The Transparency in Coverage Final Rule requires health care payers to unveil all previously secret negotiated prices with in-network providers.
A landmark federal rule that went into effect on July 1, 2022, could potentially address the exploitation that many Americans face within the US health care system.
To misquote Paul Revere, “The prices are coming! The prices are coming!” The Transparency in Coverage Final Rule requires health care payers (insurers and self-insured group health plans) to unveil all previously secret negotiated prices with in-network providers.1 Payers must make public the individual amounts their health plans pay providers across all types of services and locations, including hospitals, doctors’ offices, imaging centers, outpatient surgery centers, and urgent care clinics.
This is critical for the millions of Americans who get their health insurance through their employers and whose average annual family healthcarepremium rose to $22,221 in 2021,2 61% more than in 2010. These plans often include higher deductibles and co-pays, adding thousands of dollars in expenses. These outrageous costs are partly to blame for the100 million Americans who have medical debt3 and the nearlytwo-thirds of Americans who put off necessary medical care in the past year.4
The new insurance rule complements the Hospital Price Transparency Final Rule, which went into effect in January 2021, requiring hospitals to post all their prices by payer and plan as well as their discounted cash prices.5 Together, the 2 rules, once fully implemented and enforced, will deliver systemwide health care price transparency.
Why is this so revolutionary? This public posting of negotiated rates will give all purchasers of health care—patients, workers, employers, unions, and taxpayers—a window into what their insurance premiums are actually buying them. They will see when their plan’s negotiated rates are higher than other plans or higher than the discounted cash prices for those without insurance. The ability to see payers’ negotiated rates alongside hospital charges will help patients choose lower-cost providers and higher-value plans while giving them unprecedented price certainty and more control of their health care spending.
They will see, for instance, that prices vary as much as 10 times for the same services. Data will show that an MRI scan at one facility costs $350 whereas the same scan at a nearby imaging center costs $3500 and that a cesarean delivery could cost $6000 or $60,000 at the same hospital depending on the plan, with no difference in quality.6
Moreover, once prices are unveiled, consumers will be able to shop for care the way they do for every other product or service, whether they’re buying cars, appliances, airline tickets, or groceries. Price competition will kick in, transforming our dysfunctional, overpriced, opaque health care system into a functioning free market, lowering the cost of care and coverage, and increasing access to the same.
The new data will help employers choose health care plans with the best negotiated rates. They will be able to compare payer networks and plans and make decisions that could lower their health care costs by as much as 40%. The savings could go toward more jobs or higher wages and provide a buffer against inflation.
All this won’t happen immediately. The newly available data from insurers are currently incomprehensible to all but the most-tech savvy. Soon, however, outside technology companies will aggregate the machine-readable data files and make sense of them. They will develop online tools that make accessing and navigating prices much easier. These tools will do for health care what Zillow has done for real estate and Kayak for air travel: aggregate and organize data for easy searching.
As in the American Revolution, victory won’t happen overnight. Britain did not give up control of the colonies without a fight, and hospitals and insurers, who profit from keeping patients blinded to price, won’t either. Hospital groups and insurers have sued the government to block the rules and lost. However, since the hospital transparency rule took effect 18 months ago, only 14.3% of hospitals reviewed in a randomly assigned study were fully complying with the rule and properly posting prices, according to a widely cited report. This widespread noncompliance is largely due to the lack of government enforcement; to date, only 2 of the hundreds of noncompliant hospitals have been fined.
Instead, many hospitals have tried to skirt the requirements by not only making prices difficult to access but arguing that patients only care about out-of-pocket costs, not total prices. But total prices matter because we all pay for health care through higher premiums, higher co-pays, higher deductibles, higher costs of goods and services, and higher taxes.
But maybe not for long. Independence Day serves as a reminder that when oppressed citizens join forces and say enough is enough, freedom from tyranny and victory aren’t far behind.
Marni Jameson Carey is president of Power to the Patients, a national nonprofit organization working to make sure Americans realize their right to know the price of health care up front.