In response to President Trump’s June 24, 2019, executive order, the Centers for Medicare & Medicaid Services developed proposed rules that mandate “consumer-friendly” price transparency for hospitals.

Starting January 1 of 2020, hospitals will have to publish price information organized in a standardized way so patients will be able to do an accurate comparison of procedure pricing between hospitals. Hospitals will also be required to post all their payers specific negotiated rates, which are the prices actually paid by insurers, in that same format.

The Trump administration says the rules will increase competition among hospitals and lower healthcare costs for consumers. The CEO of America’s Health Insurance Plans claims, “Publicly disclosing competitively negotiated, proprietary rates will push prices and premiums higher — not lower.”

A recent survey from the Chelko Consulting Group and Worldwide Employee Benefits Network was conducted to gauge employee benefit professionals’ opinions on the potential impact of these rules. Respondents represented employer plan sponsors, benefits advisors, and insurance companies.

Survey results included the following:

  • Nearly 38% of all respondents believe the rules will lead to lower costs for hospital services, while an identical number are unsure about the impact and the remaining 24% believe it would have none. The subset of benefits advisors who responded are even less confident this rule change will lead to lower costs.

  • A slight majority (57%) are confident health plan members will use the information to make better value-based healthcare decisions. Nearly 25% of respondents did not share their colleagues’ faith, with the remainder sitting firmly on the fence.

  • The greatest level of uncertainty appears to be around the impact this rule will have on insurance company networks — approximately 40% of respondents are unsure. The rest of the group is more certain, with 26% of the belief it will weaken the role of insurance networks and 34% in disagreement. There’s also a slight divergence of opinion here, with more than a third of advisors of the belief insurance networks will suffer as a result, compared to less than a quarter of employers in agreement.

  • While 58% of benefits advisors believe the rule will lead to more employers direct contracting with hospitals, employers themselves are far less confident, with only 32% sharing that belief.

  • A resounding 61% of employers think the rules will lead to more patients being steered to lower cost, higher quality hospitals. Advisors were not as confident in that outcome, with only 50% of the same mindset.

  • All in all, employers — in their role as benefit plan sponsors — seem more confident that the rules will lead to lower costs via better consumerism and networks steering patients to lower cost, higher quality facilities. Benefits advisors are less confident in the resulting savings but do believe the rules will likely lead to more direct contracting and less reliance on insurance company networks.

Uncertainty Reigns
In the end, the expectations set by these benefits professionals may be more hopeful than predictive. It’s abundantly clear from the survey that a large number of respondents are unsure how these proposed rules will play out when it comes to lower cost care, consumer decision-making, direct contracting, and the role of insurance companies in a fully-transparent environment.

General Comments from Survey Respondents:

  1. Well intended, but not sure it will help employers or consumers much. Many hospitals will struggle to publish accurate numbers. For example, how will global case rates match up to line-item discounted charges?

  2. This move sounds good on paper, but when we have such low utilization with our current transparency tools that are designed to give members pricing and quality data, it’s difficult to see an increase in consumerism following additional price information being made public.

  3. While I think that the rule is well-intentioned, its broad-brush approach seems unlikely to result in consumers actually having the necessary pricing information at the appropriate time to make a better financial decision without further assistance (e.g., concierge service). This is a lot of information, and even it is provided in consumer-friendly and searchable format, how much does that help a participant at the point of service trying to make a decision with only cell phone in hand to do so? This seems an expansion of the SBC approach, and while I also think that the motivation behind those was positive, how much actual value do they provide. Moreover, and most importantly, I think that these requirements likely will represent a significant administrative burden to providers, who will pass along the cost of compliance to employers and consumers.

  4. Sadly, not sure how much I trust self-reported transparency – what other rebates, etc., will get thrown in to still make it hard to truly compare? And I could certainly see it driving lower provider discounts with insurers — the Saturn car buying experience didn’t result in lower car prices, just the peace of mind that no one got a better deal than you, and apparently, people will pay a premium for true transparency. But over time, if all providers are transparent, I’d hope consumer demand would drive prices down. And clearly, something must be done about the broken US health care system.

  5. Let’s try it; nothing to lose from the purchaser standpoint.

  6. Could potentially see a similar effect CalPERS had with certain procedures in their reference based pricing. The highest cost providers/facilities lower their rates some, where the lowest cost providers realize their lost revenue and raise their rates. With the corporate hospital structure there may not be direct contracting with hospitals, but direct contracting with hospital groups such as the OhioHealth Group or Trinity Health.

  7. This does not impact emergency care – patients need speed/proximity and won’t care about shopping. Disclosing privately negotiated pricing is anti-competitive and creates pricing “floors”. Healthcare is not something that can or should be consumed like buying goods off

  8. This rule will only work if employees actually do the research on the costs; as many do not do this up front, I’m not sure if it will have an impact.

  9. I’m a supporter of any efforts to bring transparency to this particular market, although I feel that due to other factors (nature of service models, industry interest), transparency efforts alone will not transform the industry…

  10. Health Care is the only service we purchase for which the price is unknown and not disclosed at the point of sale. This is a step toward transparency that currently does not exist and may lead to better consumerism.

  11. On a personal level, I was prescribed to have a CT-scan at a nearby hospital. I called the hospital for the price but was stonewalled and told me to call my insurer. My insurer said they could not tell me until after the procedure. Where else does a consumer have to buy something before being told the price. I persisted and after numerous calls over several days was a able to get an “estimate from the hospital. It was $2,500. I called a local radiology practice and they quoted $500. The system is broken and needs to be fixed.

  12. Anyone who thinks transparency will not enhance competition between healthcare providers and insurers is invested in the status quo and the continued lack of quality.

  13. It is hard to imagine how this can be implemented in a transparent fashion, but if it is, it would be wonderful. Given the disincentives to make costs easily understandable, I feel this proposal will be defeated by litigation from hospitals. I am extremely frustrated when I ask my TPA how much specific tests are being reimbursed to a specific provider and they say that is protected information they cannot disclose. Granted, I went to the provider and obtained it, but why should I have to do it.

  14. I hope this provides positive results for patients by choosing lower cost, higher quality providers