It is a truth universally acknowledged —  the U.S. healthcare system is one of the most expensive, confusing systems in the world. Accepting that insurance is complicated and will always stay that way is out of the question if the good health and satisfaction of our citizens is a consideration.

In the past, we have assumed that part of the solution to this issue is health insurance literacy and another part is transparency.

Health insurance literacy is defined as someone’s ability to understand and evaluate information about health plans, select the best plan for themselves/their family, and use the plan confidently when enrolled.

Transparency, the focus of several presidential administrations, is the ability to access pricing information whether it comes from a hospital, a doctor’s office, or an insurance company.

Together, the two concepts should — ideally — produce an employee who understands the pluses and minuses of any health plan offered to them, along with potential ramifications to their wallet based on the healthcare providers used.

While everyone agrees that it’s a fine thing for consumers to understand how much a product, service or course of treatment is going to cost, are the requirements to date going to provide consumers with the information they need? Let’s take a look.

Impacts of Hospital Transparency Rules

Hospital transparency rules were adopted in late 2019, with an effective date of January 1, 2021. Standard charges were required to be made public by then. However, the result has been less than stellar.

According to an article in Rev Cycle Intelligence, one year after these rules went into effect, only 14 percent of hospitals have met the requirements. And, although the fines for noncompliance are fairly steep, only two hospitals have been levied fines thus far, receiving combined penalties of just under $1.1 million. Just try searching a local hospital’s website for this information to see what you find and whether that could help you determine where to have any common service.

Group health plans and carriers received their first taste of transparency compliance earlier this year when they were asked to place machine-readable files (MRFs) on a public-facing website without any registration or membership requirements. These MRFs should be used by data mining companies to begin to create databases full of current and historical claim information, suitable for analysis. The MRFs are required to be updated monthly with the most current information. While we are all holding out hope that these databases will be built, no one is holding their breath, and it’s too early to tell whether this aggregated claims information can make a difference to an individual consumer.

Upcoming RxDC Reports

As of December 2022, employers are facing even bigger challenges. The RxDC (Prescription Drug Data Collection) reports are due for calendar years 2020 and 2021. This multi-faceted statement requires a plan report, eight comprehensive data reports, and a narrative response — lots and lots of data.

To be clear, the employer controls none of this information, except for plan year, number of employees, states of operation, and premiums paid. At least the RxDC reports have a predictable outcome. They will be analyzed and made public on the Centers for Medicare & Medicaid Services, Department of Labor, and Treasury websites, leading to what we hope is a greater understanding of drug pricing trends and impacts of rebates on consumer costs.

The first truly massive lift comes as of January 1, 2023. That’s when a list of 500 shoppable services must be ready for consumers to use via website, telephone, and (upon request) paper. As of 2023, these shoppable services only include medical, mental health, and pharmacy. As of January 1, 2024, all the services offered by a health plan have to offer these available estimates. This is likely the first time consumers will truly be helped by all the transparency efforts.

In theory, this should encourage people to stay in-network, use employer-provided services that help rank doctors and healthcare facilities, and be able to save toward scheduled services. It should allow for consumers to become more comfortable with generic drugs and more conversant with what things should cost, as opposed to simply agreeing to any cost.

Employers Bear the Burden of Transparency Efforts

While it remains to be seen whether these transparency efforts will contribute to a smarter and more economical use of our healthcare resources, it is certain that transparency requirements continue to place burdens on employers that sponsor health plans.

Those employers will likely face increased costs that follow the substantial reporting, and those employers will need to continue to educate employees on the variety of tools and resources that will — at some point — become available to them. Without that education, employees can be expected to access their health insurance benefits the same way they always have, with the same level of expected satisfaction. Employers, while the ball is in your court, we’re happy to discuss transparency and all its ramifications with you!

We have employee benefit experts on hand, so please reach out.