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Transparency in Coverage Rule Great For Doctors, Too

Transparency in Coverage Rule

A Movement Towards Pricing Transparency

There is one thing Trump and Biden seem to agree on, a mission both their Administrations committed to, increasing healthcare price transparency. Since October 2020, the U.S. Department of Health and Human Services (HHS) has been implementing a series of rules through its “Transparency In Coverage Rule” to compel insurance companies and healthcare providers to share pricing with the public. This allows patients to shop around for healthcare and healthcare providers to better negotiate with insurers.

Beginning July 1, 2022, the Transparency in Coverage Rule issued by HHS went into effect. This rule initiated a two-year multi-step program committed to removing the curtain concealing healthcare prices. Ultimately, insurance companies will be held responsible for disclosing the prices they negotiate with providers, making their pricing and coverage information publicly available in machine-readable files through JSON—a lightweight manner to represent complex data—and updating that data monthly.

On January 1, 2023, the rule expanded by requiring that 500 common CPT codes, such as office visits and MRIs, be disclosed. The final stage will go into effect on January 1, 2024, expanding to all CPT codes, therefore, fully illuminating pricing information by compelling insurance companies to present all healthcare payments with complete transparency to the public.

Yes, this transparency in coverage rule is a big deal.

Until these rules have fully taken effect, for years, insurance companies and healthcare providers will have negotiated healthcare prices behind closed doors, away from the public eye. Consequently, the average citizen has not known what to expect in the bill they receive per office visit. Often patients are even faced with surprise medical bills, such as when they visit an in-network hospital employing out-of-network physicians unaffiliated with their insurance.     

But what are the consequences of such pricing opacity?

Though the U.S. spends more on healthcare than any other of the 38 countries comprising the Organisation for Economic Co-operation and Development, the U.S. also has among the lowest rates of patient visits and the highest rates of avoidable deaths, many of which occur because of untimely healthcare interventions. Could such shocking statistics arise at least partially from U.S. patients unable to determine how much a doctor visit will cost them? That is to say, has a lack of pricing transparency caused patients to neglect to visit their doctors or to be lost to follow-up? 

Effects On Our Patients

As the HHS implements the Transparency in Coverage Rule, pricing data will be made increasingly available to the public. To further promote transparency, HHS encourages third parties to create user-friendly applications to help consumers better understand the costs associated with their healthcare. For the first time, patients can shop for their healthcare, comparing providers and procedures to create the package that best fits their financial needs. Patients will now be able to test the market for MRIs and hip replacements just as they would shopping for a new refrigerator or a pair of shoes.

Effects On Us – The Healthcare Providers

Because patients can shop around, doctors across the states may need to adjust their prices to stay competitive. This pressure could create a new sense of competition among healthcare providers as medicine becomes further commercialized. Similarly, since more data means more patients can easily compare physicians, doctors could face increased scrutiny for their performance.

On the other hand, the requirement for health insurers to make their pricing and coverage information publicly available potentially can help doctors negotiate more favorable deals with their payors and, ultimately, boost revenue. Doctors can use such public information to compare the rates and policies different payors offer. This change is especially important for independent and small practices that, in the past, may not have had the resources to negotiate as effectively as larger healthcare organizations.

The new transparency may also help doctors and healthcare organizations negotiate more favorable reimbursement rates. For example, if a machine-readable file shows that for certain procedures, a particular payor has high rates of denials, doctors can negotiate more favorable reimbursement rates or work with the payor to improve policies to reduce denials.

Finally, the new transparency may also promote competition among insurance providers. Now doctors and healthcare organizations can compare pricing and coverage options across different payors. Like their patients, doctors can shop around, too.