CMS Finalizes Price Transparency Rule; ACA Looks to Rein in Insurance Inequities

On Thursday, Oct. 29, the Department of Health and Human Services (HHS) unveiled final policies aimed at increasing price transparency in the healthcare system. The new rule will require health insurers to provide patients with complete pricing information prior to a service being rendered and builds off an earlier price transparency rule that requires hospitals to publish their negotiated rates.

Beginning in 2022, insurers will be required to publish data on prices they have historically paid providers as well as final negotiated rates for out-of-network services. The following year, insurers will have to provide public pricing information for common medical services. The rule also includes a requirement that patients be informed of their out-of-pocket prescription drug costs when a medication is prescribed.

Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma and other administration officials believe price transparency mechanisms, like those included in the rule, will increase competition in the healthcare marketplace and lead to lower healthcare costs.

House Republican leaders Greg Walden (Ore.) and Kevin Brady (Texas) applauded the announcement.  “Americans will never see lower health care costs until they know the prices,” Brady said in a press release. “This is a major step in the direction of consumer rights, and I call on Congress to make this type of required transparency permanent,” he added. Capitol Hill Democrats, while generally supportive of health insurance transparency, did not offer a statement on the regulation.

Health insurers, however, leery of any additional oversight, worry the new rule’s requirement that insurers publish negotiated rates will reduce incentives to negotiate lower rates and actually lead to higher prices. We expect the industry to heavily push back on the rule and work to revise its language.

A Bigger Prize: Insurance Equality

While this could be viewed as a win for health consumers, ACA has its eyes on a bigger prize and that is to strip insurance companies of their ability to skirt this country’s antitrust laws.  In the 1944 Supreme Court Case, United States v. South-Eastern Underwriters Association, the Court established that the business of insurance constitutes “interstate commerce,” and therefore is subject to congressional oversight under the Commerce Clause of the Constitution. This decision specifically held that the Sherman Act – the federal antitrust statute – applied to insurance.

In quick reaction, health insurance companies lobbied Congress to pass the McCarran-Ferguson Act of 1945 to establish a special-interest exemption for the industry from federal antitrust laws.

After 75 years, it is apparent that the unbridled antitrust exemption created by Congress in the 1940s was not prudent.  Over the decades, and particularly since the passage of the Affordable Care Act in 2009, the health insurance market has mutated into one of the least transparent and most anti-competitive industries in the United States.

The Competitive Health Insurance Reform Act, H.R. 1418, is legislation designed to amend McCarran-Ferguson and restore the application of federal antitrust and competition laws to the business of health insurance. The passage of this bill into law is an essential step towards increasing competition in health insurance markets and lowering prices for consumers.  The bill will ensure that health insurance issuers are subject to the same laws prohibiting unfair trade practices that other businesses are required to comply with, including those laws which prohibit price fixing, collusion, or market allocations to the detriment of consumers.

The application of federal antitrust laws is more relevant now than ever.  Application of federal antitrust law will benefit doctors, and patients alike as health insurers compete to provide quality coverage.  In short, the bill ensures health insurance issuers are subject to the same antitrust and unfair trade practice laws that all businesses are required to comply with.  For doctors of chiropractic and chiropractic patients, this means they no longer will be placed in an unfair disadvantage because health insurers will no longer be able to conspire among themselves to fix the price of services and the terms of participation.

This legislation has broad bipartisan support and passed the House of Representatives overwhelmingly in September.  Unfortunately, like many House-passed bills, H.R. 1418 is languishing in the Senate and the chances of passage there is ominous.  ACA is hopeful that in 2021, the bill will be revived and can pass both chambers.

  • To view the CMS transparency announcement, click here.

  • To view a factsheet on the transparency rule, click here.