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Looking for Transparency in the Cost of Medical Services and Insurance Coverage? Just Be PATIENT.

Doctors use a service fee calculator to save money on health insurance, drug cost concepts.

Transparency is a modern buzzword gaining traction in many areas of public life. It’s been a part of the healthcare arena since at least 2010 and seems to have kicked into high gear starting in 2020. Yet even today, consumers struggle to find out what health services will cost upfront, and healthcare providers and insurers continue to strive to keep that information secret and hidden from patients until the bill comes after the fact.

The latest salvo in the war over transparency comes from Congress in the form of a bill called Promoting Access to Treatments and Increasing Extremely Needed Transparency Act of 2023, conveniently shortened to the PATIENT Act of 2023. Below we look at the history of transparency in healthcare prices leading up to the PATIENT Act, followed by a description of what this new law, if enacted, would do.

The Problem: Inconsistency and Lack of Transparency on What Medical Services Cost or How Costs Are Calculated

If you saw what medical services cost upfront at the hospital of your choice, you’d find wildly different prices for the same service depending on which insurance company you have. Not only can prices be drastically different from insurer to insurer, but they can be even higher than what a person without insurance would pay if billed directly by the hospital, with the amount billed through insurance sometimes two or three times the cash price. Thanks, health insurance.

That’s because each insurance company negotiates prices with each hospital for the services the hospital provides, and neither the insurers nor the hospitals conduct these negotiations in public or publish the results.

The Solution: Transparency

In 2010, Congress attempted to address the problem in the Affordable Care Act (aka the ACA or Obamacare). Section 2718 of the ACA, optimistically titled “Bringing down the cost of health care coverage,” required hospitals to publish a list of “standard charges” for items and services in accordance with guidelines established by the Secretary of Health and Human Services (HHS). The legislation did not bother to define or explain what was meant by “standard charges.”

At first, hospitals were allowed to comply with the law by making their chargemasters public. According to the National Academy for State Health Policy, a chargemaster is the collection of standard list prices for hospital services, essentially the healthcare market equivalent of the Manufacturer’s Suggested Retail Price (MSRP) in the car buying market. In other words, chargemaster data is “little more than the price a seller would ideally like to charge a consumer” and is not an accurate reflection of actual hospital expenses.

Finally, in 2018, the Secretary decided that letting hospitals publish chargemaster data was not transparent enough and not helpful to patients. Through the rulemaking process, HHS defined “standard charges” to include the prices that hospitals charge insurers. This new rule also changed the format for publishing data and elaborated on what types of information would be most beneficial to patients.

In 2019, then-President Trump issued an Executive Order directing the Secretary to propose a rule. The result was a regulation that included chargemaster rates but also “payer-specific negotiated charges” disclosed in a single digital file as well as a “consumer-friendly” list of charges for three hundred “shoppable” services that patients can schedule in advance, such as a colonoscopy. Theoretically, patients could shop around for the best price before they arranged for the service or procedure, although in the real world consumers look for an insurance plan that includes their preferred providers in the network and then just use those doctors or hospitals, paying what the insurer and hospital have agreed to charge.

Finally in 2021, the federal government started requiring hospitals to publish prices in accordance with the regulation. Then almost immediately, several hospital trade groups banded together to get the rule declared unconstitutional in court. They claimed the regulation violated the ACA and the rulemaking procedures of the Administrative Procedures Act and additionally violated their free speech rights under the First Amendment. The hospital associations lost at trial and on appeal, and then they lost again in a later lawsuit. Even so, many hospitals have simply refused to comply with the posting rule and continue to keep their prices hidden.

Enter Congress and the PATIENT Act

Now Congress is stepping back onto the stage with a new law to expand transparency and hopefully provide a mechanism for enforcement. On May 22, 2023, representative Cathy McMorris Rodgers (R-WA) introduced H.R. 3561, the Promoting Access to Treatments and Increasing Extremely Needed Transparency Act of 2023, aka the PATIENT Act of 2023. In summary, the 108-page piece of legislation would accomplish the following:

  • Expand hospital price transparency requirements and establish additional reporting requirements regarding prescription drugs and pharmacy benefit managers (PBMs)
  • Provide statutory authority to require hospitals to publish an annual list of shoppable services they provide, along with specified pricing information
  • Starting in 2025, hospitals will not be allowed to use an internet-based price estimator tool to meet the publication requirement
  • The bill also modifies requirements for health insurance plan disclosures.
  • Under the Act, insurers would be required to include the rates for certain in-network services and prescription drug payment information.
  • Labs that provide diagnostic tests under Medicare will also be required to publish certain price information online
  • Similar requirements are in place for Medicare Advantage organizations and Medicare prescription drug plan sponsors

A dozen related bills have also been introduced in Congress, including the Drug Price Transparency in Medicaid Act of 2023 (H.R. 1613 and S. 1038), the Transparent PRICE Act (H.R. 2691 and H.R. 3281), and the Diagnostic Lab Testing Transparency Act (H.R. 3248). All of the related measures are currently sitting in committee, either in the Committee on Energy and Commerce or its Subcommittee on Health.

The PATIENT Act was introduced into Congress on May 22 and assigned to the House Energy and Commerce Committee, as well as the House Ways and Means Committee and Education and the Workforce Committee. Within two days, the Energy and Commerce Committee considered the bill, marked it up, and ordered it to be reported on a vote of 49-0. That’s broad support at the committee level, but the bill has a long way to go before it becomes law.

The PATIENT Act has a clever acronym for a name that focuses on “extremely needed transparency” for patients, but given the long road this bill has to travel and the already decade-plus-old attempt to force hospitals to be transparent, the bill’s name might also be a sign to consumers that if they want help from Congress on this “extremely needed” issue, they’ll just have to be PATIENT.

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