The new unprecedented view of what insurance companies pay for health care will be available to consumers, employers, and anyone else who is interested in the topic.
Beginning July 1, self-insured employers and health insurers will have to post all prices they have negotiated with providers of health care services on their websites, item by item. The only exception is prescription drug prices, which are not administered in hospitals or doctors’ offices.
This story was created in partnership with Kaiser Health News.
Federally mandated data releases could have an impact on future prices and even how employers contract to provide health care. Many people will be able to see how their insurers compare with other providers for the first-time.
These new rules go far beyond the last year’s, which required hospitals to display their negotiated rates to the public. Jeffrey Leibach, a Partner at the consulting firm Guidehouse, stated that insurers now have to post amounts paid for “every doctor in network, every hospital and every surgery center, as well as every nursing facility,”
He said, “When you get into the math, you can see trillions of records.” Noncompliance could result in federal penalties that are much more severe than those faced by hospitals.
Leibach said that federal officials learned from the hospital experience, and gave more direction to insurers on what was expected. If they don’t provide the required data, insurers or self-insured employer could face a $100 per day fine and a maximum of $100 per person.
Leibach stated, “Get your calculator out. All of a sudden, you’re in the millions pretty quickly.”
Consumers with high-deductible plans may be able to look at the data and compare what they will pay at different clinics or hospitals for certain services.
However, the sheer size of each database may make it difficult for most people to use them in a nuanced manner,” stated Katherine Baicker (dean of the University of Chicago Harris School of Public Policy).
At least for the first time.
Entrepreneurs will be expected to translate this information quickly into more user-friendly formats in order to incorporate it into existing or new services that estimate the costs for patients. The rules mandate that insurers provide online tools to help patients get cost estimates for approximately 500 services. This is a way they can plan ahead and receive an upfront cost estimate.
Chris Severn, CEO at Turquoise Health, said that once these things are done, “you’ll at most have the options in your favor.” Although many hospitals have not yet complied with the rules, Turquoise Health has made price information available online.
Sites like his can drill down into cost variations between insurers or one location by adding the insurers’ information.
He said, “If you are going to have an X-ray done, you’ll be able see that it can be done for $250 at this hospital and $75 at the imaging centre down the road or for $25 in your office by your specialist.”
Everybody will know the business of everyone else: For example, Aetna and Humana’s respective costs for a knee replacement.
These requirements are based on the Affordable Care Act, as well as a 2019 executive order signed by Donald Trump.
“These plans are supposed be acting on behalf employers in negotiating favorable rates. The little information we have shows that it hasn’t happened,” stated Elizabeth Mitchell, president of the Purchaser Group on Health. This is an association of employers offering job-based benefits to workers. “I believe that the dynamics will change.”
Others are more cautious.
Zack Cooper, Yale University Institution for Social and Policy Studies director of health policy, said that “maybe at best this will decrease the wide range of prices out there.” It won’t unleash a consumer revolution.
The July data release’s greatest value may be its ability to reveal how successful insurers are at negotiating prices. This comes after research has shown that there is a wide range in the cost of health care. Rand Corp. recently found that companies that offer job-based plans for insurance paid 224% more on average than Medicare for the same services.
Tens of thousands will see this complete pricing picture aEUR” for employers who purchase insurance coverage for their employees. They may not like the results.
Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health’s department of health policy, said that “what we are learning from hospital data is that insurance companies are really bad at negotiation.” He cited research that showed that hospital care rates negotiated by insurers can be more than those accepted by patients who don’t have insurance or are paying cash.
Mitchell and others have expressed frustration with the current system of health insurance. Many more might opt to work directly with providers, instead of using insurance companies for claims processing.
Other employers might bring their insurers back into the bargaining process.
James Gelfand, president and CEO of the ERISA Industry Committee (a trade group for self-insured employers), stated that this is the first time an employer will be able go to an insurer and say, “You haven’t negotiated a good enough deal. We know this because we can see that the same provider has negotiated a better agreement with another company.”
He said that patients will be able save money if this happens.
However, this is not a guarantee.
This type of public release of pricing data has never been widely tried in health care. It is not clear how this will impact future spending. Prices could fall if providers and insurers are forced to negotiate or if they see their position relative to others. If they find they charge less than their peers, providers may raise their prices.
Kelley Schultz (Vice President of Commercial Policy for AHIP), the industry’s trade lobby, stated that “Downward Pressure may not be a given.”
Baicker of the University of Chicago stated that rates will still be heavily influenced even after the data has been released. For example, the size of an employer or insurer can often offer higher discounts to those who are able to send more patients. AEUR” also affects the number of hospitals in an area. If there are only one, it can lead to higher rates.
Another unknown is whether insurers will meet the deadline and provide data.
Schultz at AHIP said that the industry is on its way partly because the original deadline was extended six months. She believes that insurers will do better than hospitals. She said, “We saw many hospitals that didn’t post files or made them difficult to find.”
More than 300 hospitals that are not in compliance with the law have been sent warning letters by the government. They could be subject to $300 per day fines for not complying, which is lower than what insurance companies might face. However, the federal government recently increased the ante to $5,500 per day for the largest facilities.
Leibach stated that even though the pricing data has been made public, “I don’t believe things will change overnight.” “Patients will still make care decisions based upon their doctors and referrals. There are many other factors than price.
KHN (Kaiser Health News), a national newsroom, produces in-depth journalism on health issues. It is an independent editorial program of KFF (Kaiser Family Foundation).
