Hospital price transparency is changing how self-funded employers manage rising healthcare costs. WTW’s Best Practices in Healthcare Survey revealed that more than two-thirds of U.S. employers are focused on managing their healthcare plan costs as they approach a projected cost increase of 6.4% in 2024, compared to a 6% average increase in the previous year.
With greater price transparency, self-funded employers formerly in the dark can make informed decisions about their future employee benefits and healthcare expenditures.
Hospital Price Transparency Regulations
Hospital price transparency helps plan sponsors, and participants understand the cost of a hospital service or item before receiving it. Both the Hospital Price Transparency Final Rule, effective in 2021, and the Transparency In Coverage Final Rule, effective in 2022, require hospitals to publish their rates for services publicly.
In addition, Transparency In Coverage shows negotiated rates between carriers and hospitals. This means employers, especially those with self-funded plans, can better determine which hospitals and providers will provide them with the greatest value.
Regulations Promoting Hospital Price Transparency
As of January 1, 2021, hospitals across the U.S. must post five different “standard changes” via machine-readable files, including payer-specific negotiated rates, gross changes, discounted cash prices, and de-identified maximum and minimum negotiated rates.
Hospitals must also provide patients with payer-specific negotiated rates or an out-of-pocket cost estimator tool for a minimum of 300 services.
Impact of Regulations on Self-Funded Employers
Hospital price transparency data can be beneficial to self-funded employers. When employers have the data to compare prices between hospitals in a designated area, they can decide whether to direct plan members to lower-cost options or reject certain prices altogether. Employers can also use this data to provide their workers with a financial incentive to use a lower-cost facility.
Benefits of Access to Hospital Price Transparency Data
While price transparency in the U.S. healthcare system has been a long-standing issue amongst providers and patients, hospital price transparency data enables employers to get the most value for their healthcare spending.
Some leading benefits of gaining access to hospital price transparency data include:
Cost Savings Opportunities for Self-Funded Employers
With access to hospital price transparency data, self-funded employers are better positioned to negotiate with healthcare providers and hospitals.
This transparency also allows employers to compare prices across different healthcare facilities and hospitals to identify low-cost options that won’t compromise quality. Price transparency can also serve as a valuable tool when budget planning. Employers can forecast healthcare costs more accurately and better allocate resources.
Empowering Employees to Make Informed Healthcare Decisions
Employees can also benefit from hospital price transparency data, especially when making informed healthcare decisions. Through transparent pricing data, employees can compare costs for various treatments, procedures, and services across different providers and facilities.
They can also better understand the potential financial implications of different healthcare services and more effectively budget for out-of-pocket expenses.
Strategies for Utilizing Hospital Price Transparency Data
By implementing certain strategies, employers can effectively leverage hospital price transparency data to lower healthcare costs, promote better health outcomes for workers, and improve employee satisfaction.
For example, employers can use pricing data to identify opportunities for wellness programs and initiatives. They can also achieve stronger negotiations with providers and hospitals by using the data to benchmark prices and strive toward more favorable terms.
Other strategies to consider include:
Implementing Tools and Resources to Access Pricing Information
There are several ways that employers can implement tools and resources to access hospital price transparency data, starting with health plan portals and websites.
Many health insurance providers now provide online tools and portals that offer valuable resources that employers can integrate into their employee benefits offerings.
Some employers may also consider developing customized reporting dashboards and tools that help consolidate hospital price transparency data into a user-friendly format.
Negotiating Contracts With Healthcare Providers Based on Transparent Pricing
Transparent pricing allows self-funded employers to negotiate contracts with healthcare providers using gathered pricing data that reveals the average costs of various treatments and procedures.
This information can then serve as a benchmark during contract negotiations, helping employers identify opportunities for cost savings. Pricing data and other quality metrics can also help employers identify healthcare providers that offer a good balance of quality and cost to ensure workers have access to high-value, affordable care.
How New City Can Help With Cost-Effective Employee Benefits Management
Employee healthcare benefits represent one of the most significant expenses for employers, with deductibles and premiums rising across every organization. Fortunately, change is on the horizon due to hospital price transparency data that can help save businesses money over time.
Learn how New City Insurance can help you manage cost-effective benefits by calling 888.210.2765.