Price Transparency in Healthcare

By Sherry Baker @SherryNewsViews
September 08, 2023
Price Transparency in Healthcare

Price transparency — clear information about medical costs — is becoming a reality. Here’s a look at federal rules for price transparency in healthcare.

If you are interested in your health and medical care — and the financial cost of staying healthy or getting well — you need to know about price transparency in healthcare.

“Price transparency” means having information about the cost of healthcare services, including exactly what you are being charged for and why. The goal is to help patients identify, compare, and choose healthcare providers who offer the desired level of value they need, according to the Healthcare Financial Management Association.

It’s a complicated subject. Hospitals and other medical centers and providers typically negotiate prices with insurance companies, for example, and they have administrative costs that must be considered when a patient is charged for a service. In the past, those charges were not typically broken down on a bill or shared publicly.

That changed with rules put in place in 2021. Hospitals now have to comply with price transparency federal rules from the Centers for Medicare & Medicaid Services (CMS). Hospitals in the U.S. must make public standard charges for items and services they provide. To this point, the leading journal of health policy research, Health Affairs, has evaluated 600 acute care hospitals; 70 percent of them have achieved significant improvements, while the CMS pushes the rest to catch up.

Congress is working to extend the original rules to surgical centers, imaging services, and testing laboratories.


YOU MIGHT ALSO LIKE: Our Price Transparency in Healthcare section


What the rules mean for hospitals and patients

Price transparency in healthcare is an issue that will impact almost everyone in the U.S., sooner or later.

Under the rules, hospitals are required to share price information that most have kept somewhat under wraps, including the rates they negotiate for procedures with insurance companies and the discounted fees they offer patients who pay cash. (SEE: What Is a Cash Rate for Healthcare?)

Information for all items and services must be available publicly online. The information must also explain common billing or accounting codes the hospital uses, so that patients can compare charges, hospital to hospital, for the procedures and other medical services they need.

Hospitals must be transparent about prices for both standard charges, costs incurred by treatment in hospitals, and “shoppable services,” which are often scheduled on an out-patient basis. That includes overall charges as well as charges negotiated with insurers and the amount a hospital is willing to accept if you pay cash.

Shoppable services are tests and procedures that a patient can schedule in advance, often on an out-patient basis. For example, laboratory tests, x-rays, MRIs, and other imaging tests are shoppable services, unless they’re conducted during an emergency. In addition, shoppable services also include “bundled services,” procedures that can be scheduled ahead of time but need follow-up care or multiple tests (for example, a cesarean birth with doctor visits and tests scheduled before and after delivery).

The information must be easy to understand, easy to find, and easy to search on a prominent location online.

In addition, the minimum and maximum negotiated charges for 300 common shoppable services must be updated at least once a year and available online. The service charges must be grouped with other related fees for services the hospital usually provides when a patient needs a shoppable service.

Price transparency for health insurance

Transparency rules now extend to health insurance companies.

Companies must provide people with clear and easily accessible information about costs online, including negotiated rates with the insurers’ network providers and the typical amounts the insurers pay to out-of-network providers.

The rule mandates health insurers provide easy-to-find and understandable information about how much patients may owe in out-of-pocket charges for medical services. The rule requires health plans to provide an online tool for all members to deliver immediate, personalized access to their share of costs for all healthcare services and items their insurer covers.

With easily accessible and accurate estimates of any out-of-pocket costs an insured person must pay to meet their insurance provider’s deductible, co-pay, or co-insurance requirements, the hope is patients can avoid sometimes shocking “surprise” medical bills (balance billing) that can be financially devastating.

The rule also requires most employer-based group health plans and health insurance issuers — whether they offer individual or group coverage — to disclose price and cost-sharing information up-front to those they insure. Having that information easily available can help patients compare insurance coverage when they are deciding on the policy that’s right for them.

Price transparency is one part of healthcare

Having access to medical care you and your loved ones need is extremely important. So is understanding what you are paying for and how much your insurance covers — and why.

It’s also crucial to remember, however, the least expensive insurance policy or procedure may not be the best for everyone. Healthcare needs are individual. But the move toward transparency in healthcare pricing aims to help you understand the best available options for you and your family.


YOU MIGHT ALSO LIKE: Our Health Insurance section


September 08, 2023

Reviewed By:  

Janet O'Dell