The Centers for Medicare and Medicaid Services’ Transparency in Coverage rule takes effect Jan. 1. Hospitals and their collection agency partners can work together to ensure this information is effectively communicated to consumers.

Not only can consumers hop online to check out prices for products they have their eyes on, like a car or vacuum, now they have more resources to comparison shop for their health care.

In January, a Centers for Medicare and Medicaid Services (CMS) rule will take effect requiring U.S. hospitals to provide pricing information online in two ways:

  • As a comprehensive machine-readable format file containing prices for all items and services offered by a hospital.
  • In a display of at least 300 shoppable services in a consumer-friendly format.

The Transparency in Coverage rule materialized from President Donald Trump’s executive order on “Improving Price and Quality Transparency in American Healthcare,” with the goal to increase price transparency and allow for consumers to make health care decisions before going to the hospital, according to CMS.

The rule was finalized in November 2019 and compliance is required by Jan. 1, 2021.

Price transparency is not a new area of focus for hospitals by any means and most have some sort of price estimator tool in place; the question is how accurate the information will be based on what is required in the new rule, ACA International members say.

“The key goal in all of this is to give the patient and consumer accurate out-of-pocket prices for the services they’re receiving,” said George Buck, former president emeritus of Frost-Arnett Company and an accounts receivable management industry consultant specializing in health care.

Price Transparency—Is it Accurate?

Health care providers and their business associate partners should look at price transparency in a similar perspective as to how they would address a “least sophisticated consumer” under the Fair Debt Collection Practices Act.

For example, Buck visited the websites of the three major medical providers in a metropolitan center and priced out an arthroscopic knee surgery to repair a meniscus tear. On two of the sites, he said it was easy to find the price estimator tool, but on the third site it was not available, at least not at that time.

On the two websites with a price estimator tool, Buck said the difference in the information they asked for was significant and the results presented two different prices for the surgery.

“The thing that was missing for me, and I think consumers are not going to realize, is that in each of these cases, there is a charge for anesthesiology and there’s a charge for the surgeon. And there may be other charges such as pathology or radiology,” Buck said.

Business associates of health care providers can help train clients on consumer communications about those issues.

This was part of the goal of the Healthcare Financial Management Association (HFMA) Medical Accounts Receivable Task Force when it developed best practices for the resolution of medical accounts in 2014. The best practices were updated in 2020 and include a focus on price transparency.

According to CMS, in addition to listing the prices for items and services, hospitals must also list plain-language descriptions of the services, group them with ancillary services and provide the discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.

When the COVID-19 pandemic hit in March, it presented some challenges for hospitals as they were preparing for final compliance with the rule. Their attention shifted to caring for patients with COVID-19 and providing testing. For the last several months, price transparency pages on some hospitals’ websites listed more services related to COVID-19 than other options, they said.

The final rule equips CMS with new enforcement tools including monitoring, auditing, corrective action plans, and the ability to impose civil monetary penalties of $300 per day to ensure hospitals comply.

What’s Next? A Payer Rule

In October 2020, as part of the price transparency executive order, CMS also issued a final rule requiring similar online cost disclosures by health insurance companies.

“The rule requires group health plans and health insurance issuers in the individual and group markets to not only provide easy-to-understand personalized information on enrollee cost-sharing for healthcare services, but they must also publicly disclose the rates they actually pay health care providers for specific services,” according to CMS.

On Jan. 1, 2023, like the rule for hospitals, health plans will be required to offer an online shopping tool displaying negotiated rates between their doctor and their insurance plan, as well as an individualized estimate for out-of-pocket costs. Effective Jan. 1, 2024, online tools displaying prices for medications, medical equipment, follow-up procedures and other items or services consumers may need will be required, according to CMS.

Katy Zillmer is ACA International’s communications manager.

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