According to the Peterson-KFF Health System Tracker, health care costs have increased at a steep rate over the course of the past five decades. In 1970, people were spending approximately $353 per person, and as of 2020, that number had climbed to a whopping $12,531 per person.
Accounting for inflation, $353 in 1970 is equivalent to about $1,875 in 2020. This information was pulled from data collected as part of the National Health Expenditure Projections.
Now, while the monetary adjustment decreases the discrepancy ever so slightly, the difference between $1,875 and $12,531 is still astonishing. With that in mind the amount of money people have spent on health care-related costs has risen by about $10,656 per person on average.
Additionally, the Centers for Medicare & Medicaid Services stated that the costs of health care are expected to continue to grow by 5.1% every year from 2021 to 2030. Furthermore, not only are these numbers rather jarring, but the rising costs of health care tend to be incredibly stressful for consumers, employers and employees alike, even if they have insurance.
Along with that, many employees do not fully understand the details of their health care costs or what their insurance will provide in terms of coverage. Thankfully, in an effort to offer far greater clarity in terms of the costs of health care plans, the federal government has enacted new price transparency rules that health care plans must adhere to and reflect.
These requirements are part of the 2021 Consolidated Appropriations Act, which includes the No Surprises Act as well as the Transparency in Coverage Final Rule. Together, the Department of Health and Human Services, the Department of Labor and the Department of the Treasury released the preexisting Transparency in Coverage Rule back in October 2020, whereas the CAA was signed into law in December 2020. The No Surprises Act is the most recent addition to this set of disclosure-related regulations regarding health care and insurance plans.
- The CAA’s No Surprises Act addresses surprise medical billing for specific health care services. The No Surprises Act also requires health insurers and group health plans alike to provide their consumers with specific information and tools that will help them better understand their health care options.
- The Transparency in Coverage Final Rule requires that health insurers and group health plans accurately disclose specific information regarding health care pricing plans to consumers in an up-front manner, with the long-term goal of greater transparency overall.
Some of these transparency requirements will take effect in 2022, while others will be phased into effect over the course of a three-year period.
What this means for employers
As a result of the implementation of new transparency laws pertaining to health care plans, employers will be required to supply participants of said health care plans with certain information. In greater detail, here’s what the new transparency requirements mean for employers:
- Employers can anticipate having to provide employees with an advanced explanation of benefits and accurate estimates of the out-of-pocket costs that employees can expect to face when receiving in-network medical services. The point of this is to provide participants with a better understanding of what certain services will cost them prior to them agreeing to receive medical care.
- Additionally, employers will need to provide online and accessible price comparison tools with the goal of providing participants with the opportunity to compare the costs of medical care between various medical providers. Furthermore, the online tool, as provided by the employers, must depict the rates for in-network providers as well as the price points of the out-of-pocket costs for said providers. Information of this nature must display prices for “500 shoppable services,” including but not limited to doctor appointments, screenings for cancer and MRI scans.
- Last but not least, another facet of change that employers can expect to be required to uphold is a website that publicly and accessibly displays information as it pertains to the prices of health care plans. For instance, the costs of both in-network and out-of-network services as well as prescription drugs are examples of information that employers will need to supply to participants. As a result of this publicized data, employees will be able to compare the costs of their employer’s health care plans with the plans being offered to other employees by their respective employers. Another benefit of this call for publicity is that job seekers can compare the costs of various health care costs between potential employers.
Work closely with your insurer and benefits team
If the newest transparency rules are applicable to your employers’ group health plans, the insurer or the third-party administrator of said group health plan is typically responsible for handling your disclosure-related obligations. However, as the plan sponsor, it’s important to remember that, at the end of the day, you are ultimately fully responsible for ensuring that you are in compliance with transparency requirements.