Need medical care in the new year and want to determine your out-of-pocket expenses before seeing the doctor? There’s a new tool for that, at least for patients with insurance.
As of January 1, health insurers and companies who offer health plans are required to give patients with online calculators that provide precise estimates of what they would owe for a variety of services and prescriptions, taking into account deductibles and copayments.
It is the latest step in an ongoing drive to enable price and up-front cost comparisons in a notoriously opaque industry.
Insurers are required to provide cost information for 500 non-emergency procedures deemed “shoppable,” meaning that patients often have time to weigh their options. The government mandate originates from the 2020-finalized Transparency in Coverage rule.
So how will it function?
Patients who are aware they require a certain therapy, medicine, or medical service first access a cost estimator on a website provided by their insurer or, in some cases, their employer. They can then search for the care they require by billing code, which many patients may not have, or by a general description, such as “knee replacement” or “abdominal MRI.” Additionally, users can enter the name of a hospital or physician, as well as the dose amount of the drug for which they like to obtain pricing information.
In the first year of the tools’ implementation, not all drugs or treatments will be available, but the required 500-item list covers a wide range of medical procedures, from acne surgery to X-rays.
The calculators are intended to generate real-time estimates of a patient’s out-of-pocket expenses upon data entry.
Beginning in 2024, insurers will be required to cover all medications and services.
In the past two years, hospitals and insurers have been required to publicly display their costs, including those negotiated between them, as well as the price for cash-paying or uninsured patients.
Nonetheless, several hospitals have not yet fully complied with this 2021 disclosure mandate, and the insurance data released in July is so massive that even researchers find it difficult to download and evaluate.
The price estimate tools may assist in bridging this gap.
Patients’ remaining yearly deductible and the out-of-pocket maximum for their coverage are factored into the new estimates. The amount the insurance would pay for an out-of-network service must also be disclosed. If a patient prefers to get the material on paper, he or she can request that it be sent to them in hard copy.
If enforced, insurers or employers that fail to give the tool will be subject to penalties of at least $100 per day for each impacted individual. This is a considerable incentive to comply.
In addition, there are restrictions: consumers utilizing the tools must be enrolled in the particular health plan, and there is no assurance that the ultimate cost will be exactly as displayed.
Federal authorities said in defining the guidelines that “unexpected variables during the course of treatment, which may involve new services or providers, can result in larger actual cost sharing liability.”
Insurers are not liable for inaccurate estimations.
Due to the likelihood that the cost estimates will differ from the final price, either because the procedure was more complex than anticipated or was handled by a different provider at the last minute, one risk is that “I might get a bill for $4,000 and I’ll be angry because you told me $3,000,” said Gerard Anderson, professor of health policy and management and international health at the Johns Hopkins University Bloomberg School of Public Health.
Studies indicate that although many insurers have supplied cost estimator tools in the past, only a small number of participants actually use them.
Federal regulators supported the demand for estimating tools by stating that, despite the fact that many insurers had already offered them, the new rule establishes specified parameters, which may be more specific than in the past.
In describing the final rule, the Centers for Medicare & Medicaid Services noted that some previous calculators “on the market only offer broad-range estimates or average estimates of pricing that use historical claims data” and did not always include information about how much a patient had accrued toward an annual deductible or out-of-pocket maximum.
Such price transparency, according to the FDA, will aid in price comparisons and may eventually help reduce the rise in medical prices.
This however is not a given.
David Brueggeman, director of commercial health at the consulting firm Guidehouse, remarked, “CMS has a lot of individuals who feel this will have a huge impact, but they have a long time horizon.”
Short-term results may be more difficult to observe.
Dr. Ateev Mehrotra, a professor of health care policy at Harvard Medical School, stated, “Most patients are not adopting these tools en masse.”
There are various reasons, he added, including a lack of financial incentive if customers must pay the same dollar copayment regardless of whether they visit a costly or less expensive clinic. Creating pricing levels and rewarding patients who seek the most cost-effective physicians with lower copayments, he added, is a better method to convince consumers to switch to lower-cost providers.
Mehrotra is unconvinced that cost estimator tools alone will have a significant impact on rising medical costs. He is more optimistic that, over time, the requirement that hospitals and insurers post all their negotiated pricing will reduce costs by revealing which providers are the most expensive and which insurers negotiate the best rates.
Still, the cost estimator tools could be valuable for the growing number of individuals with high-deductible health plans who pay a significant portion of their health care costs out of pocket before reaching their deductible. During this time, folks can save a large amount of money by shopping about.
These deductibles increase “the pressure on consumers to buy based on price,” according to Brueggeman of Guidehouse. “It is debatable whether they are genuinely doing it.”
KHN (Kaiser Health News) is a national news organization that delivers in-depth health-related journalism. KHN, with Policy Analysis and Polling, is one of KFF’s three primary running programs (Kaiser Family Foundation). KFF is an endowed nonprofit organization that provides information on national health issues.