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The Status of Healthcare Price Transparency in 2022

Would you ever buy a car without knowing the price? Doubtful. Have you ever purchased a house without knowing what the mortgage would be? Most likely not. For most purchases, including sizable ones, you want to know upfront how much you’ll be paying. 

Patients often receive medical care without knowing the exact price, even though they face high and varying out-of-pocket fees for their care. They can receive the exact same healthcare services as another patient but end up paying a drastically different price. 

The United States spends almost twice as much as the average developed country, which should result in the best healthcare in the world. It doesn’t, though. The U.S. has the unfortunate distinction of the lowest life expectancy and highest suicide rates among the highest-income nations. 

The average outpatient visit costs $500. Most inpatient stays run more than $20,000. It’s easy to understand why consumers are fed up with these high costs.

Even when a patient attempts to research healthcare prices to find the highest quality of care at the lowest cost, they rarely end up paying those exact amounts. Why the difference? One reason is healthcare providers’ contracts with different insurance providers. Another is cost variations due to components such as deductibles and copayments. 

Reduced Healthcare Costs Through Provider Competition 

Is there an easy solution for eliminating these high costs? No. However, there have been multiple attempts to address the issue, most of which focus on the idea of price transparency. 

The idea behind price transparency is to help Americans be aware of the cost of medical care before receiving it. The overall goal is to reduce healthcare costs and spur competition among providers by enabling consumers to shop for healthcare services. This initiative is especially important in the growing trend of healthcare consumerism

Without price transparency, some patients avoid regular medical care. Many U.S. consumers want the government to require healthcare providers and insurers to disclose prices. Data from PatientsRightsAdvocate.org shows that 85 percent of Americans believe that cutting costs and improving quality by making healthcare prices, quality metrics prices, quality metrics and outcomes more transparent should be a priority for lawmakers. 

Key Price Transparency Legislation 

Keeping up with government initiatives can be mentally exhausting. To give you a better look into what Congress is doing to address the country’s exorbitant spending, we’ve compiled a list of some of the most recent price transparency legislation affecting the healthcare industry in 2022. 

Transparency in Coverage Final Rule 

This rule was issued in October 2020 as part of the Consolidated Appropriations Act. Although it was initially slated to take effect at the start of this year, the Departments of Labor, Health and Human Services (HHS) delayed enforcement until July 1, 2022. 

The Transparency in Coverage Final Rule requires most group health plans and health insurance issuers in the group and individual market to disclose price and cost-sharing information to participants, beneficiaries and enrollees. Pricing materials, which the Centers for Medicare & Medicaid Services (CMS) states can be used by third parties to help consumers better understand the costs associated with their healthcare, include:

  • Advanced explanations of benefits (EOBs) 
  • An online price comparison tool Extensive drug cost information derived from participant claims
  • Plan pricing disclosures on a publicly accessible website  

No Surprises Act 

On December 27, 2020, President Trump passed and signed into law the No Surprises Act, which took effect on January 1, 2022. Although multiple states have adopted comprehensive legislation to mitigate surprise billing, there wasn’t previously any such statute on the federal level 

Why is surprise billing such a big issue in the U.S.? Primarily due to the fact that millions of Americans receive surprise bills each year, with as many as one in five emergency room visits resulting in such a charge. The average surprise charge for an emergency department visit is approximately $600, but some patients have received bills larger than $100,000 from out-of-network providers they didn’t select. 

In summary, the No Surprises Act prohibits out-of-network providers from billing patients more than in-network cost-sharing amounts for the following:

  • All out-of-network emergency facilities and professional services
  • Post-stabilization care at out-of-network facilities until such time that a patient can be safely transferred to a different facility
  • Air ambulance transports, whether emergency or non-emergency in nature
  • Out-of-network services delivered at or ordered from an in-network facility unless the provider follows the notice and consent process 

As noted in the National Law Review, a federal court in February 2022 vacated a provision of the interim final rule concerning the dispute resolution process. The court found that the previously Departments of Labor, Health and Human Services exceeded their authority by instructing independent dispute arbitrators to favor some factors over others in determining the “qualifying payment amount.”  

Hospital Price Transparency Rule 

Another piece of legislation promoting price transparency that took effect on January 1, 2021 is CMS’ Hospital Price Transparency Rule. It requires each hospital operating in the U.S. to provide clear, accessible pricing information online about the items and services they provide in two ways:

  1. As a comprehensive machine-readable file with all items and services
  2. In a display of shoppable services in a consumer-friendly format 

According to the rule, the prices must include standard charges for all items and services for all payers and health plans and a standard charges list or a price estimator tool for the 300 most common services. Some research found that hospitals were more likely to comply with the shoppable services requirement than the machine-readable file requirement. 

Many hospitals haven’t yet achieved compliance with the rule, though. As of February 2022, only 14 percent of hospitals had met compliance with the rule, up from 5.6 percent in July 2021. Between December 2021 and January 2022, only 143 of 1,000 hospitals reviewed by PatientRightsAdvocate.org were in compliance with all aspects of the price transparency rule. 

Benefits of Price Transparency for Providers and Patients 

Along with reducing the cost of healthcare, price transparency has the potential to provide numerous benefits to both consumers and providers, such as real-time online access to estimated out-of-pocket (OOP) costs, enhanced patient engagement and reduced market prices for various procedures. It helps patients make more educated healthcare purchasing decisions and be more aware of their payment responsibility to their provider. 

Subscribe to our blog to learn more about issues affecting the healthcare industry. Also, check out our Guide to Healthcare Consumerism for details on aligning consumerism with provider goals.