What You See is What You Pay: 5 Things to Know About Patient Cost Transparency in 2021

Last year, the Centers for Medicare and Medicaid Services (CMS) quietly unveiled the Transparency in Coverage final rule, which promotes healthcare cost transparency for patients and providers alike. Set to kick off in January 2022, this initiative will not only help patients understand and plan for the cost of medical procedures and services, but also require insurance payers to be more upfront about how much they reimburse providers for services rendered.

This new rule, which you can read here, is oozing with potential to spark some serious change in the healthcare industry by “requiring the dissemination of price and benefit information directly to consumers and to the public.” As the rule explains, greater transparency in coverage provides patients with the following benefits:

• Enhanced ability to evaluate healthcare options and make budget-friendly decisions;
• Increased patient support and protection from stakeholders;
• Reduction in surprise out-of-pocket costs;
• Potential for a more competitive dynamic in the health service market; and
• Increased pressure on payer entities to lower overall healthcare costs.

1. Currently, the new cost transparency rule only applies to payers and hospitals.

During the first two years of this program, CMS is focusing on payer transparency. This means insurance companies will need to be more upfront about which services they cover as well as how much they pay both in-network and out-of-network providers for those services.

As of right now, there is no language in the rule that outlines private practice participation. However, during a recent discussion with John Wallace, PT, MS, WebPT’s Chief Development Officer for Revenue Cycle Management, he noted that this will likely change. Wallace speculates that, in the future, inclusion in the transparency program will depend on annual gross income from Medicare. He believes CMS will bring practices into the program in cohorts, focusing first on larger Medicare providers. (For those providers who are familiar with the Merit-Based Incentive Payment System [MIPS], the rollout of this transparency initiative will likely be quite similar.)

As for an estimated timeline, if—or more likely, when—rehab therapists become eligible for participation, it’ll likely be a few years into the program (similar to what we’ve seen with previous CMS initiatives). 

2. This rule will enable private practice rehab therapists to see what hospitals charge.

While this initiative only applies to facility-coded groups (e.g., hospitals and SNFs) for the time being, private practice rehab therapists should still pay attention. In some private practice circles, there’s a pervasive belief that payers reimburse hospital-based therapists at a higher rate than outpatient therapists for the same services. As it stands, that belief is difficult to confirm. However, increased pricing transparency will allow private practice providers to compare their reimbursement rates to those of their facility-based peers—and potentially use that information to negotiate better rates from those same payers.

3. As a result, outpatient providers can make more informed payer contracting and credentialing decisions.

The benefits also extend beyond negotiating existing contracts. As Wallace pointed out, “Unfortunately, low pricing hasn’t been enough to keep people from signing bad contracts. That’s the biggest reason pricing has gone down: because providers are willing to sign contracts for lower rates out of fear.” But with this new initiative, payers will have greater accountability as lower-paying carriers are forced to compete with their higher-paying peers for access to rehab services.

4. Patients can also make more informed decisions when choosing their insurance plans.

Eventually, this rule will help patients make smarter choices about health insurance. As patients select their coverage—whether that be through employer-provided plans or independently—they’ll be able to discern which payers offer better coverage for services they use or plan to use in the near future. This type of transparency could also positively impact overall patient outcomes. As a patient, Wallace pointed out, “you’re potentially going to receive better care if the payer is paying your provider more.”

5. Payers and hospitals will be required to post data sets.

For the first time, broad data on things like care cost and utilization will be publicly accessible. What’s particularly significant is that this information won’t come solely from federal payers—which already make their data sets available. Private payers—which are notoriously tight-lipped about cost and utilization—will also be represented. This opens a major doorway for advocacy groups—including the APTA—to not only make meaningful strides toward promoting access to care, but also measure the success of those efforts. As the 2017 joint study between the APTA and Optum taught us, cold, hard data can prompt a payer to increase access to conservative therapies—and potentially even raise reimbursement rates. Now, imagine what having widespread utilization and cost data for every payer could do for access to rehab therapy.

Stay tuned to the WebPT Blog for more updates on this initiative. This certainly won’t be the last we hear about cost transparency in the healthcare space, and we’re excited to see what’s in store for private practice rehab therapists.