House Health Care Legislation Rolls Back the Price Transparency Employers Need

Congress agreed to an 11th-hour deal to temporarily fund the government last weekend, giving lawmakers 45 days to focus on their legislative agendas. A top priority in the House of Representatives is health care reform legislation, the Lower Costs, More Transparency Act, whose backers hope to pass the bill by the end of the year. Although the spirit of this bill is appreciated, it ultimately would roll back health care price transparency needed to reduce outrageous costs. 

Currently, there are three pillars of federal health care price transparency policy, which Congress should strengthen, not weaken. The first two pillars — the Hospital Price Transparency rule that took effect in January 2021 and the Transparency in Coverage rule that took effect in July 2022 — require hospitals, group health plans, and health insurers to publish their actual prices, including all their negotiated rates. The third pillar is the Consolidated Appropriations Act of 2021, which requires third-party administrators, insurers and provider networks to share claims information with employer and union health group health plans.

This information can empower consumers, including employers who provide health coverage for nearly 160 million Americans, to choose affordable health care and benefit from competition. Armed with actual prices, employers can compare and reconcile their health claims with hospital and health insurance prices to get the best pricing and care for employees. By auditing their claims against actual posted prices, they can avoid overbilling, price gouging, and waste that is responsible for runaway costs. Employers can then share ensuing savings with their employees through lower premiums and higher wages. 

From our experiences in two states, we’ve seen how access to all health plan prices and claims data is needed to dramatically reduce health care costs. Montana’s State Health Plan, insolvent in 2014, covers approximately 30,000 state employees, retirees and their families. An analysis of the plan’s medical claims data revealed that Montana hospitals were charging up to six times the Medicare rate for services, with significant price variation between providers. 

To overcome this egregious and highly variable hospital pricing, the plan contracted with hospitals in the state to pay rates slightly more than twice Medicare rates. This move increased plan reserves from a projected deficit of $9 million to a surplus of $112 million in three years, saving $121 million without cost-shifting or decreasing benefit levels.

New Jersey’s public-sector health plan likewise has had wide price variation and discrepancies in the state’s claims data, which has led to ongoing investigations into the practices of some of the state’s largest vendors. New Jersey launched a payment integrity program that has provided enhanced oversight of hospital billing and carrier payment practices to safeguard the plan and protect taxpayer dollars, saving more than $150 million in its first 20 months. 

Unfortunately, these pillars haven’t become a reality for most American health care consumers. A recent PatientRightsAdvocate.org report finds that only 36% of U.S. hospitals are fully complying with the price transparency rule, including posting all negotiated rates by health plan.

A new Health Affairs paper reveals most employer health claims don’t match the prices in the insurance price disclosure files. This lack of pricing data makes it impossible to reconcile claims, identify overbilling, or shop for better-quality, lower-cost care. The study’s authors note, “The intent of the regulations that govern the body of price transparency policies cannot be accomplished with the current level of inaccuracies in the files.”

In addition, major employers and unions nationwide, including Ford, Kraft Heinz, Owens & Minor Inc., and Bricklayers and Sheet Metal Workers unions, recently have sued their health insurance companies to access claims data and accurate pricing information. They’ve identified billions of dollars in overcharges facilitated by the opaque status quo. 

Legislators should codify and strengthen the three health care price transparency pillars to empower employers to lower costs. However, the pending Lower Costs, More Transparency Act would erode these pillars by expanding the use of price estimates for hospitals, eliminating billing codes and other identifiers for health insurers, and enabling third-party administrators, insurers and provider networks to restrict access to critical claims information that employers need.

The key to reducing American health care costs — which now make up nearly one-fifth of the economy and have put 100 million Americans in debt — is to empower employers and all health care consumers with the information they need to make smart purchasing decisions and protect employees: actual prices from hospitals, the prices negotiated by carriers on employers’ behalf, and the employers’ own claims data. The final House legislation must reflect this priority. 

Marilyn Bartlett, CPA, CMA, CFM, CGMA, is the former administrator of the Montana Employee Health Plan. Christin Deacon is the former director of Health Benefits Operations and Policy and Planning for New Jersey.