The Trump administration on Thursday finalized a rule that will bolster price transparency requirements for health insurers, including a mandate that some health plans make public the rates negotiated with providers included in the health plan's network.

Background

HHS proposed the new rule in November 2019, in accordance with an executive order President Trump signed last year that directed the department to increase price transparency in health care. At the time, HHS and CMS released the proposed rule for insurers along with a separate final rule that requires all hospitals operating in the United States to publish the negotiated rates they reach with insurers for health care services, among other things.

HHS finalizes price transparency regulations for insurers

CMS in a fact sheet said the newly finalized rule, which HHS released in conjunction with the Department of Labor and the Department of the Treasury, will require most group health plans—including self-insured health plans—and health insurance issuers to disclose cost-sharing and price information to enrollees, beneficiaries, and other participants.

Specifically, the final rule will require most non-grandfathered group health plans and health insurance issuers offering non-grandfathered health plans in both the individual and group markets to make personalized out-of-pocket cost information available to all beneficiaries, enrollees and authorized representatives, and other participants. Affected entities will have to make the information available for all covered health care services and items, including prescription drugs, via "an internet-based self-service tool and in paper form upon request," CMS said.

CMS said the requirement will allow most consumers "[f]or the first time … to get estimates of their cost-sharing liability for health care items and services from different providers in real time, allowing them to both understand how costs for covered health care items and services are determined by their plan, and also shop and compare health care costs before receiving care."

The final rule also will require most non-grandfathered group health plans and health insurance issuers offering non-grandfathered health plans in both the individual and group markets to make public:

• The rates negotiated with providers that are included in the health plan's network;
• At least 20 entries showing the health plan's "historical payments to, and billed charges from, out-of-network providers"; and
• The health plan's "in-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level."

CMS said affected entities will have to make the data available to all public, including "stakeholders such as consumers, researchers, employers, and third-party developers" via three separate, machine-readable documents that adhere to a standardized format and are updated monthly.

CMS said the agency under the final rule will allow health plan issuers "to take credit for … 'shared savings'" generated by empowering consumers to shop for health care services "in their medical loss ratio (MLR) calculations." According to CMS, affected entities under the final rule will "not be required to pay MLR rebates based on a plan design that would provide a benefit to consumers that is not currently captured in any existing MLR revenue or expense category."

Most of the provisions included in the final rule are scheduled take effect for plan years that begin on or after Jan. 1, 2022.

One exception to that effective date is the requirement that insurers provide enrollees with "personalized out-of-pocket cost information" for health care services and prescription drugs. Under the final rule, insurers must make available "[a]n initial list of" a specific "500 shoppable services …  via the internet based self-service tool for plan years that begin on or after Jan. 1, 2023," CMS said. The agency added, "The remainder of all items and services will be required for these self-service tools for plan years that begin on or after Jan. 1, 2024."

Another exception is the MLR provision, which is scheduled to take effect beginning in the 2020 MLR reporting year.

Trump admin, industry groups clash on rule's potential effects

HHS Secretary Alex Azar in a release hailed the Trump administration's price transparency rules as possibly "the single most pro-patient, pro-consumer reform American health care has ever seen." He said, "We want every American to be able to work with their doctor to decide on the health care that makes sense for them, and those conversations can't take place in a shadowy system where prices are hidden. With more than 70% of the most costly health care services being shoppable, Americans will have vastly more control over their care, delivering on [Trump's] vision of better care, lower costs, and more choice."

According to Wendy Netter Epstein, a professor of health care law at DePaul University, because the final rule "requires both employer-sponsored and individual health plans to give patients cost information specific to them, upon the patient's request," if a patient is "going in to have a procedure, [he or she] could call [his or her] insurer in advance and the insurer would be obligated to provide [the patient] an estimate of the cost."

But Epstein predicted that the new rule will "almost certainly" see legal challenges, noting that the American Hospital Association already has challenged the separate rule regarding hospital price transparency.

According to STAT+, health insurance companies pushed back against the newly finalized rule when it was first proposed, saying the rule wouldn't help patients gain a better understanding of their out of pocket costs. Further, America's Health Insurance Plans (AHIP) at that time had argued that the rule is unconstitutional, because it effectually would implement "a taking of health insurance providers' trade secrets (and) unconstitutionally compels speech," STAT+ reports.

On Thursday, AHIP President Matt Eyles in a statement said the finalized rule "will work to reduce competition and push health care prices higher—not lower—for American families, patients, and taxpayers." He continued, "This is precisely the opposite of what Americans want in their health care."

However, Ben Ippolito, a health economist at the American Enterprise Institute, told STAT+ he was skeptical of whether the final rule drive prices upward. "Arguably, the biggest impact of a policy like this might be that it improves our understanding of what drives commercial health care spending," Ippolito said. "But there's the public pressure element of it too, right? The fact that people can write articles and say, look at this egregious example of something expensive."

Separately, STAT+ reports that the Pharmaceutical Research and Manufacturers of America (PhRMA) when the rule was first proposed had argued the regulation should require that patients get information on the drugs prices they'd see "at the point of sale" rather than the "negotiated rates" that insurers reach with drug companies, because those rates negotiated rates typically don't include any discounts or rebates that patients receive. PhRMA did not immediately respond to a request for comment on the finalized rule, STAT+ reports.

A spokesperson for the American Hospital Association (AHA), however, told STAT+ that although AHA supports efforts to help patients better understand their out-of-pocket costs for health care services, the final rule won't achieve that goal (Facher, STAT+, 10/29 [subscription required]; HHS release, 10/29; CMS fact sheet, 10/29; Alonso-Zaldivar, Associated Press, 10/29; Weixel, The Hill, 10/29).