The draft Transparency in Coverage rule was developed by the Departments of Treasury, Labor and Health and Human Services (hereinafter “the Departments’) and published on November 27, 2019. This rule was developed in response to the President’s Executive Order on Improving Price and Quality Transparency. The proposed rule applies to group plans and health insurance issuers in the individual and small group market.
The draft rule’s public comment period has been extended by 15 calendar days due to the holiday season, and comments can be submitted electronically (http://www.regulations.gov) or by mail until January 29, 2020.
Proposed Changes to Improve Transparency
As a component of the broader federal effort to target rising healthcare costs, the proposed rule would require that health insurance issuers make changes to the way information about cost sharing is disseminated to consumers. The aim of the proposed rule is to provide consumers with price and benefit information that will enable them to evaluate healthcare options and make cost-conscious decisions, reducing the sticker stock that often accompanies out of pocket healthcare costs and bills. Ultimately, this rule seeks to educate consumers about negotiated rates and pricing in advance of receiving care—allowing them to demand lower prices and increase competition amongst health insurance carriers.
These goals will be accomplished by implementing the following policy changes, detailed in the proposed rule:
- Issuers would be required to provide consumers with real-time access to cost-sharing information for all covered services in two venues:
- An online tool (created by the health plan)
- A print document (available to all enrollees upon request)
- Issuers would be required to publicly disclose the negotiated rates for in-network providers and allowed amounts for out-of-network providers.
The changes and new requirements would be applicable for plan years beginning on or after one year after the finalization of the rule. We will be following developments on this topic, particularly comments received from issuers about the feasibility of implementing the tools and public disclosures in the manner and timing the rule proscribes.
State Level Cost Transparency Efforts
In addition to putting forth these proposed policy changes, the rule summarizes some of the state efforts underway to provide consumers with more transparency in health costs. One state cited is New Hampshire and its effort to build NH HealthCost, a website that allows consumers to compare prices for services across carriers and provider entities, and well as quality across facilities. The rule cites a study published by MIT in October 2019 that found the NH health cost transparency tool had “reduced the cost of medical imaging procedures by 5% for patients and 4% for issuers over a 5-year period,” with the total out-of-pocket costs 11% lower for those medical imaging services included in the NH health transparency tool.
Additionally, the proposed rule highlights efforts underway in Kentucky to provide state employees with health cost transparency tools. Public employees were provided with a price transparency tool that allows them to shop for healthcare and share any savings realized by seeking lower-priced care. Kentucky has roughly 260,000 beneficiaries (including retirees) enrolled in the state employee health plan. A March 2019 report cited in the proposed rule found that this program saved taxpayers an estimated $13.2 million and resulted in $1.9 million in cash benefits for beneficiaries, paid out during the three-year program operation period to employees that utilized the tool and chose a low-cost provider. Of the 42% of Kentucky employees that used the tool, 57% then went on to choose a more cost-effective provider. The top five most frequently shopped services were mammograms, MRIs, coloscopy, CT Scans and Ultrasounds.
With 2.7 million public employee households across the country, the Kentucky model—implemented on a nationwide scale—could potentially target the $30 billion presently spent on insuring public employees in the United States. However, cost savings should not be the sole aim of these programs; it is important that any shared-savings public employee model provides consumers with sufficient access and information to ensure they choose high-quality, comprehensive care.
 Brown, Z. “Equilibrium Effects of Health Care Price Information.” 100 Rev. of Econ. and Stat. Volume 101, at http://www-personal.umich.edu/~zachb/zbrown_eqm_effects_price_transparency.pdf
 8 Rhoads, J. “Right to Shop for Public Employees: How Health Care Incentives are Saving Money in Kentucky.” Dartmouth Inst. for Health Pol’y and Clinical Prac. March 8, 2019, at https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf