Two federal rules, both intended to deliver greater price transparency to patients anticipating healthcare procedures, are set to go into effect January 1, 2021. While healthcare entities from the American Hospital Association (AHA) to the Association for Community Affiliated Plans have objected to these specific proposed rules—including a failed legal challenge by the AHA and other hospital groups—most healthcare stakeholders acknowledge that the industry at large owes patients more transparency. Indeed, massive surveys have demonstrated that when patients know in advance what to expect from their medical bills, they are more satisfied with their care as a whole.
Greater patient satisfaction is of course not the only story here. The widespread adoption of high deductible health plans has uncovered the glaring affordability gap in healthcare: research suggests that 38% of Americans say they are worried about being able to afford surprise medical bills and 50% of U.S. adults say they or a family member put off a healthcare visit in the past year because of cost. The affordability gap has only widened since COVID-19, with 13 million Americans having lost their employee-sponsored insurance following the pandemic.
In turn, patient liability has posed a major financial issue for hospitals. With 30% of the average healthcare bill owed by patients themselves—and nearly 70% of Americans with less than $1000 in savings before the pandemic—patients have found themselves unable to pay their medical bills in full. Hospitals have thus had to find ways to collect directly from patients who lack the capacity to pay.
What patients’ experience shows, however, may be promising in the current context. Patients who know upfront what they will owe for a medical procedure, and who have a reasonable payment plan beforehand, are more likely to pay their bills.
The call for greater transparency by patients is, at its core, a call for better affordability. In other words, while these new transparency rules will absolutely demand massive time and effort from both providers and payers, they may end up addressing some of healthcare’s other challenges like path to payment and affordability.
The rules 1. The final rule “Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates. Price Transparency Requirements for Hospitals to Make Standard Charges Public” requires hospitals and ASCs to make both their chargemaster prices and the prices they’ve negotiated with payers publicly available online. The rule applies to the prices of 300 “shoppable” healthcare services—everything from a basic metabolic panel to a hip replacement—which the provider organizations must display in a consumer-friendly manner.
