Congress Needs To Build On Its Previous Half Win On Transparency In Next COVID Bill

Tucked into the massive COVID bill that Congress passed before Christmas was an important step forward for patients wanting more price transparency, that received almost no media attention. As debate begins again on another bill, Congress needs to build on that momentum and add additional price transparency for patients.

The first time around, most of the headline ink was spilled on the debate on fixing “surprise billing”—which happens, for example when an out-of-network anesthesiologist knocks a patient out for surgery, and bills the patient separately even though the patient is laying on a gurney at an in-network facility.

However, for most patients, every health care bill feels like a surprise these days. That is why three little-discussed price transparency provisions tucked into the Christmas COVID bill matter.

In a first of its kind, patients will now automatically receive an “advanced explanation of benefits” with an estimated cost of care ahead of receiving that care. Starting in 2022, once a patient schedules an appointment it will trigger a request to the patient’s insurer to send them this price information ahead of time.

The two most positive aspects of this new law are that patients will get an estimate automatically and that patients will be given the real price or the contracted rate. This is important, as about a quarter of patients avoid needed care due to not knowing the costs ahead of time, and second, patients can switch providers before it is too late since they are often paying most of the cost if they have a deductible.

Congress did miss an opportunity to make it clear that states can allow even more robust price transparency, and that should be made clear in the next COVID bill.

A second price transparency provision applies to providers and facilities. Starting in 2022 they will need to provide patients with an estimate of what they will be charged. Unfortunately, the word “charge” means something specific in health care but is largely useless to patients. The “charge” price is not what their insurance will pay for a procedure, not what they would be required to pay when using their insurance, and most often not even what a patient would pay if they were paying cash for the procedure.

Congress missed the mark on this one. The Biden administration should issue guidance that indicates that they will interpret “charge” in the same way as was used in new transparency regulations that are far more patient-friendly. This would require providers and health facilities to tell patients what they expect to be paid by an insurer, which would allow the patient to decide the best place to receive care.

Finally, the Christmas bill includes a requirement that health insurers maintain a price comparison tool to help patients be able to shop for care by seeing estimated out of pocket costs. This information is helpful to a patient, but is incomplete.

Research has shown that large hospital systems game the system that make care look less costly to patients upfront, but spike spending on the back end. This allows some systems to keep increasing prices, drives up total spending, and increases health premiums the next year.  

In an analysis on Boston-area hospitals that examined what percentage of the total bill that patients paid toward a knee MRI, the authors found that two hospitals within 20 miles of each other had a more than $300 difference for the exact same service, despite the higher cost one having a lower out-of-pocket estimate. It is not a problem that is isolated to one region or one insurer. It is very common, and it leads to huge levels of avoidable spending on health care that could be spent on education, food, paychecks at small businesses, or on other family expenses if it were not going to health care.

Congress took a step forward around Christmas, but now it is time to get the details right to help patients. They should learn from state experiences where patients receive a shared savings incentive when they pick a less expensive care option, and where they have access to less expensive providers even when they are out-of-network.

These state reforms protect patient access and create a market. Without the right information, our nearly $4 trillion health care system will just keep consuming valuable and limited resources out of the dwindling bank accounts of American workers, that Congress is backfilling with periodic stimulus checks.