Health Insurers Must Be Transparent About Pricing: Marketing Pro

Americans are calling for greater price transparency from their health insurers, but experts say nothing will change unless companies abandon their "secrecy clauses."

Most American consumers struggle to figure out exactly how much their medication or treatments will cost as hospitals and providers rarely reveal their exact rates to the public.

Even after the Consolidated Appropriations Act of 2021 was passed, patients have often been led astray and end up paying far higher rates than they expected.

The bill required health plans to post their in-network rates, out-of-network allowable amounts and billable charges as well as prescription drug negotiated rates. It also added on a "No Surprises Act" to protect people receiving care from an out-of-network provider when they have limited access to in-network services.

Plus, it outlawed health insurance companies from making agreements to limit their cost information. Following that, the U.S. House passed the Lower Costs, More Transparency Act to strengthen price disclosure requirements for ambulatory surgical centers, labs and imaging centers.

Still, though, the everyday American finds the pricing options difficult to access and fully understand, Daniel Weinbach, the CEO of healthcare marketing company The Weinbach Group, said. Many providers have simply opted not to comply with the new rules.

Even for those that do, the files available online are often many pages long and not easy to read. That means many patients won't get the information they need before deciding on a course of treatment or provider.

"In order for providers to be transparent about pricing, they, and the insurance companies with which they contract, would need to abandon the clauses in their contracts that require secrecy surrounding the negotiated rates for each service," Weinbach told Newsweek.

The information available also doesn't offer data about the healthcare provider's quality, and patients rarely can distinguish between which option has better results and patient satisfaction.

Price transparency is further complicated by the sheer number of plans available in America as well, according to Louise Norris, a health policy analyst for healthinsurance.org.

"Price transparency in health care has historically been a challenge and is complicated by the fact that each health plan negotiates its own prices with medical facilities and professionals," Norris told Newsweek. "So the price of a given item or service will depend on what health plan the patient has, and where they receive the care."

If price transparency is ever going to be fully available, providers must break the mold and lead by example, pushing others to follow suit.

"Once one or two large leaders emerge, it could prompt more providers to follow suit, creating a cascade effect of newly available pricing information," Dominic Micali, vice president and senior benefits sales leader at Conner Strong & Buckelew, wrote in a recent report.

Further legislation might also be required to push providers into full compliance, and this could be enacted at the state level.

However, further regulation will only be as helpful as consumers are aware of it, Norris said.

"States can set more robust requirements for medical providers and state-regulated health plans, and those entities can, of course, go above and beyond the minimum requirements for price transparency," Norris said. "However, the data are only useful to the extent that consumers will use them and feel comfortable making their healthcare decisions based on the pricing data."

Many patients currently operate under the recommended provider by their primary care doctor, regardless of the specifics of coverage and pricing.

"If a patient prefers to simply go to a particular specialist recommended by their primary care physician, for example, or to use the hospital that's closest to their house, price transparency data aren't relevant for them and won't move the needle in terms of overall costs," Norris said.

Americans Suffer Due to Lack of Transparency

As a result of the lack of transparency, many Americans suffer, Weinbach said.

"We often don't find out the actual price of healthcare services until after we've accessed them," Weinbach said.

Even beyond that, missing price transparency means health insurance premiums and consumers' share of the price burden will be higher than necessary for both deductibles and copayments, he said.

So why do the healthcare providers and insurers keep price transparency from consumers? It comes down to basic business incentives.

"Both providers and payors are disincentivized to support price transparency, as it opens their revenue models to the same kinds of price pressure we see in nearly every other industry," Weinbach said.

Healthcare costs as a share of gross domestic product continue to rise at a faster rate than other segments of the economy due to these methods, Weinbach added.

That doesn't mean the healthcare premiums are sustainable in the long run, though. Government-subsidized healthcare like Medicare and Medicaid continue to put greater pressure on providers to reduce pricing, Weinbach said.

"Eventually, it will become an unsustainable circumstance to have one set of patients, those with subsidized coverage, paying dramatically lower prices than commercially insured patients," Weinbach said. "The disequilibrium will force all parties in the equation to level their pricing."

Kirat Kharode, the CEO and founder of a managed market network called HealCo and Pinewood Family Care Co, echoed this sentiment and his hope for the future.

"The secretive relationships that pervade our current system inflate costs, obscure accountability, and erode the trust that is essential to patient care," Kharode told Newsweek. "This status quo is untenable, and we stand on the cusp of a transformative shift."

Through a mix of legislative action, industry leadership and consumer and employer demand, he can see a pathway forward for full price transparency.

"To turn this vision into reality, it is imperative for us to band together, government, healthcare providers, insurers, patients, and especially employers, to demand change," Kharode said.

Do you have a story about hidden health insurance costs? Newsweek wants to hear from you. Contact us at personalfinance@newsweek.com.