Metis Healthcare Advisors Explores the Hospital Price Transparency Rule and What it Means for Hospitals in 2022 and Beyond.
Rising health care costs are consistently a top concern for employers, and the COVID-19 pandemic only made things worse. In 2022, experts predict the medical cost trend will be 6.5%. While this is a decrease from the 7.0% medical cost trend predicted for 2021, it’s still the second-highest trend in the past six years. This can be attributed to a few things, including the continued fight against COVID-19, patients seeking the care they deferred during the pandemic, and the stark increase in behavioral health conditions.
Beginning January 1, 2022, the Centers for Medicare and Medicaid Services (CMS) will increase the penalty for some hospitals that do not comply with the Hospital Price Transparency final rule. Transparency in Coverage and the No Surprises Act will go into effect, mandating employer plan sponsors and health plans to provide crucial pricing information that could empower consumers to make better-informed decisions about their care.
The spirit of the rules is universally agreed upon by health care stakeholders as good; if implemented in a meaningful way (including the portions due by January 1, 2023, and January 1, 2024), these rules will help consumers not only make better health care decisions but achieve improved health outcomes, as well. In addition, they could result in cost savings for both the consumer and the employer. In other words, these new regulations have the potential to reduce the medical cost trend for 2022 and beyond—but only if consumers understand and utilize the data and tools.
2022 Changes
Requires plan sponsors and health plans to provide public machine-readable files that display:
- in-network rates,
- out-of-network allowed amounts,
- prescription drug pricing.
2023 Changes
Requires plan sponsors and health plans to provide:
- an internet-based self-service tool
- listing personalized, out-of-pocket cost estimates, and
- other price-related data for 500 predetermined items and services.
2024 Changes
Requires plan sponsors and health plans to provide:
- expand this self-service tool
- include all covered items, services, and prescription drugs.
Ensuring compliance with the rules lies on the shoulders of the plan sponsors and health plans. If they haven’t yet, responsible parties should start making a plan for how to execute these requirements and establish a clear communication plan with the medical and pharmacy plan issuers to ensure timely access to the required data. Some employers are even modifying their contracts with medical and pharmacy issuers to delineate responsibility.
It’s important to note that even if a self-insured employer does decide to contract with a medical or pharmacy plan issuer to carry out these transparency provisions, the employer or plan is still accountable for non-compliance—not the third parties.
The Final Rule requires hospitals to publish their charges based on five categories:
- Gross Charges – non-discounted rates listed in the hospital’s chargemaster
- Discounted Cash Prices – rates for individuals paying cash or cash equivalents
- Payer-Specific Negotiated – rates negotiated with a third-party payer for an item or service
- De-identified Minimum Negotiated Rates – lowest rates negotiated with all third-party payers
- De-identified Maximum Negotiated Rates – highest rates negotiated with all third-party payers
Maximum and Minimum Penalties for Non-Compliance
Hospitals with 30 or fewer beds that are not in compliance with the 2021 Rule face a minimum civil monetary penalty of $300 per day. Hospitals with greater than 30 beds face a penalty of $10 per bed per day. The maximum daily penalty is capped at $5,500 per day.
Annually, the minimum total penalty is $109,500 per hospital; the maximum total penalty is $2,007,500 per hospital.
These new rules are a step in the right direction but achieving better health outcomes and cost savings will require more than just price transparency. Cost is just one of many attributes that go into choosing the right care. Consumers should be provided with additional metrics, such as network, quality, convenience, patient ratings, and provider efficiency.
Ideally, this information would be presented in a curated approach so consumers don’t need to sift through and interpret all of the data on their own; in addition, provider and other care recommendations should be personalized and consumers should be presented with just a few top matches to choose from. Showing consumers every single option available can be information overload, overwhelming them and making it difficult to discern which recommendation is the best match for their unique clinical profile and health needs.
Lastly, though the rules focus on digital self-serve tools, this approach won’t work for all consumers. Presenting complex concepts like bundled care and cumulative treatment limitations will raise questions. Providing human support—clinical and benefits experts who can help individuals navigate not just cost of care transparency, but their entire personal health journey—will be imperative to reach the total population, especially those with low health literacy, poor technology, and other special needs.
By: Derick Perkins (January 19, 2022)