Price transparency in healthcare

Price transparency in healthcare is about making consumers feel more prepared, involved and informed. Although some payers and providers have already been providing pricing estimates for select items and services before care is delivered, healthcare is not like other goods. It is more expensive, confusing and personal, and involves decisions that can have life-long consequences. In addition, more than half of U.S. consumers – 50% of whom are college educated – don’t understand the healthcare system well enough to effectively navigate their healthcare benefit choices and services utilization. The inability of consumers to effectively research and compare healthcare costs and quality is a barrier to achieving high health literacy, and ultimately, lowering costs.

To help consumers improve their understanding of costs, The Centers for Medicare and Medicaid Services (CMS) has issued two final rules – one addresses Hospital Price Transparency, and the other Transparency in Coverage. Pairing “high-tech” solutions with a “high-touch” approach to consumer engagement healthcare providers and payers can help comply with the new rules.

Under the Hospital Price Transparency Final Rule, each US hospital is required to:

1. Publish clear, accessible pricing information for 300 “shoppable” services. This information must be published online, require no login or personal health information (PHI) for access, and be offered in a consumer-friendly format.
2. Publish a machine-readable file including rates for all services (not just shoppable services).

The Hospital Price Transparency Rule went into effect on 1 January 2021. Failure to comply will come with penalties of 300 USD per day. However, there are solutions available that can help hospitals avoid fines and quickly comply with the new rule.

The Transparency in Coverage Final Rule, issued in October 2020, requires health plans and self-insured employers to disclose detailed pricing and cost-sharing information to consumers and other stakeholders. The final rule takes two approaches to making pricing information more accessible, which must be executed by three key deadlines: 

1. Publish three publicly available, machine-readable files, updated monthly, for in-network provider negotiated rates, historical out-of-network allowed amounts and drug pricing. (by Jan. 1, 2022) 
2. Provide an online self-service tool for members, with specific search functionality that give pricing and cost-sharing information for 500 shoppable services that are defined by CMS. (by Jan. 1, 2023) 
3. Using the same online tool, give pricing and cost-sharing information for all items and services. (by Jan. 1, 2024) 

Penalties for failing to comply with the new rule have yet to be announced.

Solutions and services from Watson Health can help payers and providers successfully engage consumers — turning the new mandate for price transparency in healthcare into an opportunity for financial growth. Apply IBM’s deep insights into consumer behavior and local markets to help formulate a strategy that puts you ahead of the competition.