Health Care Price Transparency Implementation in 2021

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By Juliana Moses

In November 2019, the Centers for Medicare & Medicaid Services along with the Department of the Treasury and the Department of Labor published the financial issuance of the Price Transparency Rule, aimed at making hospital pricing for common services more accessible and more transparent to patients.

The move was part of a larger push by the Trump administration to ensure that every American knows in advance how much their health care will cost, so that they can make “informed and value-conscious” choices. Yet there is disagreement on whether posting the prices for hospital procedures and services will truly achieve that goal.

Health Care Price Transparency

As of Jan. 1, all operational hospitals within the United States are required to publicly list their standard charges for items and services via the internet. Under the Hospital Price Transparency Rule, the lists must be made public in two ways.

• A comprehensive machine-readable file listing completely standard charges for all hospital items and services.
• A consumer-friendly display of 300 common ‘‘shoppable’’ services derived from the machine-readable file.

Price Transparency Intent

Enforcement of the Rule empowers health care recipients to make feasible, informed decisions based on pricing for themselves and receive more cost-effective health care options. Ultimately, it should help drive market competition so that the cost of health care services lowers to become affordable for all patients.  

Transparency Rules’ Patient Benefits

The rule aims at helping all Americans. An industry survey by Waystar found that only one out of 10 patients reviewed prices of service providers for planned or routine medical procedures, before admission. As a result, a patient seeking medical care does not know what the services he or she receives will cost and will experience “surprise billing” weeks later. A quarter of such patients find pricing too difficult to understand and one-third assumes all health care providers quote the same costs, across the board. 

In addition, patients between the ages of 18 and 39 are worst affected by medical bills and related debts. One out of three chose to decline care to avoid paying huge bills. Forty-two percent of patients prefer being offered payment plan options, and only a quarter of care-recipients said they have been offered one for payment resolution. 

“As for the potential benefits of this new price transparency policy, it would allow individual consumers and employers to go online, access the pricing information, and compare treatment prices across different hospitals. Ultimately, the hope is that hospitals would begin competing against each other ‘on the margin of price’ and drive overall health care costs down,” said Julius L. Chen, an assistant professor of health policy and management at the Mailman School, to Columbia Spectator.

The rule also facilitates employed Americans seeking health care services as health benefits via the organizations they work for.

“The rule puts that all into the light,” says James Gelfand, senior vice president at the ERISA Industry Committee, to NPR. “When an employer sees these ridiculous prices, for the first time they will have the ability to say no. That could mean rejecting specific prices or the hospital entirely,” he added.

Thus, by accessing health care services information before signing up for them, employees and their companies will benefit by:

• Obtaining clear, precise information as consumers and patients.
• Forwarding the same to employers, so management can guide workers to cost-effective options.
• Employers gaining insights to monitor insurers’ operational effectiveness and remove cost-inflating middlemen.
• Both organizations and people applying public pressure so high-cost providers reduce prices. 

It will help families too since the second-largest spending factor in household budgets is health care, and hospital care accounts for nearly 45 percent of all spending by private health insurers. California Health Care Foundation reported private health insurance paid $1.079 trillion in 2018 and $481.1 billion on hospital care. 

Centers for Medicare & Medicaid Services Follow-Ups

Starting January 2021, Centers for Medicare & Medicaid Services will:

• Evaluate complaints made by individuals or entities to Centers for Medicare & Medicaid Services
• Review individuals’ or entities’ analysis of noncompliance
• Audit hospital websites

It is imperative that hospitals begin compliance with the rule, as failure leads to:

• Provision of a written warning notice to the hospital of the specific violation(s)
• Request for Corrective Action Plan for noncompliance leading to material violation(s) requirements
• Imposition of a civil monetary penalty not in excess of $300 per day and publication of the penalty on Centers for Medicare & Medicaid Services website upon hospital failed to respond to a request for Corrective Action Plan submission or compliance.

Though it doesn’t seem clear immediately, health care providers will also benefit long term as they standardize charges or let cost-productive care-providers get leeway to grow.

References:

https://www.jdsupra.com/legalnews/update-on-hospital-price-transparency-6453729/

https://www.npr.org/sections/health-shots/2021/01/05/953340571/hospitals-forced-to-be-more-transparent-about-pricing-will-that-save-you-money

https://www.columbiaspectator.com/news/2021/02/26/new-york-hospitals-make-slow-progress-on-implementing-new-price-transparency-rule/