Wachler & Associates Health Law BlogInsurer Rates Have Gone Public
The reimbursement paid by health insurers for services is often concealed from healthcare providers and difficult to obtain. However, a recent federally required data release may change all of this, bringing a multitude of consequences. The Center for Medicaid and Medicare Services (CMS) recently released a plan regarding Health Plan Price Transparency that began on July 1st, 2022. This plan will take place in three phases. Phase 1 began with a release of Machine-Readable Files containing both the In-Network Rate File (rates for all covered items and services between the plan or issuer and in-network providers) and the Allowed Amount File (allowed amounts for, and billed charges from, out-of-network providers). Phase 2, beginning in 2023, involves the release of an Internet-based price comparison tool allowing an individual to receive an estimate of their cost-sharing responsibility for a specific item or service from a specific provider or providers, for 500 items and services. Finally, beginning in 2024, CMS will release Phase 3, which expands the use of the price comparison tool to ALL items and services.
With the required data release starting July 1st, anyone interested in healthcare prices will be able to see what insurers pay for healthcare because they will have to post every price they have negotiated with providers for their healthcare services. The only exclusions would be prices paid for prescription drugs that are not administered in hospitals or doctors’ offices. In order to enforce this, CMS will punish non-compliance by either requiring corrective actions or imposing a civil money penalty of up to $100 per day for each violation and individual that is impacted by that violation.
The data release of Phase 1 will reveal differentiation in prices and almost certainly lead to market disruption, bargaining, and rate changes. The direction of this bargaining, however, is not yet clear. If insurers realize that they have higher in-network rates than their rivals, insurers may seek to lower rates. On the other hand, providers will have more information about the rates insurers have negotiated and are paying and may be in a better position to negotiate.
It is also important to note that the gravity and breadth of this data release will make it difficult to interpret and use as a smaller provider, regardless of the price comparison tools offered. Insurance companies will likely be able to use this information more efficiently than providers, given the resources available to them.
For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding the healthcare regulatory landscape. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.