How the New Transparency Regulations will Impact Healthcare Industry

The New Transparency Regulations:? Will Consumers Finally Be Able To Shop For Healthcare?

In November 2019, two sets of regulations that would make a lot more healthcare costs information publicly available, including rates negotiated by health plans and providers.? One was the final rule specifying transparency requirements for hospitals.? The other was proposed regulations for group health plans and insurers.? The regulations, as written, are already causing quite a stir in the healthcare industry.? Four major hospital groups question the legality of these regulations and plan to file a lawsuit.?

Final Rule:

Hospitals will be required to make their “standard charges” publicly available beginning in 2021.

The two main requirements are:

Comprehensive machine-readable file.? All of this pricing data will be online, in a file, which could then be accessed by apps or transparency tools.? The data elements include:

1. Gross charges
2. Payer-specific negotiated rates
3. The amount the hospital will accept in cash from the patient
4. The minimum and maximum negotiated? charges for services

The file must include common billing codes and a description of the service.

Display of shoppable services.? Hospitals are required to display, in a consumer-friendly manner, ???????300 common services: ?70 CMS-selected/230 hospital-selected.

There is a penalty of $300 per day for hospitals that do not comply.? The four leading hospital groups plan to file a lawsuit arguing the rules exceed the administrations authority and violate their right to protection trade secrets.? The administration has already seen its rule requiring drug prices to be disclosed in direct-to-consumer advertisements invalidated by the courts.

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Proposed Rule:?

Transparency in coverage impacting Group Health Plans and Insurers

The proposed rule would require health plans to provide members with out-of-pocket cost information for all covered health services before they receive care and…the plans negotiated in-network rates as well as out-of-network allowable amounts. (This information must be available online and on paper if requested.)

The proposed rule allows 60-day comment period and would go into effect for plan years one year after being finalized, which probably means January 1, 2022 at the earliest for calendar year plans.

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What employers need to know!

Some observations to help put this all in context:

• Quality:? Neither rule addresses quality of care.? Quality matters, especially for more complex care.? It means fewer complications, better outcomes and lower overall cost.
• Cost:? Some economists expect that transparency would lead to price compression, with smaller providers demanding higher prices and larger providers getting squeezed.
• What is really shoppable??? Currently, only a small percentage of healthcare services are shoppable but with greater transparency, we can expect certain medical services to become increasingly shoppable.
• Timing:? There is a 60-day comment period for the proposed rule that seems so short for such an extensive and significant change.? Stakeholders may ask regulators to extend that period.
• How hard is it?? Both hospitals and insurers contend that the administration has greatly under-estimated the cost and burden of implementing these rules.

We undoubtedly will be hearing more from the carriers, economists, and other stakeholders as this ensues.? As much as we want to see greater transparency when purchasing healthcare, these expansive requirements present some real challenges.? Most likely, some of these regulations will have to be fine-tuned.