Seema Verma Explains How Medical Price Transparency Can Be Better

Former Administrator of CMS Wants Providers and Insurers to do More to Help Patients Make Financially Sound Decisions

As a long-time champion of pulling back the veil on medical prices, Seema Verma worked to craft and implement the regulations that, in 2021, began to require hospitals to publicly list their negotiated prices. Now, as new rules stemming from those initial, successful forays into medical price transparency come online, the former administrator of Centers for Medicare & Medicaid Service continues to offer policy suggestions to ensure that Americans benefit from a market-based approach to healthcare.

Healthcare price transparency has the potential to save consumers considerable amounts of money in the short term as well as exert downward pressure on medical costs, which have ballooned uncomfortably in the last few decades.

By allowing consumers to purchase medical care or procedures in the same way they would shop for any other good or service, these regulations bring the benefits of open-market capitalism to an industry that cost $12,914 per person in 2021 (or 18.3 percent of the country’s Gross Domestic Product), according to CMS.

But while new regulations have mandated that consumers have access to price tags for nearly all medical services and offer significant protections against “surprise” medical bills, the industry has not gone far enough, Seema Verma has noted.

She believes there are ways that all stakeholders, including health insurance providers and care providers, can work together to help the government advance the ability of patients to buy the most cost-effective medical services available to them.

Bettering ‘Good Faith’

Among the ways that providers can boost price transparency is by deciding on a way to standardize the estimates of care costs, Seema Verma argued.

Recently enacted regulations have tried to limit the damage medical bills can do to American families by requiring care providers to provide their patients with a “good faith” estimate of the cost of their services. However, the regulations stopped short of defining what constitutes a “good faith” effort.

If providers can agree on a standard for estimated costs, consumers would be allowed to make helpful comparisons. It would also bring the healthcare industry in line with most other businesses in the United States, Seema Verma said.

“Companies in every other industry compete for consumers on the basis of cost and quality. Decisions made by informed consumers drive companies to deliver the products people want at prices they can afford,” she wrote in Op-Ed column for the Minneapolis Star Tribune “Yet in healthcare, prices are intentionally hidden at the point of purchase. For too long, insurers and hospitals have dubiously claimed that negotiated prices are a strange variation of proprietary business secrets that they’ll share with you — just after you receive the service.”

A Role for Insurers

One of the more difficult aspects of ensuring that healthcare transparency regulations make a difference to patients is the problem of health insurance. When patients are not responsible for footing the cost of their own medical bills, they have little incentive to comparison shop among a wide range of medical service providers.

However, it doesn’t have to be this way, according to Seema Verma.

Health insurance companies have the ability to create financial motivations for patients in a number of ways, Seema Verma said. By doing their part to ensure the benefits of healthcare transparency are fully embraced by American patients, insurance companies can help drive down over-billing and help keep medical costs in check.

Seema Verma outlined suggestions for ways that these companies could incite patients to shop around for medical care and procedures in her opinion piece in Stat News

“Health insurers should design plans that financially reward their customers for choosing high-quality, low-cost providers by lowering cost-sharing when they use these clinicians,” she wrote in Stat News.

These benefits could come in several forms, from reduced monthly payments to covering a greater portion of high-cost procedures, among other encouragements.

“Insurers should also offer to cover travel-associated costs if patients need to travel long distances to reach these providers,” Seema Verma added.

Moving Forward

Whether private practice physicians, hospitals, and health insurance companies decide to make the job of comparison shopping for medical services easier or not, the government needs to be prepared to enforce its newly enacted rules and regulations.

Only through a robust system that imposes severe punishments on institutions and individuals who fail to comply can the federal government hope to effect meaningful change. At the same time, medical agencies should be sensitive to the concerns of both industry partners and consumers, as inevitable policy hiccups develop in the course of rolling out new regulations, Seema Verma said.

“For these important new price transparency rules to make a real difference, the Biden administration must build on its enforcement commitments, penalizing providers and payers that refuse to comply, and continuing to refine the regulations as needed,” she wrote in Stat News. “The status quo is unacceptable. A more transparent marketplace, fueled by these new regulations, will give everyone the information they need and deserve to make better decisions about their care.”

Sources cited:

Stat News: https://www.statnews.com/2022/07/22/new-price-transparency-regulations-for-hospitals-insurers-empower-patients/

Star Tribune: https://www.startribune.com/health-care-price-transparency-is-sorely-lacking-that-s-got-to-change/565906482/?refresh=true