Would you like to find out more about healthcare costs in advance? New tools are tackling it
Do you need medical treatment in the new year and want to nail down your expenses before heading to the doctor’s office? There is a new tool for this, at least for the insured.
Beginning Jan. 1, health insurers and employers offering healthcare plans must provide online calculators for patients to get detailed estimates of what they’ll owe — taking into account deductibles and co-payments — for a range of services and medications.
It’s the latest effort in an ongoing movement to allow prices and upfront cost comparisons in a business notorious for its opaqueness.
Insurers are required to provide cost information for 500 non-emergency services that are considered “purchasable,” meaning patients generally have time to consider their options. The federal requirement results from the 2020 finalized rule on transparency of reporting.
How will it work?
Patients who know they need a specific treatment, drug, or medical service first register with the cost calculator on a website provided by their insurer or, in some cases, their employer. Next, they can use the billing code to search for the care they need, which many patients may not have. or by a general description such as “knee repair” or “abdominal MRI.” You can also enter the name of a hospital or doctor, or the dosage amount of a drug you’re looking for pricing information for.
Not all drugs or services will be available in the tools’ first year of rollout, but the required 500-item list covers a wide range of medical services, from acne surgeries to X-rays.
Once the information is entered, the calculators are designed to generate real-time estimates of a patient’s deductible.
From 2024, the requirement for insurers will be expanded to include all medicines and services.
These pricing tool requirements come in addition to other pricing information disclosures that have come into effect over the past two years that require hospitals and insurers to publicly disclose their pricing, including those negotiated between them, along with costs for cash-paying or uninsured patients .
Still, some hospitals have not fully complied with this 2021 disclosure guideline, and the insurer data released in July is so voluminous that even researchers find it cumbersome to download and analyze.
The price estimator tools can help to fill this gap.
The new estimates are personalized and calculate how much of an annual deductible patients still owe and the deductible limit that applies to their coverage. The amount that the insurer would pay if the service were off-network must also be stated. Patients can request that the information be provided on paper if they prefer this to the online procedure.
Insurers or employers who fail to provide the tool could face fines of at least $100 a day for each affected individual, a significant incentive to comply — if enforced.
And there are caveats: consumers using the tools must be enrolled in the specific health plan, and there’s no guarantee the final cost will be exactly as advertised.
This is because “unforeseen factors in the course of treatment that may affect additional services or providers may result in greater liability for actual cost sharing,” federal agencies wrote in the rules’ outline.
Insurers are not liable for incorrect estimates.
Because cost estimates can vary from the final price, whether because the process was more involved than originally anticipated or because a different vendor handled the last minute, there’s a risk that “I might get a $4,000 bill and I’ll do it.” going to get mad because you told me $3,000,” said Gerard Anderson, professor of health policy and management and international health at Johns Hopkins University’s Bloomberg School of Public Health.
Studies have shown that many insurers have already offered versions of estimating tools, but a small percentage of enrollers actually use them.
Federal regulators defended the requirement for estimation tools, writing that the new rule sets specific parameters that may be more detailed than previous versions, although many insurers would have provided them.
In outlining the final rule, the Centers for Medicare & Medicaid Services noted that some previous calculators “on the market only offer broad estimates or average estimates of pricing that use historical claims data,” and did not always provide information on how much the patient had accumulated towards an annual deductible or a deductible limit.
The agency says such price disclosure can help people compare and ultimately help curb rising medical costs.
But that is not a matter of course.
“A lot of people at CMS believe this will have a significant impact, but they also have a long timeline,” said David Brueggeman, director of commercial health at consultancy Guidehouse.
In the short term, results may be harder to see.
“Most patients don’t move en masse to use these tools,” said Dr. Ateev Mehrotra, Professor of Health Policy at Harvard Medical School.
There are many reasons, he said, including little financial incentive when faced with the same dollar co-payment whether they go to a very expensive facility or a less expensive facility. A better way to encourage patients to switch to lower-cost providers is to create tiered pricing that rewards patients who seek the lowest-cost providers with lower co-payments.
Mehrotra is skeptical that the cost estimation tools alone will do much to curb rising drug prices. He’s more hopeful that over time, requiring hospitals and insurers to publish all of their negotiated rates will further reduce costs by showing which are the most expensive providers and which insurers negotiate the best rates.
Still, the cost estimator tools could be useful for the growing number of people with high-deductible health plans, who pay for much of their healthcare directly out of pocket before reaching that deductible. During this time, some can save significantly by shopping around.
Those deductibles add “pressure on consumers to shop by price,” Guidehouse’s Brueggeman said. “Whether they actually do that is up for debate.”
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Along with Policy Analysis and Polling, KHN is one of the three major operational programs of the KFF (Kaiser Family Foundation). KFF is a donated non-profit organization that provides information on health issues to the nation.