What is price transparency in healthcare?

Price transparency in healthcare refers to the practice of making healthcare costs and pricing information more readily available and understandable to patients and consumers. It involves providing clear and comprehensive information about the prices of medical services, procedures, tests, medications, and other healthcare-related expenses.

The goal of price transparency is to empower patients to make informed decisions about their healthcare by allowing them to compare costs, understand their financial responsibilities, and choose healthcare providers or treatment options that best align with their budget and healthcare needs.

Key aspects of price transparency in healthcare

These key aspects of price transparency collectively aim to empower patients with the information they need to make informed decisions about their healthcare, understand their financial responsibilities, and ultimately contribute to a more transparent and consumer-friendly healthcare system.

  1. Disclosure of Prices: Healthcare providers, hospitals, and healthcare facilities are expected to provide accessible and accurate pricing information for their services. This includes publishing price lists or chargemasters, which detail the costs of various medical procedures and services.
  2. Insurance Information: Clear explanations of how insurance coverage affects costs, including deductibles, copayments, coinsurance, and out-of-network expenses, should be readily available to patients.
  3. Out-of-Pocket Costs: Patients should be informed about their expected out-of-pocket expenses before receiving healthcare services, helping them plan for their financial responsibilities.
  4. Quality Data: In addition to pricing information, patients may benefit from quality data, such as patient outcomes and satisfaction ratings, to make more informed decisions about their healthcare providers.

Why is price transparency in healthcare important?

Price transparency in healthcare is important for several reasons, as it can have significant benefits for patients, healthcare providers, and the healthcare system as a whole:

  1. Informed Decision-Making: Price transparency empowers patients to make more informed decisions about their healthcare. When patients have access to pricing information, they can compare costs for different providers, treatments, or procedures, enabling them to choose options that best align with their needs and financial resources.
  2. Cost Control: Transparent pricing can help control healthcare costs by fostering competition among healthcare providers. When providers know that patients can easily compare prices, they may be more inclined to offer competitive rates, which can ultimately lead to lower healthcare expenses.
  3. Healthcare Efficiency: Transparent pricing can lead to more efficient allocation of healthcare resources. It encourages providers to offer cost-effective services and may reduce unnecessary tests or procedures, improving the overall efficiency of the healthcare system.
  4. Avoiding Surprise Bills: Price transparency can help patients avoid unexpected and exorbitant medical bills. Knowing the costs upfront allows patients to seek alternatives or negotiate prices with providers before receiving care.
  5. Enhanced Accountability: Transparent pricing can hold healthcare providers and insurers accountable for their pricing practices. It can help identify cases of price gouging or overcharging, leading to greater fairness and equity in healthcare billing.
  6. Improved Access to Care: Some patients may delay or forgo necessary medical care due to concerns about the cost. Price transparency can encourage these individuals to seek timely treatment, potentially preventing more serious health issues and reducing overall healthcare expenses.

How price transparency Is changing healthcare

Price Transparency FAQs

Price transparency timeline

Jan 1st
2021

Hospital price transparency final rule

Jan 1st
2022

Group health plan transparency rule for public disclosure

Jan 1st
2022

No Surprises Act: emergency services

Jan 1st
2022

External review

Jan 1st
2023

Group health plan transparency rule for disclosures to participants and beneficiaries

What providers should know about price transparency

The No Surprises Act, which took effect in the United States on January 1, 2022, introduced several rules and protections aimed at shielding patients from unexpected medical bills, commonly known as “surprise bills.” This Act primarily targets situations where patients receive care from out-of-network providers in emergencies or at in-network facilities without their knowledge. Here are some key rules from the No Surprises Act that apply to healthcare providers:

  • Emergency Services Protection:  Providers cannot bill patients more than the in-network cost-sharing amounts for emergency services, even if the services are provided out-of-network. This applies regardless of where the emergency services are provided.
  • Non-Emergency Services at In-Network Facilities: If a patient is at an in-network facility but receives care from an out-of-network provider, the provider cannot bill the patient more than the in-network rates unless the provider gives the patient proper notice and obtains the patient’s consent.
  • Advance Notice and Consent Exception: In non-emergency situations, out-of-network providers at in-network facilities must inform patients at least 72 hours in advance about their network status and provide an estimate of charges. Patients must consent to receiving out-of-network care for the provider to bill above the in-network rate. There are exceptions to this rule, such as for ancillary services (e.g., anesthesiology, radiology) where consent is not required.
  • Prohibition of Surprise Billing for Ancillary Services: Providers cannot issue surprise bills for ancillary services (like anesthesiology or radiology) at an in-network facility, as these are typically not services for which patients can meaningfully choose an out-of-network provider.
  • Air Ambulance Services: The Act also includes protections against surprise billing for air ambulance services provided by out-of-network providers.
  • Dispute Resolution Process: The No Surprises Act establishes an independent dispute resolution (IDR) process for providers and insurers to negotiate payment for out-of-network services, instead of putting the burden on the patient.
  • Transparency Requirements: Providers are required to inform patients about the No Surprises Act’s protections against surprise billing and provide information on who to contact if they believe they have received a surprise bill.
  • Good Faith Estimates for Uninsured (or Self-Pay) Patients: Providers must provide a good faith estimate of the expected charges for services to uninsured or self-pay patients upon request or when scheduling service.

