Analyzing the impact of new transparency rules and the No Surprises Act
Mixed reviews for new regulations.
A new analysis from PwC’s Health Research Institute (HRI) finds that recent federal health care transparency initiatives could have a significant impact on health care consumers, providers, and payers.
The measures, which include two regulatory rules on hospital cost transparency and a law passed by Congress addressing surprise medical billing, were priorities of the Trump Administration. Although that administration’s battles with the Affordable Care Act drew more headlines, these measures may end up being the most important legacies of the Trump years when it comes to health care.
There is still some uncertainty about the regulatory rules—the Biden Administration could revisit them—but for now they represent some important changes to the level of transparency of health care costs in the U.S.
And although many questions remain about how useful these changes will be to consumers, the HRI analysis found that payers will be able to use information revealed by the rules in creating provider networks and negotiating prices.
Mixed reviews for new regulations
The stated reason for the rule changes was to create more transparency in health care costs in order to make it easier for consumers to shop for the best deal. The report suggests this goal remains elusive.
One CMS rule, which took effect on Jan. 1, requires hospitals to publicly post standard charges for all items and services, which includes the total bill without discounts, any discounted prices charged to self-paying individuals, and minimum and maximum charges for all services and products.
The HRI analysis noted that hospitals were still figuring out how to share that information, and that the pricing information may not be easily comparable between provider systems. The report said there was “wide variation” in how hospitals were complying with the new rule.
“The information is scattered on hospital websites all over the country in different formats and different use access mechanisms,” said Niall Brennan, president and CEO of the Health Care Cost Institute, who was quoted in the HRI report. “There is absolutely no way whatsoever that any consumers can use this information in an actionable way.”
For insurers, and payers, the report said, there is considerably more utility in the new rules. It said that payers can examine data by region and procedure, and use the data when negotiating with providers over contracts. It predicts that data analytics firms and tech companies will offer tools to payers and consumers to help better understand the data.
A second rule, which will fully take effect in 2023, will provide price transparency from health insurance plans. They will be required to make public rates negotiated with providers, billed charges for out-of-network providers, and information on prices they pay for prescription drugs.
This rule is also controversial. Brennan from HCCI said it will only cause more confusion among consumers, and the report quotes an insurance industry executive who said insurers already provide adequate price information to consumers and that the Biden Administration should revisit the rule.
“The rule’s most significant impact may be to change the dynamics of negotiations by giving payers; providers; employers; and pharmaceutical and life sciences companies more data,” the RHI report said.
An end to surprise medical billing
The No Surprises Act was passed by Congress and signed into law by President Trump in December of last year, as part of an omnibus spending bill. Surprise medical billing was one area of health care where there has been bipartisan consensus—the practice of billing consumers for out-of-network services when they were not aware the services were out-of-network is universally unpopular with consumers and legislators.
The new law limits the practice (ground ambulance services were exempted), and requires patients to pay in-network prices for any out-of-network bills, with the payer and provider to negotiate a settlement of the remaining costs. The law, which goes into effect in 2022, allows for independent arbitration of these disputes, but the administrative costs of that process may encourage parties to negotiate settlements without arbitration.
“The new price transparency rules inject new information into the interactions between payers and providers that can be used as they try to assess the market, reach a settlement, or develop arbitration strategies,” the HRI report said. “While payers may try to bring high-cost providers into their networks over time, out-of-network providers may have to make near-term decisions about joining payer networks or gauging the likelihood they can extract more than in-network rates through settlement or arbitration.”
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