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Insurers Must Disclose Pricing Information to Consumers

October 30, 2020

The Centers for Medicare & Medicaid Services, along with the U.S. Department of Labor and the U.S. Department of the Treasury, issued a final rule about price transparency. The rule requires most private health plans, including group health plans and individual health insurance market plans, to disclose pricing and cost-sharing information upon request to a participant, beneficiary, or enrollee (or his or her authorized representative), including an estimate of the individual’s cost-sharing amount for covered items or services furnished by a particular provider.

This rule is being implemented in phases:

  • January 1, 2022:  Health plans must make publicly available standardized and regularly updated data files to include their in-network negotiated provider rates, out-of-network coverage rates and in-network drug pricing
  • January 1, 2023:  Health plans must offer an online shopping tool that allows consumers to see the negotiated rate between their provider and their plan, as well as a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services
  • January 1, 2024:  The shopping tools must show the costs for the remaining procedures, drugs, durable medical equipment, and any other item or service

By 2024, Americans will have real-time price information, enabling them to know how much their health care will cost them before going in for treatment. The rule requires insurers to not only provide easy-to-understand personalized information about enrollee cost-sharing for health care services, but they must also publically disclose the rates they actually pay health care providers for specific services. 

People who are uninsured or shopping for health insurance will be able to better understand how health care items and services are priced under health insurance coverage. The government says this new price transparency will benefit employers, providers, and patients, and help to drive down the overall cost of health care.

Insurers are unlikely to accept the new rule without a fight. In comments about the proposal, they argued that launching such tools would come at a significant cost, and providing the data would confuse their members. Health plans also argued that posting pricing data without quality information alongside could lead patients to believe that higher prices equate to higher quality, driving up costs. The Blue Cross Blue Shield Association noted that estimates from the firm Bates White project that setting up and maintaining the mandated transparency tool would cost an insurer $13.63 million, a figure 26 times higher than the government’s $510,000 estimate.

This rule echoes a similar regulation finalized during November 2019 that requires hospitals to post their negotiated rates with insurers online beginning January 1, 2021.

For questions, contact Jolene Calla, Esq., HAP’s vice president, health care finance and insurance.