HHS Proposal Requires Price Transparency for Cost-Sharing Info

November 15, 2019 - HHS announced the Transparency in Coverage proposed rule requiring payers offering group and individual health insurance plans and employer-sponsored group health plans to offer price transparency about prices and cost-sharing information to consumers, including out-of-pocket healthcare cost estimates, copays, co-insurance, and in- and out-of-network provider rates.

“Today's transparency announcement may be a more significant change to American healthcare markets than any other single thing we've done, by shining light on the costs of our shadowy system and finally putting the American patient in control,” said HHS Secretary Alex Azar.

The goal of this price transparency proposal is to enable members and beneficiaries to more easily compare plans and to incentivize lower costs and lower healthcare spending.

The Transparency in Coverage rule requires that payers put information both online and, at member request, on paper regarding cost-sharing prices and liabilities. This data would have to be accessible in real-time and would be personalized to the viewer.

Furthermore, transparency would extend to in-network provider rates, which payers would have to publish publicly online alongside the charge for out-of-network providers.

While the proposed rule primarily targets lower rates for consumers, HHS also highlighted the intended benefits for researchers, employers, and developers. The department says that publicizing this information will encourage these stakeholders to create and implement new tools to support members’ decision-making and fuel competition.

The proposed rule also aims at creating more variety among health plans and reward plans that can provide high quality service at low cost. According to the administration, consumers would be able to witness how payers put shared savings in their medical loss ratio calculations to work on behalf of their members.

“Under the status quo, healthcare prices are about as clear as mud to patients. Thanks to President Trump's vision and leadership, we are throwing open the shutters and bringing to light the price of care for American consumers," said CMS Administrator Seema Verma.

“Kept secret, these prices are simply dollar amounts on a ledger; disclosed, they deliver fuel to the engines of competition among hospitals and insurers. This final rule and the proposed rule will bring forward the transparency we need to finally begin reducing the overall healthcare costs. Today's rules usher in a new era that upends the status quo to empower patients and put them first."

HHS announced the proposed rule alongside its finalized hospital price transparency rule, the Medicare Outpatient Prospective Payment System (OPPS) rule, set to go into effect in 2021. The rules are in response to an executive order published in June 2019.

Payers and hospitals are united in their opposition to the kind of price transparency that HHS demands.

The Medicare OPPS rule requires publishing prices negotiated with hospitals. When the hospital price transparency rule was still a proposal, payers voiced their arguments against it.

“Publicly disclosing competitively negotiated, proprietary rates will push prices and premiums higher – not lower – for consumers, patients, and taxpayers,” Matt Eyles, president and CEO of America’s Health Insurance Plans (AHIP), said.

Payers point out that they already offer tools to help consumers see pricing. Thirty-one out of 43 payers that participated in an AHIP study had price estimator tools for members to compare pricing on treatments, healthcare services, or out-of-pocket costs.

Another common rebuttal is that the price transparency initiative will influence the industry toward less competition, the opposite of the administration’s intentions. Instead of instigating greater innovation and creating a cap on pricing, price transparency would create a baseline from which all payers operate. In his written statement, Eyles specifically mentioned the Federal Trade Commission’s blog post which found that increased transparency would hurt competition, instead of enabling it.

As an alternative to targeting price transparency for hospitals and payers, Eyles suggested that the administration direct its efforts toward drug price transparency. The leader of the nation’s insurers association argued that pharmaceutical companies need to be held responsible for skyrocketing prescription drug pricing that influences healthcare spending across the industry.

Drug price transparency is something the administration has attempted to tackle in the past but a federal judge struck down the proposed solution.