Insurance industry claims new federal price transparency regulations cost each payer as much as $13.6 million in set up and maintenance costs
Price transparency in hospital, clinical laboratory, and other service provider costs marches ever closer to reality for America’s healthcare consumers. Meanwhile, some insurers and hospital groups are working to block implementation of federal rules they argue will confuse consumers and potentially lead to higher costs.
The first is a Proposed Rule, titled, “Transparency in Coverage Proposed Rule” (CMS-9915-P) that would require payers to make public on their websites negotiated rates for in-network providers and allowed amounts paid for out-of-network providers. Insurers also would be required to make an online “tool” available to members that would provide consumers with out-of-pocket cost estimates for “all covered healthcare items and services.” The 60-day public comment period for this rule went into effect November 15, 2019.
Medical laboratories and anatomic pathology groups may want to closely monitor ongoing efforts by payers and hospital groups to block these rules, since any changes will extend to their services, as well as extend price transparency to most employer-based group health plans and health insurance issuers offering group and individual coverage.
Will Transparency Lead to Higher Healthcare Costs?
In its story on insurer claims, FierceHealthcare reported that the rule would require payers to disclose a “staggering” amount of data, leading to implementation costs 26 times more than the Trump administration’s $510,000 estimate. To comply with the federal rule, an insurer will spend as much as $13.63 million on setup and maintenance. That prediction is based on an economic analysis from economic consulting firm Bates White, which conducted the survey on behalf of The Blue Cross Blue Shield Association (BCBSA).
“Some plans have indicated they would be forced to run two sets of tools—one designed to meet member shopping needs and another implemented only to meet the requirements of the proposed rule,” the BCBSA told FierceHealthcare.
Meanwhile, the Association for Community Affiliated Plans (ACAP) argued in a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma that cost-sharing liability estimates—which are not a price quote for care—could “lead to consumer confusion and frustration.” The ACAP also asserts the transparency plan could inadvertently lead to higher healthcare cost increases.
“In the absence of quality data, consumers may determine that high cost equates to higher value, select the higher-cost providers, and ultimately drive up medical expenses, especially in circumstances where the consumer’s out-of-pocket costs have been met,” wrote ACAP Chief Executive Officer Margaret A. Murray.
“We have long supported efforts to make quality and pricing information more accessible, understandable, and actionable for consumers,” the ACHP wrote. “But they need real-time, patient-specific information tied to individual coverage benefits, not a massive published list of prices that may only frustrate consumers and likely increase costs over time.”
Hospital Associations and Healthcare Systems Bring Lawsuit Against HHS
In December 2019, several hospital associations and healthcare groups filed a lawsuit to block next year’s implementation of the hospital price transparency rule. The plaintiffs included the:
These healthcare organizations and providers joined together to argue that HHS lacks the statutory authority to require and enforce public disclosure of individually negotiated rates between commercial health insurers and hospitals. They also say consumers are likely to be confused by the information they receive.
“America’s hospitals and health systems stand with patients and are dedicated to ensuring they have the information needed to make informed healthcare decisions, including what their expected out-of-pocket costs will be,” said Rick Pollack (above), President and CEO, American Hospital Association, in a news release. “Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry.” (Photo copyright: American Hospital Association.)
In its legal response, HHS contends that hospitals are adding to consumers’ confusion by failing to provide transparency.
“They do not dispute that consumers are casting about for accurate information about prices in a complex healthcare system, yet they rely on that same complexity as an affirmative reason to deprive patients of pricing information they need to figure out their out-of-pocket expenses,” HHS said in its brief.
DePaul University Professor Anthony LoSasso, PhD, who specializes in healthcare economics, admits to being “on the fence” regarding the pros and cons of transparency plans.
“I want to think that people can benefit from price transparency. But for a variety of reasons, people don’t look at pricing info even when it’s available,” LoSasso told WTTW News in Chicago.
Nevertheless, HHS vows to continue its push for price transparency.
“Hospitals should be ashamed that they aren’t willing to provide American patients the cost of a service before they purchase it,” HHS Deputy Assistant Secretary and National Spokesperson Caitlin Oakley told Reuters in a response to the hospital groups’ lawsuit.
In light of the government’s push to make healthcare pricing more transparent, clinical laboratory and anatomic pathology leaders in hospitals and health systems would be wise to prepare for a future that includes price shopping by consumers.
Meanwhile, some insurance payers are dropping coverage for certain medical treatments they consider “unnecessary,” leaving hospitals and their medical laboratories to wonder if they will be reimbursed for the tests they perform
Hospital-based medical laboratories and anatomic pathologists are well aware that the emergency department (ED) in their hospital is their single largest customer and that reporting test results within required turn-around times (TATs) is a non-stop battle. Thus, it will not be a surprise to learn that EDs provide nearly half of all hospital-related medical care in the US. That’s what a study by the University of Maryland School of Medicine (UMSOM) reports.
The UMSOM researchers claim their study, which was published in the International Journal for Health Services (IJHS), is the first ever to quantify the contribution EDs make to US healthcare. According to an UMSOM news release, they determined that 47.7% of all hospital-associated medical care between 1996 and 2010 was delivered by EDs.
