On the cusp of an administrative change, the Trump government has finalized a price transparency ruling for private health insurance companies, so patients and enrollees are aware of their true health care costs in advance, which can help them make informed decisions before seeking care. The final rule follows an Executive Order that was issued in 2019 to improve transparency in the U.S. healthcare system.

What is the Final Rule?

The final rule directs insurers offering individual and group health plans to provide details on cost-sharing responsibilities, also known as out-of-pocket (OOP) costs, when requested by a patient or an enrollee, for covered treatment and services provided by specific health care providers. Prior knowledge of their OOP costs gives consumers—in this case, enrollees—the flexibility to shop for services that would be more financially reasonable. The rule also requires plans to be transparent about their negotiated contracts with in-network care providers, previous out-of-network rates, and drug costs.

Beginning January 1, 2023, health plans are expected to provide beneficiaries an online tool that provides information on how much their insurance plan will pay their provider for a specific service. The tool is also expected to estimate the beneficiaries share of the cost. The initial launch will have cost estimates for 500 common items and services, to be expanded to include all services, drugs, durable medical equipment, and any other items and services by January 1, 2024.

For prescription drugs, the rule requires payers to disclose the in-network price after accounting for the rebate, along with the patient’s share in the cost of the drug.

What Will be the Impact?

The expectation is that this transparency and data sharing by health plans will:

  • Force health care providers to offer competitive pricing for their services
  • Help enrollees make informed and financially conscious health care decisions
  • Allow entrepreneurs, researchers, and developers to make patient-friendly tools to guide care decisions
  • Empower patients and the public

In a conversation with Patients Rising Now’s executive director Terry Wilcox, Cynthia Fisher, founder and chairman of Patient Rights Advocate, said that this ruling will allow patients to compare prices like they currently compare hotel costs on Priceline. She believes that transparency around health care prices will put patients first, increase healthcare quality, expose overbilling and fraud, reduce waste, and generate an economic stimulus.

These rules, if adequately implemented, could also help prevent patient struggles with medical debt. Having a clear understanding of what the cost of a specific treatment is, and their share of the cost, will avoid billing surprises for the patient and put them in control of making more financially suitable health care decisions.

Health insurance companies are unhappy with this rule. Matt Eyles who leads America’s Health Insurance Plans, a trade group of health insurance companies, said in a statement that 75% of health plans already provide their enrollees access to health care price transparency tools. He warned that the transparency rule will reduce competition and raise health care prices, not lower them.

Another transparency rule that mandates hospitals to disclose what they charge for services will be effective on January 1, 2021. 

Additional Resources

  1.     Listen to our podcast on the final rule: https://www.patientsrising.org/episode-38-patient-victory-for-price-transparency/
  2.     How price transparency will matter: https://www.commonwealthfund.org/blog/2019/price-transparency-health-care-is-coming-to-us-will-it-matter.

The information in this article was researched and summarized by Surabhi Dangi-Garimella, Ph.D., Principal, SDG AdvoHealth, LLC.