After decades of attempts to transform the healthcare system into a true market—one in which forces like competition between providers based on quality and pricing can bring prices down, it is finally happening. The federal government’s new Transparency in Coverage Rule based on provisions of the Affordable Care Act means that 212 million consumers will be given ready access to the prices of virtually every test and procedure so they can decide for themselves whether to spend, say, $800 for an MRI of the lower back or $6,000. And, believe me, the prices for an MRI of exactly the same quality can be that dramatically different, within a 10 miles radius—or less.
This massive and welcome sea change in health care is unfolding right now, and health providers, insurers and employers will be scrambling to keep up. Why? Because initial compliance begins on January 1, 2022. And as of January 1, 2023, employers can be fined $100 per insured individual per day for not arming them with access to comprehensive, transparent, easily accessible competitive pricing options. This should be a welcome mandate for companies, however, as it promises to dramatically reduce their health care expenditures, thus positively impacting their bottom line.
What’s more, thanks to the No Surprises Act, passed by Congress in December, 2020 and taking effect January 1, 2022, medical providers who schedule services at least three-days in advance have to inform consumers of their out-of-pocket responsibility for each and every service they plan to provide—before they provide it. If they fail to do so, they will be prohibited by law from billing any more for those services than what the consumer would have paid as a copay or in-network deductible under his or her insurance plan. That’s regardless of whether the service is “covered” by insurance or not. In just over 7 months, these will be the new, patient-friendly rules.
The impact of these events cannot be overstated. This time next year, a woman scheduling a mammogram or a lab test will have to be advised of the costs of the services being rendered to her and agree to them. Otherwise, she need not pay a penny more than her health insurance co-pay or in-network deductible. Period. No more surprises about this or that service “not being covered” and costing an entirely unexpected and eye-popping sum.
Moreover, in an outstanding example of the beauty of modern technology, the prices of every lab study, every EKG, every MRI and every other test or procedure available in any given area or region will, by law, be made available to consumers via, say, apps on their mobile devices so they can comparison shop and decide where they are most comfortable being tested or treated.
In the past—and it will soon seem like the distant past—many consumers didn’t think much about pricing. They weren’t paying for it, so why bother? But that’s over. Many consumers have high deductible health plans and just aren’t going to pay $5,000 for something that they can get nearby for $400. Think about the successful, user-friendly GoodRx program that allows consumers to compare prescription drug prices at every retailer within a radius they determine, with a few clicks of a mouse or taps on the screen of their mobile device. As anyone who has used Good Rx or any similar real-time drug price comparison tools can attest, a prescription priced at $100 at pharmacy A can often be found for half or less of that cost at pharmacy B just a mile down the road. Transparency in Coverage mandates the same model, with a much broader menu.
After so many years of stagnation in the healthcare marketplace and increasing economic disempowerment of patients, healthcare consumers are about to be armed with the tools they need to stay healthy and autonomous while simultaneously transforming the health care system and patient experience in the United States. It’s about time.
Mark Galvin is the Founder & CEO of TALON and was instrumental in the federal government issuing the Transparency in Coverage Rule.