AHIP Issues Criticism on Final CMS Price Transparency Rule

America’s Health Insurance Plans (AHIP) has come forth with critique of the price transparency final rule, saying that it will drive healthcare prices up and decrease industry competition.

The criticism, levered at the Centers for Medicare & Medicaid Services (CMS) follows the recent price transparency rule finalization. The final rule requires the disclosure of privately negotiated rates between health insurance providers and drug makers, providers and device makers.

“The approach in the rule is flawed,” Matt Eyles, president and CEO of AHIP, said in a statement. “As consumers’ bargaining power, health insurance providers work hard to negotiate lower prices, which result in lower premiums and costs. Competition experts, including the bipartisan Federal Trade Commission, agree that disclosing privately negotiated rates will reduce incentives to offer lower rates, creating a floor – not a ceiling – for the prices that drug makers, providers, and device makers would be willing to accept.”

In the statement, Eyles argued that the new rule goes against what American families want in their healthcare by noting that 75 percent of Americans reported that they would not support a federal regulation for price transparency if it would in turn raise the cost of premiums.

Additionally, Eyles said that the majority of health insurance providers are already offering price transparency to patients so that they can make informed decisions about their care.

“At least three-quarters of commercial health insurance providers already offer price transparency tools to the more than 120 million people they serve, according to AHIP research,” explained Eyles. “Health insurance providers strive every day for workable, consumer-friendly transparency that ensures health care information is personalized, easy-to-understand, accurate, and actionable, focusing on care for which Americans can actually shop.”

According to CMS, the rule will provide patients with the information necessary to shop around and find the best cost for quality care.

“The American patient is begging for change," said CMS Administrator Seema Verma. "This is an opportunity to turn our whole health system around."

Verma called the rule a “turning point” and said that its adoption “ushers in a new era of price transparency and patient empowerment in this country.”

HHS Secretary Alex Azar echoed Verma’s sentiments.

“When I first identified transparency as a key part of value-based transformation when I started as secretary in 2018, I said you should have the right to know what a health care service is going to cost, and the right to know what it’s going to cost you out of pocket,” said Azar. “That’s what today’s rule will do.”

The new rule was designed to convert America’s noncompetitive markets to competitive markets, according to Marty Makary, MD, MPH, chief of the Johns Hopkins Islet Transplant Center. "It's an American disgrace that the price to deliver a baby in New York City ranges from $6,000 to $70,000 with no difference in quality," Makary explained to AJMC. "It's the Wild West."

The rule, which applies to payers on the group and individual health insurance markets as well as most group health insurance plans, requires that payers make their rates available in data sets for plan or policy years starting on or after January 1, 2022.

Beginning on or after January 1, 2023, payers must make pricing information available to patients in their online, self-service tool for 500 “shoppable” services that CMS will identify.  Lastly, payers must make cost-sharing information for all items and services available to patients on or after January 1, 2024, including in-network rates, out-of-network charges and allowed amounts, and prescription drug pricing.

Another piece of the transparency rule, which requires hospitals to disclose what they charge for services, is slated to go into effect January 1, 2021.