Enforcing Hospital and Health Plan Price Transparency
States are enacting legislation to enforce federal price transparency rules for hospitals and insurance plans, as well as establish additional state-level requirements. As of January 2021, hospitals are required to publish pricing information in two formats: a consumer-friendly list of 300 “shoppable services” and a comprehensive machine-readable file for all items and services. The Centers for Medicare & Medicaid Services found that 70% of hospitals have successfully met federal transparency requirements. Other estimates, however, have shown the percentage of hospitals in compliance to be much lower. CMS recently released updates to enforcement processes in April this year.
State legislators have pursued several strategies to improve hospital price transparency enforcement. Arizona, Indiana and Virginia codified federal price transparency rules into state statute—with the Arizona legislation requiring its health department to annually verify price transparency compliance. Arkansas, Colorado and Texas established state-level penalties for hospitals not in compliance. Colorado also prohibited noncompliant hospitals from engaging in certain debt collection practices for unpaid medical bills.
Earlier this year similar requirements of health plans went into effect, requiring price transparency for group and individual health insurance plans. The federal rules require health plans to post machine-readable files for negotiated in-network rates, as well as historical reimbursements to and charges from out-of-network providers. Additionally, health insurers must create consumer price comparison tools allowing enrollees to compare cost-sharing estimates for specific items and services. While reports have found insurers are largely complying with federal requirements, insurer data files are often difficult to access and interpret for anyone without a very powerful computer.
Several states are approving legislation to enhance health plan price transparency. Texas codified health plan transparency requirements similar to the federal rules into state statute and required health plans to provide cost estimates to enrollees upon request. Oklahoma established a “Right to Shop” program, providing financial incentives to enrollees for choosing lower-cost providers. Participating insurance plans must create a cost-comparison tool for health insurance enrollees shopping for lower-cost care.
Addressing Health Facility Fees
Hospitals often impose facility fees to cover operating or administrative expenses and these fees are historically associated with hospital inpatient and emergency services. However, facility fees are becoming increasingly common (both in amount and frequency) in non-hospital settings, such as a physician office acquired by a larger health system. Leading some experts to associate increases in vertical integration (e.g., a hospital acquires a physician’s office) and facility fees. Some research indicates that facility fees can increase the overall costs of care for consumers and payers. For example, some estimates show an ultrasound can be more than double the price when a facility fee is charged.
Many states have recently enacted legislation to protect consumers from unknown or costly facility fees. Specifically, states are bolstering facility fee disclosure requirements, increasing state oversight of fees, limiting the instances when providers can charge facility fees and prohibiting facility fees for telehealth visits.
In the last several sessions Connecticut, Colorado, Maryland and New York required health facilities to provide written notice of a facility fee to patients prior to rendering services. Connecticut, Colorado and New York’s legislation has specific notification requirements for new facility fees as a result of that facility affiliating with a larger health system. Florida required freestanding emergency departments to post signs with their average facility fees in their entrances and waiting areas.
Some states are increasing reporting requirements and directing state studies over facility fees. For example, Indiana required hospitals to provide information on facility fee revenues, along with other revenue sources, in annual financial filings to the state. Colorado established a steering committee to study the effects of facility fees on patients, employers and payers and determine overall trends related to facility fees.
Beyond transparency and reporting requirements, some states are directly regulating or prohibiting outpatient facility fees. Connecticut expanded the types of outpatient services facilities are unable to impose a facility fee for. Colorado and New York prohibited facility fees for preventive services. Texas barred facility fees for drive-thru health services, such as testing and vaccinations.
Several states—including Connecticut, Ohio and Washington—are limiting facility fee charges for telehealth visits. Connecticut and Ohio’s legislation broadly applies to all types of telehealth visits, whereas Washington prohibited facility fees just for audio-only telephone consultations.