Health Plan and Provider Price Transparency Obligations Can't Be Ignored

Federal agencies get serious about enforcing transparency measures

Stephen Miller, CEBS By Stephen Miller, CEBS July 26, 2021
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Health Plan and Provider Price Transparency Obligations Cant Be Ignored

The Centers for Medicare & Medicaid Services (CMS) has proposed penalties for hospitals that don't comply with a price transparency rule that took effect this year. Meanwhile, sponsors of group health plans should prepare for their own transparency requirements, which start to take effect in 2022.

Hospital Transparency Requirements

On Jan. 1 of this year, the Hospital Price Transparency final rule became effective, requiring hospitals in the U.S. to establish, update and make public a yearly list of their standard charges for items and services they provide.

Many hospitals, however, have been criticized for failing to implement the new requirements, and in a July executive order, President Joe Biden directed the Department of Health and Human Services (HHS) "to support existing hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing."

In response, CMS has proposed civil monetary penalties at $300 a day for smaller hospitals with a bed count of 30 or fewer that violate the transparency rule, and at $10 per bed per day for hospitals with a bed count greater than 30, up to a maximum daily fine of $5,500.

"Biden's order not only means that the existing hospital price transparency rule won't be blocked, but that the government will begin enforcing a rule that too few hospitals were in compliance with," said Kim Buckey, vice president of client services at Birmingham, Ala.-based DirectPath, a benefits education, enrollment and health care transparency firm.

A recent study found that just one of the 20 top-ranked U.S. hospitals was in full compliance with the rule, Buckey noted. "Many, instead, rely on pricing estimators, which are based on average pricing for a procedure. Yet, as The Wall Street Journal recently reported, prices can fluctuate by as much as 10 times within the same hospital depending on the payer," she explained.

For many plan sponsors, "the first order of business is to begin educating employees about the availability of this information, why it's important and how it can save them money," Buckey recommended. "That said, most consumers would need assistance accessing and interpreting the data and applying it to their personal situations, and for making an educated decision about where to receive care."

[Want to learn more about compensation and benefits? Join us at the SHRM Annual Conference & Expo 2021, taking place Sept. 9-12 in Las Vegas and virtually.]

Group Health Plan Disclosures

Beginning in January 2022, employers with self-insured group health plans or insurance carriers (for fully insured group plans) must provide plan enrollees with estimates of their out-of-pocket expenses for services from different health care providers, so enrollees can shop and compare costs for services before receiving care.

The requirement is part of the Transparency in Coverage rule that was finalized last November by the departments of Labor (DOL), Treasury, and HHS.

"While third parties can implement many of the pricing transparency measures, plan fiduciaries must ultimately ensure compliance," advised attorneys at law firm Akerman in West Palm Beach and Tallahassee, Fla. "As compliance deadlines for new pricing transparency requirements for group health plans draw near, plan sponsors will need to use the second half of 2021 to prepare," they noted.

In addition, the Consolidated Appropriations Act, 2021 (CAA), signed into law last December, contained the No Surprises Act, which bans out-of-network billing for emergency services and out-of-network charges for ancillary care at an in-network facility, for instance. On July 13, HHS, DOL and Treasury, along with the Office of Personnel Management, issued an interim final rule as the first in a series of regulations to implement the new limits on surprise billing.

The CAA/No Surprises Act also contained steps to increase transparency in employee health benefit plans in key areas, which will be subject to future regulations, such as:

  • Removal of gag clauses on price and quality information. Plans may not agree to restrictions in provider network contracts that would prevent them from accessing cost and quality of care information and providing that information to participants.
  • Disclosure of compensation to brokers and consultants. Plans must disclose payments of $1,000 or more that they make to any health benefits broker or consultant.

The legislation "includes a myriad of transparency and disclosure requirements that take effect in 2021 and 2022," according to the Akerman attorneys. "Plan sponsors will need to work closely with service providers and issuers to ensure that group health plans are well-positioned to comply."

Benefits broker HUB has posted a timeline showing when upcoming price transparency disclosure requirements take effect. "The most significant challenge relates to timing, with so many rules coming online on or around Jan. 1, 2022," HUB's employee benefits compliance team noted.

Promoting Consumerism

At a minimum, Buckey advised, "employers should be educating employees and their families about the importance of shopping for care, the direct—and indirect—impact on their wallets, and the resources the employer is making available to help employees access and use this material."

Given the rollout of new group plan requirements starting next year, she added, "this should be part of a comprehensive, long-term campaign."

Price transparency is "a simple idea but it's very difficult to execute and pull off," said Michael Rea, founder and CEO of Rx Savings Solutions, which makes software for comparing drug costs.

Speaking recently at the virtual 2021 World Health Care Congress, Rea said that "there are two options for employers and providers: One is to check the box and technically be in compliance. The other is to take the next step and really arm members with the information they need, to provide cost savings …  but also to build goodwill for the brand that the health plan or employer represent."


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