Under a new federal regulation, health insurers and self-insured employers are now required to publish an itemized list of the prices they pay for most health care services—a move that gives consumers access to online tools that provide cost estimates for around 500 "shoppable" services.

The price transparency trifecta: 5 takeaways from our expert panel

Rule details

In November 2019, HHS proposed the new rule in accordance with an executive order signed by former President Donald Trump, which directed the department to increase price transparency in health care. 

Under the rule, all health insurers and self-insured employers are required to publish their negotiated prices paid to in-network providers and hospitals, as well as their allowed rates for out-of-network providers and hospitals, in machine-readable files.

These rules are much broader than similar rules that went into effect last year, requiring hospitals to publish their negotiated rates.

According to Jeffrey Leibach, a partner at consulting firm Guidehouse, insurers must post the prices they pay for "every physician in network, every hospital, every surgery center, every nursing facility."

"When you start doing the math, you're talking trillions of records," Leibach added.

How will the rule impact consumers?

The sheer size of the databases could make it difficult for individuals to access and understand the pricing data. According to Tim Brechtel, an attorney at Jones Walker who has worked with employers on the rule, some companies have a terabyte of pricing and payment data.

Initially, the size of each database could mean that most people "will find it very hard to use the data in a nuanced way," said Katherine Baicker, dean of the University of Chicago Harris School of Public Policy.

"John or Jane User is not likely to start perusing millions of files," Brechtel said. "In theory, that's the goal of this—to have (people) see what it costs for a given service. But I just don't know how many people are going to do it."

However, entrepreneurs are expected to quickly reconfigure the data into user-friendly formats that can help estimate costs for patients, Kaiser Health News reports.

Once that happens, "you'll at least have the options in front of you," said Chris Severn, CEO of Turquoise Health.

"If you're going to get an X-ray, you will be able to see that you can do it for $250 at this hospital, $75 at the imaging center down the road, or your specialist can do it in office for $25," he added.

"These plans are supposed to be acting on behalf of employers in negotiating good rates, and the little insight we have on that shows it has not happened," said Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health. "I do believe the dynamics are going to change."

"For the first time, an employer will be able to go to an insurance company and say, 'You have not negotiated a good-enough deal, and we know that because we can see the same provider has negotiated a better deal with another company,'" said James Gelfand, president of the ERISA Industry Committee, a lobbying group for large, self-insured employers. 

If that happens, "patients will be able to save money," he added. However, it is still unclear how the public release of pricing data will affect future prices. If insurers are forced to bargain or providers see how they compare to their peers, prices could drop. However, some providers could also increase their prices if notice they are charging less than their peers.

"Downward pressure may not be a given," said Kelley Schultz, a VP at AHIP.

Insurers face large fines for noncompliance

Large penalties will likely encourage compliance. Under the rule, companies that fail to publish their data face a fine of $100 per day, per enrollee, which means that a company that provides health insurance to at least 10,000 employees would be hit with $1 million in penalties in a single day.

"We're talking about millions of dollars for not complying," Gelfand said.

"These files are absolutely massive and extraordinarily complex," Schultz added. "It's likely we're going to continue looking at them and see how certain data is entered." (Appleby, Kaiser Health News, 7/1; Herman, STAT+, 6/30)