Could new price transparency laws affect your benefits program?

Under new regulations put into place by the Department of Health and Human Services, the IRS, and the Employee Benefits Security Administration, group health plans and insurance carriers will have to update the way they share price information with plan participants.

This could have impacts on not just the way your department presents benefits information, but the way your employees shop for and utilize their benefits in the future. The government’s goal in mandating price transparency from hospitals and health plans is to allow consumers to make better decisions — which could shake up which plans prove most popular.

Will Price Transparency Cause Employees to Choose Different Plans?

“Price transparency puts patients in control,” then-CMS administrator Seema Verma said in the CMS press release announcing the changes in October, 2020, “and supports competition on the basis of cost and quality.” One goal of price transparency is to use competition to slow rising healthcare costs, by allowing plan participants to make more informed decisions. Will this drive employees of group healthcare plans to choose the one offering the lowest prices on healthcare services?

Maybe not. Consumer healthcare choices might not be as price-driven as you’d expect. In fact, according to a price transparency tool study published in 2016, annual healthcare spending by outpatients in the study group went up with the introduction of a price transparency tool.

The study did find that few people went out of their way to search the price transparency tool. Ultimately, the authors suggest, the best way to help employees make decisions with their coming price transparency tools will be to proactively coach employees to use it, as well as offering healthcare plans which incentivize the search for less-expensive offerings of comparable care.

What Does Price Transparency Compliance Include?

Group health plans and insurers will have two phases to implementing price transparency. The initial requirement begins on January 1, 2022:

Public disclosure of provider rates, sharing negotiated rates for covered in-network services and items, historical payments and historical allowed amounts/billed charges from out-of-network providers, and in-network negotiated costs and rates for prescription drugs. Each of these three rate sheets should be in the form of standardized, machine-readable files.

The second requirement begins on January 1, 2023:

Disclosure of cost-sharing information, to plan participants, which provides details on costs of healthcare before the participant obtains treatment. This would include cost-sharing liability, accumulated amounts, negotiated rates, out-of-network allowed amounts, any perquisites such as prior authorization, and bundled payment arrangements. The information should be provided as a self-service tool on a website, with paper responses serviced as requested within 48 hours.

This requirement will initially draw from a list of 500 services and items, but in 2024, it extends to cover all of a plan’s services and items. With a price transparency shopping tool in hand, participants will be able to see their potential healthcare costs before they engage in a treatment plan or choose a clinic setting.

The Potential Benefits of Price Transparency

With a stated goal of helping plan participants make value-conscious decisions about their healthcare, the price transparency initiative could ultimately lower group healthcare costs. Helping consumers approach healthcare with information which was previously kept behind closed doors could help relieve disparities in individual healthcare choices which can often lead to expensive or even unnecessary care. How can your company begin the process towards a successful price transparency policy in 2022 and beyond?

First, discuss the upcoming changes with your brokers and key plan contacts. Find out how your healthcare plan providers are planning to provide this information, and what your role might be.

Second, begin to work out a communications strategy to support this important update to your benefits program. Your employees will need your help to locate the new information and understand how it can help them. All of the compliance in the world won’t change behavior and improve their benefits usage if they don’t understand the program or how to use it.

Third, learn how your benefits administration platform is addressing the coming requirements. As they work on everything from updating data feeds to your internal website, your ben admin provider is one of your most important partners in this compliance roll-out. Are they moving on compliance?

Step up your benefits administration game with WBD. Contact us today to learn how we can provide customized, responsive benefits administration solutions for your company.

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