Since January 1, 2023, the Transparency in Coverage Rule required health insurance providers and health insurers to provide price information to participants in a publicly accessible place. This means consumers should, in theory, be able to go to any payor's website and see what different doctors, hospitals, and health systems are charging for the same services. The law was meant to allow consumers the ability to shop for healthcare services based on cost and, thus, hopefully lower their healthcare expenditures.
What we have observed is a contrast to what was intended to happen. Insurance payors have been slow to follow the rule, with some plans that outright do not comply with the rule. Some health plans published a “data dump” of multiple terabytes of information that was impossible for consumers to actually use.
Price transparency is supposed to lower costs. If consumers knew that you could get a knee replacement from a qualified surgeon at a surgery center versus the hospital for tens of thousands of dollars less, that would likely be the driving factor as to where the procedure is performed. In fact, outpatient joint replacements performed in an ASC cost 40% less than those performed in a hospital, and other procedures, such as rotator cuff repair and knee arthroscopy, cost over 50% less (Orthopedics Review).
The cost can also vary widely according to your health plan. A Blue Cross Blue Shield health plan could have negotiated a rate that's much lower than United Healthcare and, thus, employer groups and consumers could shop more appropriately.
So, why don't insurance companies want the information public to actually drive down costs? Interestingly, health plans have been able to see what their payor competitors are reimbursing through what is called coordination of benefits for years. With coordination of benefits, payors can view allowable rates for secondary insurances (often their competitors) and have created their own databases.
The answer is not necessarily that payors are concerned about consumers shopping around for healthcare services but rather that the rules would show the healthcare community that corporate-owned health systems and hospitals have been enjoying rates that are often 200%-500% greater than small to medium-sized physician groups. These hospitals and health systems are often financially tied to many of these health plans. Meaningful price transparency would dismantle these institutions and the supra normal profits they enjoy on the backs of employer groups and taxpayers.
Payors have been sacrificing physician groups and pointing the finger at physicians as the scapegoat. It's much easier to create that narrative rather than actually focus the blame on corporate practice of medicine at these larger health institutions.
What can be done? It's uncertain if the Center for Medicare and Medicaid Services (CMS) will start enforcing the new rules more forcefully. To date, no health plan has been fined for failing to be in compliance. In the meantime, physician groups need to stand up against payors and negotiate their reimbursement rates. In theory, the health plans should be shifting reimbursement from the hospital to these physician groups. This would result in a more robust and competitive private physician landscape. This would help to avoid the mass entrance of private equity in private practice. Physician groups would be able to remain independent from hospital systems and private equity where it has been proven that clinical outcomes and patient safety are superior.
As an organization that negotiates for these groups, we understand the impact that this information has on healthcare and how it could actually control costs while leveling the playing field for physician groups. It could save taxpayers substantially and improve clinical outcomes. For patient-reported outcomes, smaller practices were consistently found to be associated with better access to care and better patient satisfaction.
Nathaniel Arana is a nationally recognized healthcare business consultant with NGA Healthcare who works with practices to negotiate reimbursement rates and helps physicians remain autonomous.
