Employee benefits are a crucial piece of business to any employer. But, while necessary, these employee benefits cost employers’ copious amounts of money every year. A 2019 Bay Alarm Medical study found the average employer spends $21,726 per employee, per year on employee benefits. And health coverage specifically, costs employers a copious amount per employee.
This year, employees will spend an estimated average of $14,642 on healthcare expenses alone, which include premiums and out-of-pocket costs. In 2020, this total is expected to increase to an average of $15,375 per employee. Of these expenses, the average large employer covers around 70 percent. The remaining 30 percent, approximately $4,500, is the responsibility of the employee.
This total may not seem like much, but for a lot of Americans, it would mark a significant source of financial stress. According to a 2018 LendingTree survey, 52 percent of Americans don’t have enough put away to handle a $1,000 emergency expense. These numbers illustrate why, as of 2019, 137 million Americans have faced medical financial hardship in the past year.
In an effort to combat these steep prices, and potential financial hardships, the Trump administration recently finalized two regulations designed to improve price transparency in healthcare. In this article, we’ll detail what these proposed regulations would do and how they could enhance price transparency in healthcare in America.
Boosting Price Transparency in Healthcare
Currently, hospitals only disclose information about the full list prices they charge for care for patients who come in without the use of a provider network and can afford to pay the entire bill. The new hospital cost transparency regulation would require hospitals to publish a complete set of charge information, in a single standard data file, on the Internet, starting in 2021.
This data file must include all hospital standard charges for all items and services, according to the Center for Medicare and Medicaid Services (CMS). The file would also show what the hospital might charge various Blue Cross plans for specific procedures, as well as how much it might charge UnitedHelath plans for the same procedures.
A file including all this data would be far too large for the average consumer to practically use. But, under the new proposed rule, hospitals will also have to provide “payer-specific negotiated charges” for 300 of the most common shoppable services. Plus, hospitals must provide this list in a form that is “consumer-friendly.” Penalties for hospitals that don’t comply with the new rule include maximum fines of $300 per day, or about $110,000 a year.
The other proposed regulations would involve anyone health insurers and group health plans, not just healthcare providers. These regulations would require coverage providers to give consumers real-time, personalized information about how much they’re likely to pay for all covered healthcare products and services through an online tool.
Essentially, health insurance providers would have to post their negotiated rates for in-network providers on the Internet. Additionally, these coverage providers must post the allowed amounts they pay for care from out-of-network providers, per Federal officials.
The CMS has sent the final regulations to the Office of the Federal Register for publication. These regulations are now open for public comment. Comments are due by January 14, 2020.
It’s expected both insurers and hospital systems will go to court to challenge their respective new regulations. Both insurance-industry groups and hospital associations have already been critical of these new rules.
A joint statement from several hospital associations claimed the new regulations are “a setback in efforts to provide patients with the most relevant information.” Similarly, insurance leaders such as Scott Serota, the CEO of Blue Cross Blue Shield, claim the new rules could have “negative, unintended consequences – including price increases.”
Price transparency in healthcare is absolutely essential to ensuring your employees make the best benefits decisions for themselves and their families. So, we will make sure to keep you abreast of any changes or developments related to these two new price transparency in healthcare regulations. Make sure to check back in with The Olson Group’s employee benefits blog. Or, if you have questions, contact one of our benefits consultants today!