How benefits brokers are preparing for new health care transparency rules
They say now is the time for employers to boost their health care literacy and ask plenty of questions.
As new hospital price transparency rules go into effect beginning this year — requiring hospitals, employers, and health care coverage providers to supply detailed pricing information — uncertainty abounds. Will hospitals comply with the regulation right away? What happens if they don’t? And what steps do employers need to take now in order to prepare for the implementation of new rules for them in 2022 and 2023?
“Everybody has been busy with other things,” says Jennifer Berman, chief executive officer of benefits compliance firm MZQ Consulting, referring to the myriad of challenges COVID-19 created for hospitals in 2020. “So it’s hard to imagine anybody going after the hospitals right away because they haven’t posted their prices online.”
Related: Transparency: A must-have for health care payments
Under the hospital cost transparency regulations that took effect on January 1, hospitals are required to publish a comprehensive set of pricing information for 300 “common shoppable services” on the internet.
Additionally, beginning in 2022, insurers and employer-sponsored health plans will be required to post in-network and out-of-network negotiated rates for 500 shoppable services by 2023 — thereby helping consumers better understand those rates, along with drug-pricing information and out-of-pocket costs, according to the rule.
Lost in the chaos
“I think most employers decided, ‘Well, we’re not going to touch the health plan in the midst of a global pandemic.’ They didn’t want to freak out their employees by overhauling the plan.”
Employee benefits brokers say the new rule hasn’t been on many of their clients’ radars yet. Part of the reason might be because they’ve been inundated with change for months, thanks to the pandemic — from implementing remote work strategies to possibly laying off or furloughing employees.
“The last thing they want to do right now is change something,” says Josh Butler, president of Butler Benefits and Consulting. “I think most employers decided, ‘Well, we’re not going to touch the health plan in the midst of a global pandemic.’ They didn’t want to freak out their employees by overhauling the plan.”
“It seems that this significant change — the most significant change in 10 years — has not entered their world yet,” Allison De Paoli, founder of Altiqe Consulting, says about her employer clients. “We are alerting them and we will be having much more significant discussions in the early part of 2021. That is the top focus for us.”
To that end, De Paoli and her compliance team are working with vendor partners in preparation for meeting the new requirements.
“Many of the processes and tools will need to be delivered through third-party administrators or insurance carrier partners,” she says. “It is more important than ever to have solid contracts that have been independently reviewed and to have very clear hold-harmless and fiduciary responsibility provisions.”
She suggests employers connect with their health care vendors to make sure those vendors are updating their contracts and executing their responsibilities in accordance with the transparency rule.
“The employer cannot fulfill [the transparency] responsibility — even though the penalty for not complying with the regulation is squarely on the shoulders of the employer,” De Paoli says, referring to failure-to-comply penalties associated with the Affordable Care Act. “So it’s another set of questions to ask when you’re vetting vendors and reviewing contracts with existing vendors: How are you handling the transparency rule? What are the legal responsibilities and who will absorb the legal liabilities?”
The key to all this, accordingbu to Butler and De Paoli, is helping clients better understand their health plans and how to leverage the new rule.
“The biggest impact transparency will have in the immediate future for employers is exposing just how bad price variance is in health care,” Butler says. “This is really going to increase people’s awareness about price variance, because we have pricing failure. Self-funded employers need to know that they are overpaying for health care. You can’t manage what you can’t measure. That’s a cliché statement, but it’s true. If you’re trying to lower your health care costs as an employer, you need to know what your health care costs are.”
It’s all a matter of health care literacy, Butler says, and he recommends all employers (especially self-funded ones) connect with an advisor who can help them determine how their health plan stacks up against high-performing plans in place elsewhere.
“I think that you have to get a clear assessment of where you are, and then ask if you can improve upon what you’re currently doing. To me, that’s the exercise that every employer in the country — I don’t care how big or how small — should be doing right now,” he says. “Find out if you are paying a fair price for health care and employee benefits.”
Lester Morales, founder and chief executive officer of insurance consultancy Next Impact LLC, agrees that his clients are looking for more certainty in their plans. That certainty, he adds, will take the form of usable data to help them make more effective purchasing decisions. Critical to the process is helping clients become “mentally prepared” to actively engage in the process.
“Certainty is the theme of our entire 2021 approach,” he says. “Data is going to allow clients to understand that the opaqueness of the current model is not working.”
Reasons for optimism
While it’s too early to outline specific strategies brokers and consultants plan to deploy for helping their clients navigate the new transparency rules, this much is clear: The process must be simplified, according to Butler.
“This is the only way we start bending the cost curve and getting to the place where people have the information they need to make good health care purchasing decisions.”
“We have to make it just as easy for the employer to hire us and participate in a high-performance health plan as it is for them to hire a status-quo broker,” he says. “We have to construct high-performance health plans that can leverage this new transparency rule by providing access to data, direct contracting, and lower reimbursement rates. So that’s where our focus has shifted.”
Complicating matters is the potential inclusion of additional administrative fees providers assess to employers and subscribers in the name of enhanced transparency. “You don’t think this is going to be done for free, do you?” De Paoli asks. “Most people will assume that this is just part of their plan — and it is — but there is language in the law that will allow this to not go to the MLR [medical loss ratio], and it can stack on top. So I think people should expect that.”
Berman predicts that employers might have more time to prepare for these changes in transparency efforts than initially thought, although that doesn’t mean they should procrastinate. “I don’t necessarily think this will actually become effective Jan. 1, 2022,” she says. “I think there’s a good chance that we might see an extension from the Biden Administration. But I don’t think it’s going away. So this should absolutely be a key priority and something they need to be aware of.”
“I feel very good about what we need to do,” De Paoli adds. “We, as a firm, already live by the transparency philosophy, but my biggest concern is that our clients might not know what questions they need to ask to protect themselves further down the line.”
Morales is optimistic, too — even if everything might seem a little overwhelming to employers right now. “This is the only way we start bending the cost curve and getting to the place where people have the information they need to make good health care purchasing decisions,” he says.
Berman agrees that the transparency regulations ultimately will help fix problems currently existing within the U.S. health care system. “It’s just that the devil is in the details, and people are going to need to pay attention,” she says. “Employers and advisors need to understand that this is another major shift. It’s coming, and it’s coming quickly.”
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