Health plans prepare to post prices for consumers
The price transparency rule allows insurers to reduce MLR payments by using incentives to encourage consumers to choose low-cost, high-value providers.
On July 1, Brian Walsh, account executive with price transparency firm Turquoise Health, will closely monitor health insurers who publish the prices they pay to hospitals, doctors and other healthcare providers.
After consulting with many small and midsize health insurers across the country, Walsh is confident that most, if not all, of the insurers he spoke to are preparing to comply with the new federal transparency rule. How many health plans will comply with the final rule of transparency in coverage will be quite fascinating. But health insurers and industry watchers will also be keeping tabs on how health insurers are using a new in-rule financial tool that’s designed to encourage consumers to choose hospitals, doctors and other providers. high-value, low-cost health care.
Under the rule, HHS will also allow health insurers to use incentives, such as waiving or reducing co-pays or deductibles, to encourage their members to purchase services from lower-cost providers and more great value. When using such incentives, health plans will be able to give enrollees a portion of the savings made when their enrollees obtain services from lower-cost, higher-value consumers, according to CMS. Additionally, they can include the savings they share with enrollees in the numerator of their medical loss ratio (MLR), as well as claims incurred and other expenses related to improving healthcare. In this way, HHS allows insurers to reduce what they would pay in discounts under MLR rules.
Since the MLR rules came into effect under the Affordable Care Act (ACA) in 2014, health insurers have paid out millions in rebates to consumers. Industry watchers say insurers are likely to welcome the possibility of reducing what they pay under MLR rules while encouraging consumers to choose lower-cost, higher-value hospitals and providers .
One issue: How will health plans define high-value providers? According to A. Mark Fendrick, MD, director of the Center for Value-Based Insurance Design at the University of Michigan, choosing value in healthcare is challenging because it’s often in the eye of the beholder. The challenge in defining value, says Fendrick, is that quality is tied to what the consumer pays. “Value is the combination of the quality of care you get for the price you pay,” says Fendrick. “It’s best described as a fraction of the value over the price.” Some consumers will choose the cheapest hospitals, doctors and providers, while others will choose hospitals and providers based on the quality they offer or a combination of higher quality and lower price, says Fendrick .
Since Jan. 1, HHS has required hospitals to post what they charge for their care and services under the Hospital Pricing Transparency Final Rule. But for Fendrick, the rule of transparency in coverage is more important because consumers, researchers and other insurers will be able to see what their competitors are paying.
“Transparency between plans means there will be more competition and possibly less variation in what they pay,” says Fendrick.
The rule applies to most health insurers that have not been grandfathered under the ACA and to health plans offering non-grandfathered health insurance coverage in the individual and group markets. HHS defines a grandfathered plan as one that someone purchased on or before March 23, 2010, when the ACA was enacted. These plans are not sold on the ACA exchanges; instead, insurers or their agents market them to consumers.
Insurers will have to create machine-readable public files showing what they pay for all covered items and services to in-network providers, as well as the authorized amounts they pay and the billed fees they receive from out-of-network providers.
Hospitals will also be required to provide an internet-based price comparison tool that will allow individuals to get an estimate of what they would pay out of pocket for a specific item or service from a named provider or group of providers. , for 500 purchasable items and services.
Upon consumer request, insurers would also be required to make this price comparison information available, HHS said. Failure to provide this information will result in fines of $100 per day for each violation or for each person involved.
Joseph Burns is a freelance journalist in Brewster, Massachusetts, who covers health care and health insurance.