The Department of Health and Human Services, Department of Labor, and Department of the Treasury just issued the final rule on price transparency which requires health insurers to disclose cost-of-care information to patients in advance:

The rule requires that most health plans and health insurers not only provide easy-to-understand personalized information on enrollee cost-sharing for healthcare services, but must also publicly disclose the rates they actually pay healthcare providers for specific services. 

Through a shopping tool available through their plan or insurance company, consumers will be able to see the negotiated rate between their doctor and their plan or insurer, as well as the most accurate out-of-pocket cost estimate possible based on their health plan for procedures, drugs, durable medical equipment, and any other item or service they may need.

Consumers will also have access to accurate price and plan information that allows them to shop and compare costs between individual doctors before receiving care, so they can choose a healthcare provider that offers the most value and best suits their medical needs.

The requirement for the publicly available data files will take effect for plan or policy years beginning on or after January 1, 2022. Plans and issuers must make cost-sharing information available for 500 specified items and services for plan or policy years beginning on or after January 1, 2023, and must make cost-sharing information available for all items and services for plan or policy years beginning on or after January 1, 2024.

This is the last of several price transparency rules advanced by the Administration that would require hospitals and insurers to disclose their real cash prices and unveil their hidden negotiated rates so that consumers can have access to clear and real prices before they get care. The hospital price transparency rule is set to take effect in 2021 but is being challenged in court by the American Hospital Association (AHA). The case was dismissed by the District Court earlier this year, but AHA’s efforts to disrupt price transparency didn’t end there—in August, AHA appealed the judge’s order upholding the price transparency rules . 

Right now, price transparency—a bipartisan issue that nearly 90% of Americans say they support—is basically non-existent in the U.S. healthcare industry. In fact, many patients don’t learn what a medical service will cost until after the fact in an “explanation of benefits.” 

We shouldn’t have to buy something without knowing what it is going to cost. Over 90% of healthcare spending is on non-emergency care… meaning it is “shoppable.” If patients had access to healthcare prices upfront, they could make more informed choices about their care and plan for bills ahead of time.

Price transparency will also introduce more competition into the healthcare marketplace which will encourage providers to compete with one another and bring costs down for everyone.

To sum it up, as IWF’s Hadley Heath Manning explains in this policy focus, the lack of price transparency: 

  • Limits competition: The vast majority of healthcare spending (over 90%) is on services that are shoppable (not emergencies). Patients should be free to shop. 
  • Drives up healthcare spending: The average household spends $28,000 per year on health care and coverage. 
  • Creates uncertainty: Fully 57% of Americans report receiving a “surprise” medical bill. This fosters a lack of trust between patients and the medical system.

To learn more about the steps the current Administration has taken to make price transparency in the healthcare system a reality, check out our fact check on the claim that the Obama Administration did more to further price transparency than the Trump Administration.