The Health and Human Services Department released two rules in November that give clarity on an executive order released earlier last year from the Trump administration about improving transparency in the healthcare industry. But will the rules improve transparency, or add more confusion? And are there already tools in place that accomplish similar goals?
The rules say that health insurers must give patients “an estimate of their cost-sharing liability for all covered healthcare items and services, through an online tool that most group health plans and health insurance issuers would be required to make available to all of their members,” which already exists for several of the big insurers and their plan members.
The rules would require hospitals to post their negotiated rates with insurance companies for certain procedures. These rates, which have long been held secret, would “drive innovation, support informed, price-conscious decision-making, and promote competition in the healthcare industry,” the HHS rule says.
The the American Hospital Association, Association of American Medical Colleges, Children’s Hospital Association, and Federation of American Hospitals, released a joint statement calling the rule “a setback in efforts to provide patients with the most relevant information they need to make informed decisions about their care.” They cite added confusion, anti-competitive measures taken by insurers, and a suppressing of innovation as potential results of the new rules. The groups are threatening a legal challenge to what they see as an overstep by the federal government.
A federal law already required hospitals to publish their “chargemaster,” which is a list of all the procedures and their associated prices. But these lists were often unintelligible for the average patient, with complicated coding language disguising what the procedure actually was. While posting the chargemaster was a move toward transparency, it wasn’t very helpful for the average healthcare shopper.
DFW Hospital President Steve Love says that while hospitals support transparency, requiring the posting of negotiated rates would pose a similar problem. It might be a different price next to the code that represents the negotiated rate, but understanding the list well enough to make an informed healthcare decision may still be a tall order. He noted that many operations require a number of codes and procedures, and it would be difficult for the average patient to understand what is included in their care. In addition, a posted rate might have all insurers move to a regional rate, and stop competing from there.
But the HHS rules also specify that a consumer-friendly description accompany the code in addition to the minimum and maximum negotiated rates for 300 shoppable services, which are scheduled procedures such as a C-section, X-ray, or lab testing. The coding confusion is accounted for in the rule as well. “Item and service descriptions must be in ‘plain language’ and the shoppable service charges must be displayed and grouped with charges for any ancillary services the hospital customarily provides with the primary shoppable service,” the rule reads.
DFW Business Group on Health CEO Marianne Fazen is not confident that the information will end up as clear as HHS wants it to be. “We’ve seen the hospitals fight tooth and nail to keep at bay the earlier Executive Order to publish ‘retail’ prices for various procedures. As a result, the requirements have been skinnyed down considerably, and even so, it’s unlikely that consumers or employers will find much value in the “Transparency-Lite” information,” she says.
But Fazen says the added attention to price transparency could have an impact, as consumers and employers begin to demand more from their insurers and hospitals. ” Consumers, both insured and uninsured, and employers are becoming much more aware of the behind- the-scenes pricing schemes, unnecessary and/or inappropriate treatments driven by a fee-for-service pricing model, and unmeasured, unaccountable performance by all healthcare services providers, not just hospitals and doctors, but also insurers and other ancillary services. ”
“I don’t fault people for pricing it,” Love says. “Knowing what you expect to pay is a reasonable request.” But he says the best solution is for patients to utilize patient navigators, who are already employed by hospitals who can look at a patient’s health insurance and help them get a better idea about how much different services will cost. Patients wading through online lists will just add to the confusion, he says.
Hospitals and pharmaceutical companies are fighting (and winning) battles against the government in an effort to not post prices or how much they are spending in advertising, which doesn’t bode well for this latest attempt to add consumer-friendly transparency to the healthcare marketplace.
Insurance broker Holmes Murphy President Den Bishop says that finding one or two culprits to the healthcare dilemma is not the answer. “Who is to blame for these rising prices? Insurance companies? Pharmaceutical companies? Pointing fingers may be easy, but it gets us no closer to actually solving the problem,” he writes. “Our healthcare cost, complexity, and quality problems cannot be blamed on a single stakeholder. Instead of placing blame, we must devote our time and energy to working together to find a solution and improve healthcare outcomes for all Americans.”