Government Releases Final Rule on Transparency in Health Care Costs

iStock/Oleg Elkov

In an effort to encourage comparison shopping in health care, the federal government finalized a rule in late October requiring insurers to provide patients with cost estimates before receiving health care services.

Long a priority for the Trump administration, the Transparency in Coverage rule was released by the departments of Health and Human Services, Labor, and Treasury. According to a Centers for Medicare and Medicaid Services (CMS) news release, the rule will allow 200 million Americans to gain access to real-time information on health care costs.

Under the rule, most health insurers must create an online tool through which patients can access personalized out-of-pocket cost estimates and the underlying negotiated rates for all covered services, including prescription drugs. The plans must make a list of 500 shoppable services available through the online tool by January 1, 2023. The costs for the remaining health services must be available by 2024.

By January 1, 2022, insurers must make detailed pricing information available to the public, including negotiated rates for all covered services between the plan and in-network providers, historical payments to out-of-network providers (with a minimum of 20 entries to protect patient privacy), and the in-network negotiated rates and historical prices for all covered prescription drugs. The data, which must be updated monthly, “will provide opportunities for detailed research studies [and] data analysis and offer third party developers and innovators the ability to create private sector solutions to help drive additional price comparison and consumerism in the health care market,” a CMS fact sheet states.

In her blog for Health Affairs, Katie Keith, J.D., M.P.H., noted that the new rule relies on legal authority granted to the federal government under the Affordable Care Act, the constitutionality of which is now before the Supreme Court.

Insurers have strongly objected to the rule. In a statement, Matt Eyles, president and CEO of America’s Health Insurance Plans, claimed the rule will reduce competition and increase health care prices. “[D]isclosing privately negotiated rates will reduce incentives to offer lower rates, creating a floor—not a ceiling—for the prices that drug makers, providers, and device makers would be willing to accept,” he said.

In the final rule, the government acknowledged this objection but claimed that “consumers must have meaningful information in order to create the market forces necessary to achieve lower health care costs.” Further, the government argued that transparency in cost reduces the potential for surprise billing. “While price transparency alone is not a complete solution to this problem, the disclosure of pricing directly to consumers could help mitigate some unexpected health care costs.” ■