By Christine Cooper, CEO and member; and Jack Towarnicky, member, aequum LLC.
Effective healthcare consumerism requires timely access to accurate provider and hospital fees and estimated out of pocket costs of services – before receiving care. Price transparency puts employer-sponsored benefit plans in the driver’s seat, empowering participants with information that helps them be more prepared, involved and informed in proactively making cost-conscious decisions about their health care options and utilization.
This empowerment is especially important in today’s economy. Many workers are “financially fragile” and have not set aside savings specifically earmarked for out-of-pocket medical expenses, including regular cost sharing – deductibles, copayments, coinsurance. As healthcare continues to see rising cost inflation, price transparency is more in the spotlight, triggering a (re)introduction of healthcare consumer strategies. By taking advantage of price transparency, making comparative cost and quality information available, and capitalizing on cost containment opportunities, plan sponsors and their participants can fully optimize the value of their health benefits plan.
Taking Advantage of Price Transparency
There is complexity in healthcare due to a lack of price transparency. This is especially prevalent in medical billing. Health policy changes have been enacted to make cost information in the healthcare industry more easily available to consumers with the expectation that price transparency will provide better metrics for healthcare spending. The appeal of price transparency is based on the view that increased consumer choice and less information asymmetry will aid in achieving higher-quality, lower-cost health care.
Legislation is now in effect to better enable Americans with knowing the true cost of provider health services before receiving care and submitting a claim. Federal law now supports employer-sponsored health plan access to price transparency with added levels of protection and fairness. Executive Order 13877—Improving Price and Quality Transparency in American Healthcare to Put Patients First, significantly expanded the requirements for hospital and other medical provider price transparency.
In addition, the Centers for Medicare and Medicaid Services (CMS) issued mandates that hospitals operating in the United States provide clear, accessible pricing information online about the items and services they provide. Under CMS guidance and final rules, hospitals are required to make pricing information available in machine-readable format, as well as provide a list of shoppable services that a patient can schedule in advance. This is intended to make information accurate and easier to access for health service consumers to compare prices, estimate the cost of care, and confirm market value.
For employer-sponsored health plans price transparency laws are an opportunity to for participants in an employer-sponsored health plan to better understand the information incorporated in the explanation of benefits and take a more cost-conscious, consumer role when shopping for healthcare services. This empowerment could potentially transform health care coverage by putting the economic purchasing power and decision-making in the participants own hands and generate the greatest savings for plan sponsors and members. Informed choices are part of being financially prepared. Well informed choices render savings.
Although federal and state policymakers are focusing on improving transparency, price variation and complexity remains a risk. For this reason, many employer-sponsored health plans are adopting reference-based pricing (RBP). Under RBP, the employer (supported by a third-party administrator) pays a set a price for each health care service instead of negotiating prices with providers. RBP strategy is designed to moderate skyrocketing costs of traditional hospital reimbursement systems and bases insurance payouts on a multiple of Medicare pricing to establish a common payment ceiling, achieving price transparency through consistent use across health networks.
The Value of Tech-Driven Medical Billing Support
Plan sponsors and administrators recognize there is considerable room for improvement to protect participants and better manage health care costs. Medical billing support services take on this challenge by applying best practices in information technology to benefit its partners, clients and their plan members—and help level the playing field.
Technology in helping realize the full promise of price transparency through powerful software and online analytic tools that provide data insights and intelligence – allowing fee comparisons that identity fair and reasonable prices. Real-time price information of the true cost of care enables engaged plan participants to make the most advantageous cost-benefit decisions. A tech-driven medical billing partner offers additional value by protecting plan members against aggressive out-of-network charges, recovering excessive provider payments and shielding participants from unfair debt collection practices.
Strategic action can now be taken to ensure that employer-sponsored plans incorporate the most effective strategies for the “health and wealth” of their participants. In addition to harnessing price transparency, these strategies include effectively designed acquisition cost-based pharmacy pricing, HSA-capable coverage, reference-based pricing, adequate participant protections against balance billing, and participant advocacy and litigation support.