Healthcare price transparency is heading for a more consequential phase

Key developments loom for healthcare price transparency both legislatively and in the private sector, according to insights from a recent congressional hearing.

Sen. Bill Cassidy (R-La.), who is a physician and an influential healthcare policymaker in Congress, conducted a field hearing May 5 with stakeholders in his home state to examine the issue of healthcare affordability. A chief topic was how to improve price transparency.

Since hospital transparency mandates took effect in 2021, the Biden and Trump administrations have incrementally expanded the requirements. At this month’s hearing, Cassidy, the chair of the Senate Health, Education, Labor and Pensions (HELP) Committee, suggested recent policy and technological advances have set the stage for price transparency to become embedded in healthcare.

“The price transparency, by itself, is not helpful,” Cassidy said. “The price transparency with the tools to use it is game changing, and you don’t have to be uber sophisticated. You can be like my wife and me — we know how to use an app. That’s the sort of thing that will get you, theoretically, the best value.”

Past and prospective legislation’s impact on price transparency

An early step toward a more transparent system in recent years was passage of the No Surprises Act, said Cassidy.

The 2020 legislation ensured patients don’t get billed at higher rates when an out-of-network provider furnishes services at an in-network facility. For some nonemergency services, patients must receive advance notice and give consent before being billed at out-of-network rates.

A next phase is seen in pending legislation called the Patients Deserve Price Tags Act, which would make transparency requirements more exacting.

Specifically, hospitals and other healthcare venues (e.g., labs, imaging centers, ambulatory surgical centers) no longer could meet transparency requirements by posting price estimator tools, which are permissible under the current regulations.

Instead, providers would need to show exact dollar amounts for cash prices and insurance-negotiated rates. Patients would receive clear, itemized medical billing or flat-rate bundled pricing options before procedures. Persistent or willful violations by hospitals could result in penalties of as much as $10 million.

The bill has bipartisan support in both the House and Senate, although that does not always translate to actual momentum in Congress.

Among the tools being developed to leverage greater levels of transparency are AI engines “scraping all these EOBs [explanations of benefits] that are public to find out if you go here for this procedure, to see this doctor, this is how much you get billed,’” Cassidy said.

“And so already you can say to your phone, ‘Where is the cheapest place to get a routine visit for my daughter’s earache?’ That’s already before we’ve even begun to require the full publication of this information.”

Consumer-directed subsidies could accompany greater price transparency

The opportunity for consumers to capitalize on increased transparency is one reason Cassidy continues to push for an overhaul of the Affordable Care Act (ACA) subsidy structure. During the debate on maintaining the ACA’s enhanced subsidies before they expired this year, Cassidy was among GOP leaders who proposed shifting funds to a system of health savings accounts (HSAs).

Even though the enhanced subsidies have expired, he still hopes to move federal dollars to consumers, allowing them to make healthcare choices based on what they deem to be the best value: “money in your pocket, for your out-of-pocket [costs], coupled with tools on your phone to give you a sense of where you can get a better deal,” he said.

Federal law does not allow HSA funds to go toward paying premiums. Cassidy’s thinking is that the funds would allow families to feel more comfortable about buying a higher-deductible policy that, in turn, has a relatively low premium.

Criticism about the concept includes the concern that the dollar amounts being discussed (e.g., $2,000 per year) would fall well short of supporting households that need significant amounts of healthcare. For example, the out-of-pocket maximum in the ACA marketplaces this year is $10,600 per individual and $21,200 per family.

Employer access to claims data could increase payer scrutiny

Transparency will increasingly resonate in the employer space as well. The Price Tags Act includes a provision barring insurers from using gag clauses, thereby empowering employers to audit pharmacy and medical claims data.

There have been documented circumstances where insurers overcharge employers for out-of-network care, Cassidy said.

“A patient comes to a doctor who’s out of network, has emergency surgery, and the doctor charges the insurance company $100,000,” he said. “The insurance company negotiates with the doctor and pays them $30,000 but bills the employer $60,000 and tells the employer, ‘We saved you $70,000.’ No, they did not, because they both knew the final price was going to be closer to 30, but they billed the employer that much more.”

Beyond the obvious affordability concerns, the issue has implications for healthcare access if it gives insurers incentives to keep providers out-of-network, Cassidy said.

AI tools could make pricing more precise

That type of opacity is spurring tech companies to engineer solutions.

“I can tell you there’s going to be an industry that is going to aggregate this information, bring it to the employer and say, ‘Wait a second, for your out of network charges, this insurer is padding their cost. This one is not, so you may think that you’re getting a better deal here, but on your out-of-network, you’re paying far more,’” Cassidy said.

A potential boon for providers in advanced transparency tools is the opportunity to slash administrative friction. Mechanisms such as Apple Pay would be embedded in the tools.

“[The patient] would immediately pay,” Cassidy said. “Instead of some of that money going to processing your payment, it’s just going to be deducted from your account, and so [providers] get greater efficiency on the account as well.

“If they pay you $100, instead of $15 of that being for your office overhead — or probably more like $35 — now it would be like $98 will be going to support your practice, and only $2 for overhead.”