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New Rule Improves Transparency for Healthcare Costs

Under a new federal rule from the Centers for Medicare and Medicaid Services (CMS), those insured by employer health plans will now have access to significantly more health pricing data than they ever had before.

On July 1, a new federal rule by the Centers for Medicare and Medicaid Services (CMS) went into effect that will require insurers to report healthcare pricing information for covered items and services. People will be able to see the exact cost of services and procedures before receiving care. 

The new rule is an extension of the earlier Hospital Price Transparency rule which requires every hospital in the US “to provide clear, accessible pricing information” about the costs of their items and services. Health plans that don’t comply with this rule have to pay a $100 fee for every person and every day that they violate the rule.

People with diabetes face high healthcare costs with the many different medications and supplies they use, along with more frequent trips to the clinic. They face medical expenses that are 2.3 times higher than people without diabetes. Pricing transparency will hopefully allow people with diabetes to choose more affordable services and treatments.

With this “Transparency in Coverage” rule in effect, people can make more informed decisions and compare costs between specific providers. The rule currently applies to a wide range of services, such as hospitalizations, blood tests, and prescriptions; it will continue to expand over the next two years to include more services. By January 1, 2023, all plans must share the costs of the 500 most common health care items and services; by January 2024, plans must publicize the cost of every covered item and service.

In addition, all insurance plans must provide an explanation of benefits (EOB) statement, with an estimate of the out-of-pocket costs for any medical services, before those services are provided, so that people can view the out-of-pocket costs ahead of time. 

The “Transparency in Coverage” rule requires insurers to inform people about the prices they have negotiated with in-network providers for all covered items and services. Also, for out-of-network providers, the EOB will include the maximum amount an insurer will pay for a given service (the allowed amount) and the amount that is actually charged by the provider (the billed amount). 

Insurers have to update the costs on their EOBs at least once a month for accuracy. Insurers and several health tech companies are working on developing online tools so people can compare costs. In the meantime, requests for healthcare pricing information can be made directly to insurance providers.

Prior to the “Transparency in Coverage” rule taking effect, people often chose services without fully understanding how much their insurance would pay and how much they would be charged out of pocket. For example, if you needed a surgical procedure, it was difficult to find out how much you would be responsible for paying until after the procedure when you got the bill. You also were unlikely to know if you could have gotten the same procedure from a different provider for a lower price. Now, in the “Transparency in coverage” rule, you can review health care pricing information beforehand and compare the costs among different providers.

To learn more about insurance, EOBs, and how you can save money on healthcare costs, check out these resources: