Will price transparency help benefits advisors with cost containment?  Not so fast

The Centers for Medicare and Medicaid Services’ (CMS’s) new rule on hospital price transparency finally went into effect on January 1, 2021. This was after a year-long delay to accommodate concerns about the burden of implementation, health care industry criticism, and an American Hospital Association (AHA) lawsuit.

The rule requires hospitals to disclose the standard charges for all items and services provided, and charges for the hospital’s 300 most shoppable services, including payer-specific negotiated charges, in a consumer-friendly format.

The theory underpinning this new rule is that the release of price information will stimulate market forces and, thus, work to lower rising health care costs. The Trump administration argued that arming consumers with price information would enable them to shop around for care, choose less expensive options and ultimately bend the cost of care.

American patients have more “skin in the game” than ever before, as high-deductible plans have grown more common over the past decade, according to data with the Kaiser Family Foundation. In these plans, patients spend their first dollar on health care services before coverage kicks in, which some argue incentivizes them to shop for the most cost-effective care. The average deductible for an employer plan with family coverage is upwards of $4,000. And for benefits advisors intent on reducing the cost of care for their clients, price transparency offered the promise of more clarity in data provided by the institutions themselves, compelled by regulation.

But so far at least, that promise is largely just that – a promise. Despite the fact that an appeals court threw out the American Hospital Association’s lawsuit challenging the rule’s requirements, most large hospitals across the country have ignored the new rule.

A recent Health Affairs study of hospital compliance with the new rule found that nearly two-thirds of the nation’s 100 largest hospitals were “unambiguously non-compliant” between late January and early February 2021. According to a Wall Street Journal investigation, hundreds of hospitals that made some disclosures have embedded codes on their websites that prevent search engines from finding or displaying their price lists. Some hospitals have also made the information inaccessible by burying price lists deep in their websites and requiring multiple clicks for access. Just 22 percent of the hospitals in the analysis appeared to be fully compliant with the rule’s requirements.

According to the rule, CMS can impose monetary penalties of up to $300 a day, or $109,500 per hospital per year on hospitals judged to be “materially non-compliant”. No penalties have been announced to date, however.

Related: Hospital price transparency compliance: How’s it going?

For now, brokers who were hoping to leverage mandated data disclosures in their efforts to control the cost of care for their clients will need to be patient to see what happens next. Despite the Courts having cleared the path for implementation, the Biden administration has yet to to follow through.In the meantime, brokers that really want to help their clients make a meaningful difference in the cost of care and the premiums they pay should work to refocus them on value-based contracts. The pandemic has accelerated many changes across health care, and one of them is a new openness to alternative payment arrangements. When non-emergent procedures were shut down during the pandemic, most fee-for-service oriented health care systems ran in the red for months, and will take years to recover from the financial damage. Those few organizations with a substantial commitment to capitation, however, continued to receive their monthly PMPM checks. The contrast did not go unnoticed. Agreements that are based on managing the total cost of care for defined participants offer important potential for managing healthcare inflation and deserve to be pushed to the top of every brokerage advisor’s list of options to explore with client organizations.

Michael Abrams is managing Partner at Numerof & Associates, Inc.