Healthcare price transparency is gaining momentum across the industry from shocking headlines in online news media to prominent placements on conference agendas, you’d be hard pressed to avoid this popular topic of conversation. While hospitals were required to post their prices first, health plan price transparency has revealed some surprising insights about the way care is codified, billed, and paid for.

What is health plan price transparency?

According to CMS, Health plan price transparency helps consumers understand the cost of a covered item or service before receiving care. As of July 1, 2022, most payers are starting to post pricing information for covered items and services online.

The next set of requirements went into effect on January 1, 2023, providing additional access to pricing information and enhancing consumers’ ability to shop for the health care that best meet their needs.

The final stage will go into effect on January 1, 2024, which will require health plans and payers to provide an online price transparency tool available for 500 “shop-able” items, services and drugs. Through this tool, patients and members will be able to see real-time estimates of their cost-sharing liability for all covered items, services, and drugs for plan years that begin on or after January 1, 2024. The goal for this online tool is to allow healthcare consumers to understand how costs for covered health care items and services are determined by their plan.

The No Surprises Act 

What does it mean? No surprise billing.

The No Surprises Act aims to protect patients from receiving “surprise” (or unexpected) medical bills from a healthcare provider or facility after inadvertently receiving care from an out-of-network provider. According to the federal government, out-of-network surprise billing occurs 10 million times a year. It is a financial burden for patients when out-of-network claims get denied or higher out-of-network medical billing cost-sharing occurs.

The No Surprises Act protects patients from two scenarios.

The first protection is from surprise medical bills for out-of-network emergency services, which happens during emergent situations when a patient cannot determine whether the provider they use is in-network. According to the Kaiser Family Foundation (KKF), patients unintentionally receive care from an out-of-network provider every one out of five emergency room visits.

The second protection from surprise bills is for non-emergent settings when a patient receives care from an out-of-network healthcare provider while at an in-network facility. This often occurs when a provider is dropped from or chooses to leave the health plan’s network.

The No Surprises Act set a January 1, 2022 deadline for health plans to adhere to the new requirements and billing protections. The Act does the following:

  • Bans out-of-network charges and balance billing for out-of-network ancillary providers at in-network facilities. Ancillary providers support the work of the primary physician, such as radiologists, anesthesiologists, and pathologists. Exceptions are allowed, but patients must be provided with a plain-language consumer notice that requires patient consent.
  • Requires that emergency services be covered at an in-network rate without requiring prior authorization, even if services are received from an out-of-network care provider or facility.
  • Addresses air ambulance services billing by disallowing balance billing. Privately insured patients would only pay the same deductible and copayment amount paid for in-network air ambulance providers.
  • Introduces an independent third-party dispute resolution process to resolve price disputes between providers and health plans that cannot agree on a payment amount for out-of-network services.

The Transparency in Coverage Rule

What does it mean? Consumers will be able to access pricing information through their health plans.

The purpose of the Transparency in Coverage Rule is to increase medical price transparency by providing consumers with access to pricing information through their health plans. It requires that health plans publicly disclose pricing for in-network rates, billed charges, prescription drugs, and the allowed amounts for out-of-network providers. It also requires that health plans give patients an estimate of their cost-sharing liability through an internet-based self-service tool.

It is another step toward increased healthcare transparency following the Hospital Price Transparency rule that went into effect on January 1, 2021. That rule requires hospitals to give patients access to their standard pricing, including negotiated rates with third-party payers. While the Hospital Price Transparency rule only included hospital services, the Transparency in Coverage Rule requires price reporting for all covered services. The requirements for health plans went into effect July 1, 2022 and requires:

  • Publicly available machine-readable files that disclose detailed information on the costs of covered items and services, including hospital, physician, prescription, medical equipment, and other services pricing.
  • A consumer price transparency tool that discloses personalized information regarding members’ cost-sharing responsibilities for covered items and services, including prescription drugs. The tool must be an internet-based cost estimator.

Implications for health plans as the trend in healthcare price transparency progresses

It is promising that many health plans and high-performing provider networks have taken an active and vocal stance that they plan to comply with the new transparency rules despite the downside risks. Although greater consumerism may benefit health plans, the new reporting requirements will result in new administrative burdens for health plans.

Additionally, the traditional contract negotiation process between providers and payers could be flipped on its head. Providers will be able to access any health plan’s pricing information to see the various rates they have negotiated with competing providers. Similarly, employers will have greater transparency and may become more critical of their discounted rates.

The question that remains is how accessible this information will be. The reality is that data published will be difficult for providers, employers, and consumers to digest. Additionally, how each state enforces health plan compliance with the data submission requirements will vary across borders, leading to different experiences for consumers based on where they live. 

What do we know about health plan price transparency so far? 

The past two years have been monumental for health plan price transparency and reporting regulations. The No Surprises Act (NSA), signed into law in December 2020, and the Transparency in Coverage Rule (TiC), published in October 2020, had significant implications for health plans. Niall Brennan, Clarify’s Chief Analytics and Privacy Officer, spoke to Beckers Hospital Review about the rule and said it’s “laudable, but flawed.”

Since 2015, the Clarify Platform® has been managing massive data sets using big data efficiencies that are commonplace in the consumer and financial industries and provided the perfect infrastructure to handle the size and scale of price transparency data. Clarify has processed, analyzed, and compared data from approximately 5,600 hospitals and all large national payers since the inception of each data set to assess quality differences between the data sets.

Here is what we have observed:

  • Health plans are more compliant with price transparency regulations than hospitals, resulting in higher data coverage found across payer-sourced data.
  • Hospital-sourced rates data is limited to hospital services (e.g., it is missing professional and ambulatory services). In contrast, more than 90% of unique negotiated rates reported by health plans reflect rates negotiated with professionals.
  • Notably, CMS also did not require a standard schema for hospital machine-readable files (MRF) formatting, whereas health plans must follow a defined schema. This has led to a broader variation in hospital reporting format and quality.

Clarify’s No-Code Query Engine for Faster Access to Price Transparency Intelligence

Payers and providers can now instantly query 500+ terabytes of enriched price transparency data via our software’s user interface and generate reports on market prices in seconds. Our price transparency software solution contains institutional and professional rates from over 65 national and regional payers, including United Healthcare, Cigna, Aetna CVS, Humana, and many Blue Cross Blue Shield (BCBS) payers, and is constantly adding new data as it is released, providing access to the most comprehensive and up-to-date rate intelligence on the market.

In April, Clarify was recognized in the Gartner® “Quick Answer: U.S. Healthcare CIOs Use Price Transparency Data to Improve Business Outcomes.” In February, Clarify was named a Representative Vendor in the the Gartner® “Market Guide for U.S. Healthcare Payers’ Provider Network Management Applications” for our Network Optimization solution, which links price transparency data to provider network performance insights.