Results Show EDs Critical to Healthcare Delivery
This a remarkable revelation. “I was stunned by the results,” David Marcozzi, MD, Associate Professor and Assistant Chief Medical Officer for Acute Care, UMSOM Department of Emergency Medicine, told Becker’s Hospital Review. Marcozzi led the study, which involved researchers from Thomas Jefferson University and other academic institutions.
“This research underscores the fact that emergency departments are critical to our nation’s healthcare delivery system,” he continued. “Patients seek care in emergency departments for many reasons. The data might suggest that emergency care provides the type of care that individuals actually want or need.”
As Becker’s Hospital Review explained, there were about 130-million visits to hospital EDs as compared to 101-million outpatient visits, and 39-million inpatient visits during 2010, the most recent year analyzed by UMSOM.
Quantifying the EDs Contribution to Healthcare
The researchers studied the role EDs play in caring for Americans, as compared to hospital outpatient and inpatient sectors. They were motivated, in part, by the apparent extra attention healthcare decision-makers pay to inpatient services and costs. As an emergency medicine and population health specialist, Marcozzi (who also works in the UM Medical Center Emergency Department) challenged that focal point.
In the first study to quantify the contribution of emergency department care to overall US healthcare, researchers at the University of Maryland School of Medicine (UMSOM) have found that nearly half of all US hospital-associated medical care is delivered by emergency departments. In this video, David Marcozzi, MD, MHS-CL, FACEP, talks about why this is happening and what the ramifications are for healthcare delivery in the US. Click on image above to view video. (Video and caption copyright: University of Maryland School of Medicine.)
The researchers cited National Center for Health Statistics data suggesting just 12% of ED encounters led to hospitalizations. This seems to counter claims of up to 50% of all healthcare being delivered in EDs. However, the researchers note that EDs also serve the uninsured and poor, many of whom are not admitted to the hospital.
“Traditional approaches to assessing the health of populations focus on the use of primary care and the delivery of care through patient-centered [medical] homes, managed care resources, and accountable care organizations. The use of EDs has not been given much consideration in these models,” the authors wrote in their paper.
ED Visits Jump Nearly 44% over 14 Years
Researchers analyzed ED patient, outpatient, and inpatient data from these sources:
National Hospital Ambulatory Medical Care Survey
National Hospital Discharge Survey
Electronic data files (sources of patient demographics and medical information) from commercial organizations, state data systems, hospitals, and hospital associations
They discovered that 3.5-billion healthcare encounters occurred over the 14-year period studied (1996 to 2010), representing a 43.7% increase in ED visits during that time.
During that period, ED utilization resulted in:
1.6-billion ED visits or 47.7%
1.3-billion outpatient visits or 37.6%
5.2-million hospital admissions or 14.8%
The UMSOM study also found EDs were increasingly being used by African Americans in the south and west and by Medicaid beneficiaries, Fierce Healthcare reported.
“When considering the isolated ED case mix, Medicaid as a course of payment showed a major increase in its contribution, shifting from 19.4% to 27.5% of all emergency care,” the researchers noted.
What’s needed, according to the study authors, are solutions to address non-urgent conditions often seen in EDs. However, they acknowledge, that the topic has drawn controversy.
Insurers Respond to Trend by Dropping Coverage of ‘Unnecessary’ ED Treatments
Some insurance companies on the hook for increasing ED costs have devised a novel approach to the increased cost—stop paying for it.
These new guidelines, which created quite a stir in Georgia before they went into effect July 1, 2017, are mirrored at BCBS affiliates in New York, Missouri, and Kentucky, noted sources in the Dark Daily report.
Non-avoidable Healthcare Events and ‘Connecting the Care’
“Despite a relentless campaign by the insurance industry to mislead policymakers and the public into believing that many ER visits are avoidable, the facts say otherwise,” stated Becky Parker, MD, President of the American College of Emergency Physicians (ACEP), in a news release.
UMSOM’s Marcozzi says the aim should be to “connect the care” delivered in EDs with other care offered by the healthcare system.
“Restricting EDs to patients classified as having critical illness does not seem a feasible or humanitarian option, as many individuals would not be able to find care elsewhere. In addition, many people do not have the knowledge to determine which symptoms indicate an emergency,” the researchers note.
Clinical Laboratories Can Download the UMSOM Full Study for Future Reference
At this point, it’s not clear how increasing ED costs and decreasing insurance payments will impact medical laboratories and anatomic pathology groups. Nevertheless, the UMSOM study is a good resource. ED volume and test orders will likely increase as more people go to EDs for treatment.
As a special to Dark Daily readers, Sage Publications is granting full access to UMSOM’s study through March 31, 2018. After that date, only the abstract will be available to non-IJHS subscribers. Click here to reach the full study article or place this URL into your browser: http://journals.sagepub.com/stoken/default+domain/JG8RNXfhAf7fuhFRIUIV/full.
Actions by major insurers indicate that ACOs operated by hospitals will have competition
Until recently, most media coverage about nascent accountable care organizations (ACOs) centered on the plans of major hospitals and health systems to organize ACOs within their communities. Now comes news that major health insurers are making sizeable investments as they prepare to launch their own ACOs.
These developments could be auspicious for local clinical laboratories and anatomic pathology groups. It could mean that in many regions around the United States there will be ACOs operated by hospitals/health systems that compete against ACOs operated by health insurance companies. In turn, that would mean more customers for lab testing services in these cities and towns. (more…)
