Federally-mandated data disclosure could affect future prices or even how employers contract for health care. Many will see for the first time how well their insurers are doing compared to others.
The new rules are far broader than those that went into effect last year, requiring hospitals to publish their negotiated prices for the public to see. Insurers must now publish the amounts paid for “every doctor in the network, every hospital, every surgery center, every medical facility,” said Jeffrey Laibach, a partner at consulting firm Guidehouse.
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“When you start doing the math, you’re talking trillions of records,” he said. The fines the federal government can impose for noncompliance are also more severe than the penalties hospitals face.
Federal officials learned from the hospital’s experience and gave insurers more guidance on what to expect, Laibach said. Insurers or self-insured employers can be fined up to $100 per day per violation, for each affected enrollee, if they fail to provide the data.
“Get out your calculator: All of a sudden you’re in the millions pretty quickly,” Laibach said.
Serious consumers, especially those with high-deductible health plans, may want to dig right in and use the data to try to compare what they’ll have to pay at different hospitals, clinics or doctor’s offices for specific services.
But the sheer size of any database may mean that most people “will find it very difficult to use the data in a nuanced way,” said Catherine Byker, dean of the University of Chicago’s Harris School of Public Policy.
At least at first.
Entrepreneurs are expected to quickly translate the information into more user-friendly formats so that it can be incorporated into new or existing services that assess patient costs. And starting Jan. 1, the rules require insurers to provide online tools that will help people get a preliminary cost estimate for about 500 so-called “marketplace” services, meaning medical care they can plan ahead of time.
Once those things happen, “at least you’ll have the options in front of you,” said Chris Severn, CEO of Turquoise Health, an online company that publishes price information provided under hospital rules, although many hospitals are still to comply.
With the addition of insurers’ data, sites like his will be able to drill down into cost variations from place to place or between insurers.
“If you’re going to get an X-ray, you’ll be able to see that you can get it done for $250 at this hospital, $75 at the imaging center down the road, or your specialist can do it in the office for $25,” he said. .
Everyone will know everyone else’s work: for example, how much insurers Aetna and Humana pay the same knee replacement surgery center.
The requirements stem from the Affordable Care Act of 2019 and an executive order from then-President Donald Trump.
“These plans are supposed to be acting on behalf of employers in negotiating good rates, and the few insights we have about that show that that hasn’t happened,” said Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, associated with employers that offer work-based health benefits to workers. “I believe the dynamic will change.”
Other observers are more cautious.
“Maybe at best it will reduce the big price gap there,” said Zach Cooper, director of health policy at Yale University’s Institute for Social and Policy Studies. “But it won’t spark a consumer revolution.”
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Yet perhaps the biggest value of the data released in July is that it sheds light on how successful insurers have been at negotiating prices. It comes after research showed huge disparities in what is paid for healthcare. A recent study by the Rand Corp. for example, it shows that employers who offer work-based insurance plans pay an average of 224% more than Medicare for the same services.
Tens of thousands of employers buying insurance coverage for their workers will get this more complete pricing picture — and they may not like what they see.
“What we learn from hospital data is that insurers are really bad at negotiating,” said Gerard Anderson, a professor in the department of health policy at the Johns Hopkins Bloomberg School of Public Health, citing research that found that negotiated rates for hospital care can be higher than what medical facilities accept from patients who do not use insurance and pay cash.
That could add to the frustration Mitchell and others say employers have with the current health insurance system. More may try to contract with providers directly, using only insurance companies to process claims.
Other employers can bring their insurers back to the negotiating table.
“For the first time, an employer will be able to go to an insurance company and say, ‘You didn’t negotiate a good enough deal, and we know that because we see that same provider negotiated a better deal with another company,'” said James Gelfand, president of the ERISA Industry Committee, a trade group of self-insured employers.
If that happens, he added, “patients will be able to save money.”
However, this is not necessarily a given.
Because this kind of public release of price data has not been widely tried in health care before, how it will affect future costs remains uncertain. If insurers are pushed back to the negotiating table or providers see where they stand compared to their peers, prices could drop. However, some providers could raise their prices if they see that they are charging less than their peers.
“Downward pressure may not be a given,” said Kelly Schultz, vice president of trade policy for AHIP, the industry’s trade lobby.
The University of Chicago’s Byker said that even after the data is out, rates will continue to be heavily influenced by local conditions, such as the size of the insurer or employer — providers often give larger discounts, for example, to insurers or self-insured employers who can send them the most patients. The number of hospitals in an area also matters—if an area has only one, for example, that usually means the facility can charge higher rates.
Another unknown: Will insurers meet the deadline and provide usable data?
AHIP’s Schultz said the industry has moved on, in part because the original deadline was extended by six months. She expects insurers to fare better than the hospital industry. “We’ve seen a lot of hospitals just decide not to publish files or make them hard to find,” she said.
So far, more than 300 non-compliant hospitals have received warning letters from the government. But they can face fines of $300 a day for non-compliance, which is less than what insurers could potentially receive, although the federal government recently raised the price to $5,500 a day for the largest facilities.
Even after the price data is public, “I don’t think things will change overnight,” Laibach said. “Patients will still make care decisions based on their doctors and referrals, many reasons other than price.”
Julie Appleby writes for Kaiser Health News, a national nonprofit newsroom that produces in-depth journalism on health issues.
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