Compliance with these rules is crucial for healthcare providers to avoid penalties and to ensure that patients are protected from unexpected and often financially burdensome medical bills. Providers should be well-informed and regularly update their practices and billing procedures to align with the No Surprises Act’s requirements.

Important dates for providers

Jan 1st
2021

Jul 1st
2022

Jan 1st
2023

Jan 1st
2024

January 1, 2024 and Beyond

Price transparency FAQs for Providers

Providers, let’s work together

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What payers should know about price transparency

The No Surprises Act, which came into effect on January 1, 2022, includes several provisions specifically aimed at healthcare payers (like insurance companies and health plans) to protect patients from unexpected medical bills, commonly known as “surprise bills.” Here are some of the key rules from the No Surprises Act that apply to healthcare payers:

  • Protection Against Surprise Billing for Emergency Services: Payers are required to cover emergency services without any prior authorization, regardless of whether the provider or facility is in-network. The patient’s cost-sharing (like co-pays and deductibles) must be the same as it would be if the services were provided by an in-network provider.
  • Out-of-Network Cost-Sharing for Non-Emergency Services: In situations where a patient receives non-emergency services from an out-of-network provider at an in-network facility, payers must apply in-network cost-sharing rules. This means the patient pays no more than they would for in-network services.
  • No Balance Billing in Certain Situations: The Act prohibits balance billing (where the provider bills the patient for charges beyond what the insurance covers) in certain situations, particularly in emergency services and for certain services at in-network facilities. Payers are required to ensure that their enrollees are not subject to balance billing in these cases.
  • Payment Dispute Resolution Process: When there is a dispute between the payer and an out-of-network provider regarding the payment amount for services, the No Surprises Act establishes an independent dispute resolution (IDR) process. Payers need to engage in this IDR process when necessary.
  • Transparency and Patient Notice Requirements: Payers must provide clear explanations of benefits to patients that outline what the payer will cover and the patient’s cost-sharing amount. They also must inform patients about the protections against surprise billing provided under the Act.
  • Advance Explanation of Benefits (EOB): For scheduled services, payers are required to provide an advance EOB upon request, detailing the estimated amount the plan is responsible for paying, the cost-sharing amount for the patient, the network status of the provider, and any other pertinent information.
  • Price Comparison Tool: The Act requires payers to offer a price comparison tool by telephone and on their website to allow consumers to compare the amount of cost-sharing that they would be responsible for with respect to a specific item or service by different providers.
  • Reporting Requirements: Payers are required to report certain information to the federal government, such as data on in-network and out-of-network claims.
  • Coverage of Air Ambulance Services: Similar to ground emergency services, payers must also cover air ambulance services from out-of-network providers and apply in-network cost-sharing rates.

Compliance with these rules is critical for healthcare payers to ensure they are providing the necessary protections to their enrollees and adhering to the legal requirements set out by the No Surprises Act. The Act aims to enhance transparency in healthcare pricing and protect consumers from unexpected and often excessive medical bills.

Important dates for payers

Jan 1st
2021

Jul 1st
2022

Jan 1st
2023

Jan 1st
2024

Price transparency FAQs for Providers

Payers, let’s work together

Accelerate transformation, drive growth, and adopt innovative payment models confidently with the industry’s most trusted healthcare analytics platform, mapping over 300 million real-world patient journeys with machine-learning precision.

Additional Resources

Blogs

Mar 27, 2023

Clarify Health Launches No-Code Query Engine for Faster Access to Price Transparency Intelligence

Blogs

May 29, 2023

Decoding Price Transparency Data at HIMSS23

Blogs

Aug 3, 2023

Blog: How price transparency in healthcare will impact provider networks and patient choice

Blogs

Aug 8, 2023

Clarify Health Recognized in the Gartner® Hype Cycle™ for U.S. Healthcare Payers, 2023 in Two Categories

Blogs

Aug 16, 2023

Clarify in the July 2023 Gartner® Hype Cycle™ for Payers

Blogs

Aug 16, 2023

In 2023 Gartner® Market Guide for Provider Network Management