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Credit: Photo by Towfiqu Barbhuiya via Unsplash

Health insurance companies and employers with healthcare insurance plans are required to give reliable estimates of people’s costs for healthcare, starting Jan. 1, 2023.

This requirement, described in this Federal Register entry from 2020, is not a departure for many insurance companies, who have been doing this for some time. But for employers it’s a leap. Employers can, of course, send their employees to an insurer’s cost estimator.

The bigger question is likely to be not “do the estimators exist?” but “are the estimators reliable?” Such estimators, which can be found on many hospital and insurance company websites, tend to be unreliable, and there’s not a lot of recourse in the case of error.

Beyond that, there is a big question of whether patients (or consumers, or as we like to call them, people) will use these estimators — and whether there will be any kind of appeal process if the estimates are wrong.

The requirement applies to a list of 500 common goods and services — MRI’s, CT scans, X-rays, common medications. Other goods and services will be required starting Jan. 1, 2024.

Various price-revelation requirements

The rule is yet another step attempting to bring transparency to health care by making prices public. Efforts to bring transparency to health care through legislation and regulation have had mixed success. The requirement that hospitals post their prices online — cash prices, contracted prices and charged prices — has gone through several stages, including a deadline on Jan. 1, 2019, and a deadline on Jan. 1, 2020, all culminating in a requirement Jan. 1, 2021, that hospitals put all prices online. But compliance was mixed, and enforcement was lax. To this date, only one hospital system, in Georgia, has been fined for noncompliance.

Insurers are also required to post prices online, in big spreadsheets that are difficult for average civilians to find and search, as of July 1, 2022.

The cost estimators are designed to be consumer-friendly, as compared to the big spreadsheets.

We have frequently heard patients complain — before this new rule was promulgated — that cost estimators are inaccurate. A Philadelphia woman, for example, got an estimate of $1,375, and was then billed $3,200. These disparities are common. There’s typically no recourse for a person in this situation.

A Denver woman  who expected to pay $1,337 for surgery at a Westminster hospital was billed $303,709. She did win a court case.

A North Dakota doctor told us she had used her office’s electronic records cost estimator and “checked the patient cost for an ultrasound which we charge about $200 for. It was $8550.00 !!!”

Inaccuracy is expected

In the Federal Register description of the expectations for the new cost estimators, it is clear that some inaccuracy is expected, so the definition of “reliable” is not quite clear. The language seems to suggest that enforcement will be weak.

The Final Rule in the Federal Register says: “The Departments underscore that the estimates required by the final rules are not required to reflect the actual or final cost of a particular item or service. Unforeseen factors during the course of treatment (which may involve additional services or providers) can result in higher actual cost-sharing liability following receipt of care than the estimate provided in advance. Nonetheless, the Departments are finalizing the requirement that cost-sharing liability estimates be built upon accurate information.

“However, this requirement does not mean that the estimates must reflect the amount ultimately charged to a participant, beneficiary, or enrollee. Instead, the estimate should reflect the amount a participant, beneficiary, or enrollee would be expected to pay for the covered item or service for which cost-sharing information is sought. Thus, the final rules do not require the cost-sharing liability estimate to include costs for unanticipated items or services the individual could incur due to the severity of his or her illness or injury, provider treatment decisions, or other unforeseen events.”

Such unforeseen items and services often cause the estimates to be wrong, people have told us.

Beyond that, the rule is clear that there will be no attempt to hold insurers or employers to the estimate. “Additionally, while the Departments acknowledge the value of not allowing group health plans and health insurance issuers to impose higher cost sharing than estimated, to the extent that the actual services provided were consistent with those provided under the estimate, the Departments are of the view that it would not be prudent to hold plans and issuers liable to the exact estimate that is provided through the tool, as cost-sharing obligations may ultimately vary from the estimates provided in advance. Additionally, the Departments are concerned that such a requirement could incentivize plans and issuers to provide high estimates, rather than the most accurate estimates.”

The final rule, from 2020, does trot out arguments against revealing negotiated or contracted rates between insurers and hospitals.

“Many commenters did not support the disclosure of negotiated rates, stating that publishing negotiated rates would not meet the Departments’ purported goal of helping consumers understand costs and would possibly make purchasing more confusing and difficult for consumers,” it said. “Additionally, some commenters expressed concerns that publication of negotiated rates would force plans and issuers to violate non-disclosure contracts with providers. Conversely, many other commenters did support the disclosure of negotiated rates and offered support for their disclosure to participants, beneficiaries, and enrollees. These commenters stated that consumers should be engaged and educated about health care spending, and as discussed in more detail below, several commenters supported the disclosure of negotiated rates even when it is not relevant to a consumer’s cost-sharing liability.”

As it turns out, those negotiated rates have since been revealed under the July 1, 2022, law, making the language here seem somewhat quaint.

Jeanne Pinder

Jeanne Pinder  is the founder and CEO of ClearHealthCosts. She worked at The New York Times for almost 25 years as a reporter, editor and human resources executive, then volunteered for a buyout and founded...