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Price transparency has been a long-standing issue in the healthcare industry. The lack of transparency in pricing makes it difficult for consumers to compare services and limits to their competition. According to a recent study, 50% of Americans are concerned about their ability to afford healthcare, and many people struggle to understand the true cost of their care. The Centers for Medicare & Medicaid Services (CMS) has taken significant steps to promote transparency in the healthcare system, specifically through the Hospital Price Transparency regulations. However, the implementation of these regulations has not been without its challenges. Let us shed light on the new policies and what they mean moving forward for you.
Hospital Price Transparency Regulations
The hospital price transparency regulation became effective on January 1, 2021, and requires every hospital operating in the United States to make its standard charges for the items and services it provides public for everyone to see. Before January 1, 2021, effective date, CMS began deploying significant education efforts as well as technical assistance to help hospitals prepare for compliance with the new requirements. CMS offered webinars, online aids, and checklists designed to summarize and help hospitals become and remain compliant. While certain hospitals have already met requirements(for example, hospitals operated by an Indian Health Program, the U.S. Department of Veterans Affairs, or the U.S. Department of Defense), the remaining must make their standard charges public in two ways:
- A consumer-friendly display comprising at least 300 shoppable services, which can be satisfied through the release of a shoppable services file or by offering a price estimator tool
- A comprehensive, machine-readable file
This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital. Once CMS identifies a hospital as potentially noncompliant, CMS begins a comprehensive compliance review which often involves direct hospital engagement and discourse. If found with deficiencies, CMS sends a warning letter. Should those deficiencies not be remedied, CMS requests a corrective action plan. If a hospital fails to respond to the CMS request or fails to come into compliance, CMS issues a notice of imposition of a civil monetary penalty.
Benefits of Price Transparency
One of the essential benefits of price transparency is that it empowers consumers to make more informed decisions about their healthcare. By making prices more visible, consumers can compare prices and choose healthcare providers that offer high-quality services at a more affordable price. When consumers are better informed about the cost of healthcare services, they may be more likely to choose lower-cost alternatives, such as generic drugs or outpatient services, rather than more expensive options (brand-name drugs or hospital stays). This outcome can help to lower overall healthcare spending and reduce the burden on the healthcare system. Price transparency also promotes cost savings for patients. By knowing the cost of healthcare services upfront, patients can better plan and budget for their healthcare expenses. This strategy can reduce the likelihood of surprise medical bills, which can be financially devastating for patients and their families. A recent study even showed that adults with incomes below 200% of the federal poverty level are more likely to go without medical care due to cost reasons.
Final Thoughts
CMS’s efforts to promote price transparency in healthcare are commendable. The Hospital Price Transparency regulations are a significant step in the right direction toward a more transparent healthcare industry. CMS’s approach to implementing these regulations is noteworthy since they supply all the tools necessary to help hospitals achieve compliance. They also provide a plethora of resources and FAQ documents for review. While there is still work to do for the future, we can hope for even greater transparency in healthcare pricing information. Striking a balance between empowering consumers and ensuring that healthcare providers can continue to provide high-quality care at a fair price remains critical. Standardizing pricing, simplifying billing practices, and educating consumers will create a more transparent and affordable healthcare system for everyone. To learn more about the future of the insurance industry, click here.
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