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Heather Mosley | SBJ

Clarity on Costs: No Surprises Act aims to bring transparency to insurers’ negotiated costs of care

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As part of broader legislation, the federal No Surprises Act requiring insurers to be transparent about negotiated costs of care went into effect on Jan. 1. That followed legislation last year that required hospitals to publicly post their negotiated rates to the public.

The act was designed to eliminate surprises from patient bills, but what impact it may have on insurance premiums for employers and individuals, costs for care and the overall health industry remains to be seen.

Matt Aug, president of Cox HealthPlans, said the idea of transparency began during discussions about the Affordable Care Act in 2010.

A subsequent Hospital Price Transparency Law, implemented in 2021, requires hospitals to post the cost of certain contractual items publicly on their websites. Another transparency layer went into effect July 1, when insurers were required to disclose pricing information to the public online. Other elements to be rolled out include an online price-comparison tool for 500 types of care in 2023, then for the tool to include all types of care in 2024.

Matt Barton, CEO of the Missouri Association of Insurance Agents trade association, in Jefferson City, said overall reaction among the agents he represents has been positive. For emergency care and most non-emergency services, the No Surprises Act bans “balance billings” that tend to surprise health care consumers. These bills are the gap between what an insurer would pay for in-network treatment as opposed to out-of-network, leaving the consumer to pay the balance. 

Barton said there are about 10 million surprise balance billings per year nationwide, which translates into hundreds of millions of dollars, if not more, in out-of-pocket costs for patients.

For instance: In emergency situations, patients may not be able to tell emergency services which hospital is in their network and end up receiving care at an out-of-network medical center. Or a patient at an in-network hospital may receive care from an out-of-network provider such as an anesthetist or other contracted service provider.

“I think we’ve all received balance bills. I know I have. What’s with this? I thought my insurance covered this,” Barton said.

A 2020 study by the Peterson Center on Health Care and the Kaiser Family Foundation found surprise bills occurred in 1 in 5 emergency room visits and between 9% and 16% of in-network hospital stays.

“We especially see this on the air ambulance side,” Barton said.

“The bills that these individuals receive are staggering sometimes. Let’s say a child has to be transported. The parents may get a bill for $50,000. How are they going to pay that?”

Data is out, now what?
Collecting the data is difficult and interpreting it equally so. Just because the prices are posted doesn’t mean they’re easily digested.

While the insurance companies’ contracted rates for care are public, the files are referred to as machine-readable files for a reason.

“It’s not something you can pull up in Excel or Word. It’s more for researchers,” Aug said.

The files are enormous, “maybe millions of lines of info. If you were to go online to look at a file, you couldn’t read it,” Aug said.

He said it’s in the early days, but he expects this flood of data may ignite a few startups that seek to bring order to the data and make it legible to the average layperson.

“There’s a lot of private equity money around and they see what’s spent on health care in the U.S. and they ask how do you capture the revenue in that? One of those ways is data,” Aug said.

To pull the data, CoxHealth worked with outside technical teams.

“It was a lot of time and money and effort,” Aug said. “Hopefully a lot of these rules pay off because they created a lot of administrative burden and cost.” 

But Aug said the yearlong project could prove well worth it.

“You hope you do these things to enhance the experience for consumers,” Aug said. 

The data also may allow insurance companies to better negotiate rates, Barton said.

“There will be an average or fair estimate of what will be paid,” he said.

Consumers soon will be better able to comparison shop for coverage. Aug said next year, carriers are required to supply a real-time cost estimator tool for a list of 500 items and services. “I think that’s where the impact to consumers will be,” he said.

In 2024, it goes up to include every procedure.

“This is more valuable to the consumers, so you can go online to each carrier and they can give you the cost. There should be drugs on there, too,” Aug said.

The No Surprises Act also gives consumers a framework for arbitrating high bills. While the U.S. Department of Health and Human Services has ultimate oversight for enforcement, the Missouri Department of Insurance will have the front-line role.

Unintended consequences?
While the No Surprises Act was designed to shield consumers from exorbitant health care bills, Barton said the legislation carries some risk for individuals and employers in the form of higher insurance premiums.

“This is just in its infancy right now and as with any piece of legislation, there may be some unintended consequences,” Barton said. “One of the fears is it will take the form of higher insurance premiums.”

While many good things came from the Affordable Care Act, Barton said it’s also led to continually increasing insurance premiums because of reduced carrier competition.

“If health insurance pays these out-of-network providers as in-network, it may raise costs through the premiums that employees and individuals pay,” Barton said.

Aug is uncertain what the impact on carriers or consumers will be. “The market here in southwest Missouri is very competitive, so I don’t know.”

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