Want proof of upfront health care costs? New tools take a crack at it

This article was originally published in Kaiser Health News.

Do you need medical treatment this year and want to limit your out-of-pocket costs before going to the doctor’s office? There’s a new tool for that, at least for insured patients.

Starting January 1, health insurers and employers that offer health plans must provide online calculators to patients to get detailed estimates of what they will 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 make pricing and upfront cost comparisons possible at a company known for its obscurity.

Insurers must make available cost information for the 500 non-emergency services that are considered “shoppable,” which means that patients generally have time to consider their options. The federal requirement stems from the Transparency of Coverage rule that was completed in 2020.

How will it work?

Patients, knowing they need a specific medical treatment, medication, or service, first log on to a cost estimator on a website provided through their insurance company or, for some, their employer. Then, they can search for the care they need by billing code, which many patients may not have; or by a general description, such as “knee joint repair” or “abdominal MRI”. They can also enter the name of the hospital, doctor, or dosage amount of medication they are seeking for pricing information.

Not all medications or services will be available in the first year of the kit’s introduction, but the 500-item to-do list covers a wide range of medical services, from acne surgery to X-rays.

Once the information is entered, the calculators are supposed to produce real-time estimates of the patient’s out-of-pocket cost.

Starting in 2024, the requirement for insurers has expanded to include all medicines and services.

The requirements for this estimator tool come on top of other price information disclosures that have become effective within the past two years, which require hospitals and insurance companies to publicly publish their rates, including those negotiated among themselves, along with the cost for cash or uninsured patients. on them. .

However, some hospitals haven’t fully complied with this 2021 disclosure directive, and the insurer’s data released in July is so voluminous that researchers have trouble downloading and analyzing it.

Pricing tools may help bridge this gap.

The new estimates are personal, calculating how much annual deductible patients still owe and the out-of-pocket limits that apply to their coverage. It should also show how much the insurance company will pay if the service is out of network. Patients can request that information be delivered on paper, if they prefer, online.

Insurers or employers who fail to provide the tool could face punitive fines of at least $100 per day per person affected, which is a great incentive to comply — if enforced.

And there are caveats: Consumers using the gadgets must be enrolled in the respective health plan, and there’s no guarantee that the final cost will be exactly as described.

That’s because “unforeseen factors during the course of treatment, which may include additional services or providers, can lead to an increase in actual cost-sharing liability,” federal regulators wrote in defining the rules.

Insurance companies will not be held responsible for incorrect estimates.

Because cost estimates can differ so much from the final price, either because the procedure was more complicated than initially anticipated, or because it was handled by another provider at the last minute, one risk is that “I might get billed for $4,000 and I Gerard Anderson, a professor of health policy, management and international health at Johns Hopkins University’s Bloomberg School of Public Health, said I’d be upset that you told me $3,000.

Many insurance companies have offered versions of cost estimators before, but small percentages of enrollees actually use them, studies have shown.

Federal regulators have defended the requirements for the estimator’s tools, writing that although many insurance companies have made provision for them, the new rule sets out specific standards, which may be more detailed than previous versions.

In determining the final rule, the Centers for Medicare and Medicaid Services noted that some of the previous calculators “on the market offered only wide range estimates or mid-price estimates that used historical claims data” and did not always include information about how much a patient had accumulated toward an annual deductible limit or out of pocket. pocket.

The agency says this price disclosure will help people make a comparison, and may ultimately help slow the rise in medical costs.

But this is not a given.

“CMS has a lot of people who think this is going to make a big impact, but they also have a long time frame,” said David Brueggeman, director of commercial health at advisory firm Guidehouse.

In the short term, it can be hard to see results.

“Most patients are not motivated en masse to use these tools,” said Dr. Ativ Mehrotra, professor of healthcare policy at Harvard Medical School.

There are many reasons, he said, including little financial incentive if they face the same dollar bill whether they go to an expensive or less expensive facility. The best way to get patients to switch to lower-cost providers, he said, is to create pricing tiers, rewarding patients who seek out the most cost-effective providers with lower co-pays.

Mehrotra doubts that cost-estimation tools alone will do much to dampen drug price hikes. He’s more hopeful that, in time, requiring hospitals and insurers to publish all of their negotiated rates will slow costs by showing which providers are the most expensive, along with insurers who negotiate the best rates.

However, cost estimating tools can be useful to the growing number of people with high-deductible health plans who pay out-of-pocket for much of their health care before they get that deductible. During that period, some may save significantly by shopping.

Brueggeman, at Guidehouse, said these discounts add “pressure on consumers to shop by price.” “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 surveying, KHN is one of the three main drivers of the KFF (Kaiser Family Foundation). KFF is a non-profit organization that provides information on health issues to the nation.

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