By Christine Cooper, CEO and Member; and Jack Towarnicky, member, honest LLC.
Effective healthcare consumerism requires timely access to accurate reimbursements from health care providers and hospital services and estimated out-of-pocket costs of services – before care is received. Price transparency puts employer-sponsored benefit plans in the driver’s seat, providing participants with information that helps them be better prepared, engaged and informed in proactively making cost-conscious decisions about their health care options and use.
This empowerment is especially important in today’s economy. Many employees are “financially vulnerable” and have not set aside savings specifically earmarked for out-of-pocket medical expenses, including regular cost-sharing – deductible, co-payment, coinsurance. As healthcare continues to see rising cost inflation, price transparency has become more in the spotlight, triggering a (re)introduction of consumer strategies into healthcare. By leveraging price transparency, providing comparative cost and quality information, and taking advantage of cost containment opportunities, sponsors and their participants can fully optimize the value of their health benefits plan.
Benefit from price transparency
Healthcare is complex due to a lack of price transparency. This is especially common with medical billing. Health policy changes have been made to make health care cost information more readily available to consumers, with the expectation that price transparency will provide better measures of health care spending. The appeal of price transparency is based on the belief that greater consumer choice and less information asymmetry will help to get higher quality health care at a lower cost.
Legislation is now in place to better enable Americans to know the true costs of health services from providers before receiving care and filing a claim. Federal law now supports employer-sponsored access to price transparency with additional levels of protection and fairness. Executive Order 13877—Improving price and quality transparency in US healthcare to put patients first, significantly expanded the price transparency requirements of hospitals and other healthcare providers.
In addition, the Centers for Medicare and Medicaid Services (CMS) have mandated hospitals operating in the United States to provide clear, accessible pricing information online about the items and services they provide. CMS guidelines and final rules require hospitals to provide pricing information in a machine-readable format, as well as a list of services that a patient can schedule in advance. This is intended to make information accurate and accessible to healthcare consumers to compare prices, estimate the cost of care and confirm market value.
For employer-sponsored health plans, price transparency laws are an opportunity for employer-sponsored health plan participants to better understand the information in the benefits explanation and take a more cost-conscious, consumer role when shopping for health services. This empowerment could potentially transform health care coverage by putting economic purchasing power and decision-making in the hands of participants and generating the greatest savings for sponsors and plan members. Informed choices are part of being financially prepared. Well-informed choices yield savings.
While federal and state policymakers focus on improving transparency, price variation and complexity remain a risk. For this reason, many employer-sponsored health plans use reference-based pricing (RBP). Under RBP, the employer (supported by a third-party administrator) pays a fixed price for each health care service instead of negotiating prices with providers. The RBP strategy is designed to moderate the skyrocketing costs of traditional hospital reimbursement systems and base insurance payouts on multiples of Medicare prices to establish a common payment cap, achieving price transparency through consistent use across health networks.
The value of tech-driven medical billing support
Plan sponsors and administrators recognize that there is much room for improvement to protect participants and better manage health care costs. Medical billing support services address this challenge by applying information technology best practices to the benefit of its partners, customers and their policyholders, and to level the playing field.
Technology that helps deliver on the full promise of price transparency through powerful software and online analytics tools that provide data insights and information – enabling comparison of fees that identify fair and reasonable prices. Real-time pricing information about the actual costs of healthcare enables concerned plan participants to make the most beneficial cost-benefit decisions. A technology-driven medical billing partner provides additional value by protecting subscription members from aggressive out-of-network charges, recovering excessive payments from providers, and protecting participants from unfair collection practices.
Strategic action can now be taken to ensure that employer-sponsored plans contain the most effective strategies for the “health and wealth” of their participants. In addition to leveraging price transparency, these strategies effectively designed include acquisition cost-based pharmacy pricing, HSA-compliant coverage, reference-based pricing, adequate participant protections from balance billing, advocacy, and litigation support.