What is Price Transparency? A consumer’s guide to healthcare costs

What is price transparency in healthcare?

Price transparency requires hospitals and insurers to provide clear, easy-to-find information so consumers understand how much procedures, tests, supplies, and related expenses will cost before receiving care. Cost information has to be provided free of charge to the public, and it has to reflect real-time rates.

The regulations for healthcare transparency were created by:

• provisions of the Affordable Care Act, which requires hospitals to make costs public;
• the Transparency in Coverage Act, which introduces new rules for health insurance plans;
• and the No Surprises Act, which introduces new rules for billing.

Together, they are intended to help Americans know how much they will pay for services and enable them to compare costs and shop around. Ultimately, advocates hope cost transparency in healthcare will empower people to demand more affordable care.

What are the new healthcare rules that relate to price transparency?

Several new rules will help make it easier to understand what you pay for health care services. The first, the Hospital Price Transparency Rule, requires hospitals to make it easy for patients to see what different services cost. Here are the other rules and a timeline of how they will be implemented:

2021

The Hospital Price Transparency Rule goes into effect January 1, requiring hospital prices to be made public.

2022

The Health Plan Price Transparency Rule goes into effect July 1. Phase 1 requires prices to be made public, including in-network rates, out-of-network allowed amounts, and prescription drug prices.

The No Surprises Act interim final rule goes into effect in 2022 on a rolling basis. It bans:

• surprise billing for emergency services
• high out-of-network cost-sharing for emergency and non-emergency services
• out-of-network charges for ancillary care at in-network facilities
• out-of-network charges without advance notice; notice must be given in plain language and patient consent is required

2023

Phase 2 of the Health Plan Price Transparency Rule requires plans to offer shopping or price comparison platforms for health care services, with prices for the 500 most common services and items, effective January 1.

2024

Phase 3 of the Health Plan Price Transparency Rule requires plans to expand price comparison platforms for health care services with the prices for all services and items, effective January 1.

According to the Hospital Price Transparency Rule, hospital prices for services that patients can schedule in advance should be available to the public in several ways, including machine-readable files (such as .csv files) and online in a user-friendly format. All the service descriptions should use plain language, be clear, and be easy to find. And, services that are usually provided together—ancillary services—should be grouped to give patients a better idea of their out-of-pocket costs.

For example, suppose you plan to have surgery. Federal law requires the hospital to show prices for the procedure along with the anesthesia, imaging, labs, supplies, facility fees, and fees for hospital-employed professionals together. The goal is to help you avoid a surprise bill for a service you might not otherwise have known was a part of having the procedure, and to help you clearly see what’s being billed at in-network and out-of-network rates.

Hospitals that don’t comply with healthcare transparency regulations face daily fines.

What if my hospital doesn’t have a list of their charges available, even though the Hospital Price Transparency Rule is in effect?

Even though the federal law requires hospitals to provide easy access to their prices as of January 1, 2021, compliance has been slow. As of July 2021, only six percent of U.S. hospitals made their prices publicly available, according to a report by Patient Rights Advocate, a non-profit advocacy organization. By September 2021, the U.S. Centers for Medicare and Medicaid Sevices (CMS) had issued over 256 warnings to hospitals, according to Bloomberg Law.

The Hospital Price Transparency rule initially set fines of $300 per day for failing to provide pricing information, and many hospitals simply decided to pay the fine. So CMS proposed more significant penalties (which, as of November 2021, have yet to be put in place):

• Hospitals with 30 beds or fewer would pay $300 a day for failing to comply;
• Hospitals with more than 30 beds pay $10 per bed per day, up to a daily maximum of $5,500;
• The proposed fine hike sets the minimum penalty for a year of failing to comply at $109,500 per hospital and the maximum at $2,007,500.

Regardless of the number of hospitals that aren’t yet making prices public, you are still entitled to price transparency. Ask. Only one in ten Americans know they should be able to see hospital prices before receiving care, according to a Kaiser Family Foundation Health Tracking Poll. If you can’t find your hospital’s rates online and they can’t provide that information when you ask, you can file a complaint at cms.gov.

What if I have health insurance? Should I care about this?

Suppose you get care from a provider or facility that you don’t realize is not in your health insurance plan’s network. Or maybe you have a high-deductible plan with coverage terms that aren’t clear. You’ll likely get a surprise bill from your provider holding you responsible for paying what your health insurance plan didn’t cover at out-of-network rates. Often, according to an investigative report from the Wall Street Journal, the amount the patient is responsible for is far above the negotiated in-network rates.

You can hope to see fewer surprise bills in the next few years. Other provisions of the healthcare transparency law will make it easier for you to know what your insurance will cover and what you’ll have to pay. In January 2022, insurance plans must provide publicly available machine-readable lists (again, such as .csv files). These lists must include their negotiated in-network rates, out-of-network allowed amounts (which is the cost that your insurance company has determined as reasonable for any service), and prescription drug prices.

In January 2023, health insurance plans have to go a step further and provide online shopping platforms that allow consumers to look up prices for 500 of the most popular medical services and procedures. You’ll be able to see the negotiated in-network rates between providers and your health insurance plan and a personalized estimate of your out-of-pocket cost. In 2024, the law requires healthcare shopping platforms to include prices for remaining services, prescription drugs, medical equipment, and more. With these tools, advocates believe you’ll have information to make better decisions about your health care and managing your finances.

What if I don’t have health insurance? What should I know or ask?

According to the Wall Street Journal report, hospitals are charging uninsured patients more than insured patients. Ask for their prices before you get service. In addition to their costs for services, hospitals have to show the discounted rates they are willing to accept from patients paying cash.

A significant concern for uninsured people is the cost of emergency services. Provisions of the No Surprises Act, which goes into effect in 2022, aim to help limit what you pay for emergency care. Providers must perform those services to you at in-network rates, no matter where you receive care, and without prior authorization. The law also bans out-of-network charges without giving you advance notice and getting your consent.

If or when you decide to get health insurance, healthcare transparency will make it easier to shop for plans. You’ll likely be able to see more details about what insurers pay for different services.

How do I find out the cost of care from my provider?

Hospitals aren’t required to show you rates for health professionals they don’t employ. But you still have some ways to learn more about what health care will cost before you receive it, whether or not you have insurance. 

If you’re insured, start with calling your insurance company or looking online to find what they cover and how much they pay for the services you need. Then ask the provider what they bill for a service. You can use those two amounts to get an estimate of what your out-of-pocket costs will be. Here’s an example:

• Your provider bills $500 for a service
• Your insurance company pays $300 or 60%
• The difference (your out-of-pocket cost) is $200 

Finally, shop around. Solv is committed to making it easy for you to see the self-pay cost of common services before you book so you can find providers who fit your budget before you make an appointment.