- A new final rule requires health plans to release negotiated rates and provide out-of-pocket costs.
- A change from the proposed rule is the requirement for health plans to post negotiated drug prices.
- The requirements roll out in stages through 2024.
Health plans will be required to reveal negotiated drug prices as part of information on all prices paid to providers, according to a transparency final rule released Oct. 29.
The health plan price transparency final rule, pitched as an alternative to price controls, echoed a similar requirement for hospitals to begin posting negotiated prices starting Jan. 1. The health plan requirement will go into effect in stages over the next three years.
The rule for most commercial health plans, including group plans and individual-insurance market plans, will require:
- Releasing publicly standardized and regularly updated data files (Jan. 1, 2022)
- Offering an online consumer shopping tool featuring rates negotiated with providers for “500 shoppable services” (Jan. 1, 2023)
- Providing personalized estimates of consumer out-of-pocket costs for 500 shoppable items and services (Jan. 1, 2023)
- Showing the costs for all other procedures, drugs, durable medical equipment and any other item or service (Jan. 1, 2024)
The requirement to release data files was pitched as a way to make third-party tool developers available to “create private sector solutions for patients to help them make decisions about their care,” according to a release. However, the data will be located on each health plan’s website and not through a consolidated public-use file.
The data-release requirement is designed to help the uninsured and those shopping for health insurance understand how items and services are priced under health insurance coverage.
“Technology companies can create additional price comparison tools and portals that will further incentivize competition, as well as allow for unprecedented research studies and data analysis into how healthcare prices are set,” the release states. “With this information available to the public, there can finally be pressure on those that price gouge consumers when they are at their most vulnerable.”
The public-posting requirements for health plans, according to a CMS fact sheet, include:
- In-network negotiated rates
- Billed charges and allowed amounts paid for out-of-network providers
- Negotiated rates and historical net prices for prescription drugs
- Personalized out-of-pocket cost information
The information is to be made available through an Internet-based self-service tool and in paper form upon request.
“Typically, you get this data on the back end with an explanation of benefits,” CMS Administrator Seema Verma said in a call with healthcare industry officials. “What we’re requiring now is for insurance companies to provide it on the front end in some type of a tool.”
CMS estimated the rule would affect about 200 million Americans with health insurance.
The health plan requirement followed a separate hospital rule that is facing a legal challenge and goes into effect Jan. 1. It requires those organizations to post both negotiated rates and prices for 300 “shoppable services.” The latest health plan-focused rule also requires disclosure of hospital facility fees.
The health plan rule does not ban so-called gag rules by either plans or providers regarding the release of their negotiated rates. On the call with industry officials, CMS officials said future rule-planning will consider whether the industry is moving away from those types of policies, which could affect employers’ access to data.
Drug price information gets incorporated in the rule
Verma said in a call with reporters that the most significant change from the proposed rule issued in November 2019 was the addition of the requirement for health plans to post negotiated rates and historical net prices for prescription drugs.
The final rule states that health plans should include the price negotiated for that plan or issuer with a pharmacy benefit manager. The historical net prices will be based on three consecutive months of data from before Jan. 1, 2023.
Verma also said the health plan rule does not make the hospital transparency requirement redundant.
“The insurance plans’ [requirement] will overlap to some degree, but I think it will be more helpful to the uninsured,” Verma said. “What we’re doing today is more expansive and it really does cover the entire healthcare industry, not just hospitals.”
The rule also aims to encourage consumers to shop for services from lower-cost, higher-value providers by allowing health plans that share the resulting savings with consumers to take credit for “shared savings” payments within their medical-loss ratio calculations.
“So, it doesn’t count toward their administrative costs; it would count on the healthcare expenditure side,” Verma said.
Leading health plan expresses concerns about the rule
Justine Handelman, senior vice president of the Office of Policy and Representation for the Blue Cross Blue Shield Association, said in an emailed statement that healthcare consumers are most interested in knowing what their out-of-pocket costs will be, the quality of care a physician or facility will provide, and whether a clinician is in-network.
“However, making negotiated rates public will not provide consumers with the clear, easily understandable information that they are looking for,” Handelman said. “Instead, it’s likely the final rule will have the unintended consequences of confusing consumers and increasing prices — something no one wants.”
She said most Blue Cross and Blue Shield members already have “robust tools that are tailored” to their health plan, which provide cost and quality information for certain procedures while safeguarding consumer information.
“We need to expand the use of secure health plan tools to make health care costs more transparent, reduce complexity and help Americans avoid unexpected and unnecessary expenses,” Handelman said.
Matt Eyles, president and CEO of America’s Health Insurance Plans, said his group also agrees on the goals of the rule.
“But requiring health insurance providers to publicly release all in-network negotiated rates, information on out-of-network payments and prescription drug negotiated prices in machine-readable formats will fail to deliver what Americans want — lower costs and high-quality health care,” Eyles said in a written statement.