotiated rates, information on out-of-network payments and prescription drug negotiated prices in machine-readable formats will fail to deliver what Americans want – lower costs and high-quality health care.
It undoubtedly looks like a long road ahead for the industry to turn these rules into reality. In the second part, DistilINFO will analyze the factors from providers point of view