Impact of Transparency Legislation & Trends on Patient Financial Services

Over the past several years, a number of important pieces of government legislation have been aimed at increasing the level of transparency related to the cost of healthcare in the United States, in response to concerns from citizens and government officials surrounding the cost of care. From the Hospital Price Transparency Final Rule, which came into effect January 1, 2021 to the No Surprises Act from January 1, 2022, to the most recent Transparency in Coverage Final Rule which most recently came into effect on July 1, 2022, hospitals and health systems are facing additional compliance hurdles, as well as addressing the impact of greater transparency on relationships with patients, negotiations with payers, and competition in the market.

Patient Concerns Surrounding the Cost of Care

As patients increasingly shoulder a greater burden of the cost of care in the form of larger deductibles and co-insurance payments, as well as higher monthly premiums for coverage, there has been a demand from patients to lower costs, creating a political issue that policy makers wish to address through new transparency requirements. Although many more patients are receiving estimates as well as direct support from providers in explaining benefits coverage and potential costs, final bills can often reflect different values, and in cases of unplanned care, result in considerable unplanned expenses.

Hospital Price Transparency Final Rule

Nearly two years ago, on January 1, 2021, the Hospital Price Transparency Final Rule came into effect, requiring hospitals to publish standard charges, along with a consumer-friendly format highlighting the prices for the 300 most common services provided. In reviewing hospital and system websites to review this information, it can certainly be obtained, and is in many cases quite navigable if you are aware of the CPT code associated with the procedure you may require. Unfortunately, most consumers are not aware of CPT codes and have difficulty navigating these documents. Online price estimators have become more common, and while very useful for gaining a broad understanding of costs, they require patients entering policy data that may not be entirely accurate.

Further, research compiled by Patient Rights Advocate reveals that in a survey of more than 2,000 US hospitals, only 319, or 16%, were in compliance with the Final Rule.

The No Surprises Act

A year on from the Hospital Price Transparency Final Rule, the No Surprises Act came into effect, with a focus on creating limits on the cost of care for patients that require out-of-network care, which has traditionally, as a result of not being covered by in-network benefits, cost considerably more. Across the country, hospitals and health systems have been working to interpret and implement the No Surprises Act, with a considerable allocation of resources required. While compliance at this early stage certainly appears strong, a report from Morning Consult found that 20% of adults have received a surprise medical bill.

Further complicating the No Surprises Act are state-specific requirements which supersede national regulations, as well as newly released requirements related to Surprise Billing.

Transparency in Coverage Final Rule

Most recently, on July 1, 2022, the new Transparency in Coverage Final Rule went into effect, requiring insurers to disclose pricing and the rates that have been negotiated with providers, to give patients greater insight into what their insurance plan will pay for, whether in or out of network. If leveraged accurately, patients should have a greater sense of their out-of-pocket costs for care, a long-time concern. However, many in the industry point out that consumers find considerable difficulty in navigating this information, understanding procedures, and can have their best laid plans disrupted when providers change the course of care in order to achieve the best, but perhaps unplanned, outcome.

Impact of Transparency on Competition

The combination of recent transparency rules is changing the dynamic across the industry as related to the prices charged for care, and the long guarded chargemaster rates, which were traditionally viewed as a trade secret. Hospitals and health systems are now viewing more easily the rates charged by competitors, and using this data as leverage in negotiations with payers, though the negotiating power can slide in both directions given the diversity in rates.

Non-Compliance Penalties

Penalties for non-compliance with the Hospital Price Transparency Rule are calculated based on hospital size and range from $300 per day to $5,500 per day for large systems. In June of this year, CMS began fining hospitals after failure to respond to Warning Notices and Requests for Corrective Action Plans that had been issued. In addition, penalties for violation of the No Surprises Act can reach up to $10,000 per violation, underscoring the urgent need for interpretation and implementation of compliance plans.

Outcome of Transparency Initiatives

While it is far too soon to predict the long-term impact of price transparency rules, the immediate impact has certainly been another administrative cost for hospitals and health systems already struggling to ensure payment from patients and providers. In a complex system for delivery and payment, hospitals are shifting additional resources to compliance. During the Patient Financial Services meeting taking place online this October 11 & 13, numerous panels and moderators will address how they are interpreting and implementing these rules, from front-end patient estimates initiatives to final bills and reimbursement.