Effective since Jan. 1, 2021, the Hospital Price Transparency Rule is the federal government's attempt to make health care pricing more transparent for patients. The goal is to make hospital services "shoppable" and eventually drive down costs for consumers. Nearly two years since this Rule took effect, almost two-thirds of hospitals are in compliance, according to one survey. Why does it still feel like nothing has changed?
To comply with this Rule, hospitals must make their standard charges publicly available online in two ways. First, they must post their chargemaster, which includes standard charges for all hospital items and services, in a comprehensive machine-readable file. Second, the chargemaster must include a consumer-friendly display that includes standard charges for at least 300 shoppable services customarily provided by the hospital.
Recommended For You
Transparency is lagging
Initial adoption to comply with this Rule has been slow. In fact, one study analyzed 5,000 hospitals in the six to nine months after Jan. 1, 2021 and found less than 6% of those hospitals were in compliance. Another audit found that many hospitals are partially complying but missing key information for patients. For example, more than 60% did not publish a sufficient amount of negotiated rates, while several others did not publish any discounted cash prices. The lack of incentive for hospitals to comply has led to this slower than anticipated adoption by some and the acceptance of a daily fine for non-compliance by others.
Now, regulators have decided to intervene to accelerate hospitals' compliance with this Rule. In September, New York City unveiled new legislation that would add more price transparency requirements for hospitals. As part of this legislation, a newly created enforcement office will impose significant financial penalties for hospitals found to be out of compliance. It's possible more cities or states will follow suit if this legislation is successful. The industry is slowly inching toward more health care price transparency, but it's not moving at a pace that will benefit patients any time soon.
Get off the sidelines
Rather than watching from the sidelines while hospitals and regulators work through this process, employers and their brokers can use this time to explore how they can achieve lower health care costs on their own. This coming year especially, it will be even more important for employers to be proactive with their employees' health plans based on price projections.
In 2022, premiums stayed relatively the same year-over-year, according to the Kaiser Family Foundation's (KFF) annual benefits survey. What was a big win for this year could be a warning for what's to come, though. Many of these premiums were set before the economy saw the true effects of inflation. With inflation in full swing, KFF expects higher than typical increases in average premiums next year, and they're not alone.
According to Aon, employers' costs are projected to increase 6.5% per employee in 2023 – more than double the 3% increase they experienced in 2022. This increase is a result of the dire situation facing our health systems, from inflation, staffing shortages and high demand – none of which appear to be near a resolution. Brokers would be wise to heed these warning signs and start directing their clients toward more cost-effective healthcare solutions.
The shift to self-funding
Self-funded health plans are one cost-effective solution that could help employers reduce costs. Self-funded plans have become an increasingly popular alternative solution over the past decade, with the number of workers on self-funded plans jumping significantly in 2020. This year, 64% of workers are on a self-funded plan.
Brokers can also consider educating their clients on taking their self-funded plan to the next level with a reference-based pricing (RBP) model. An RBP model eliminates any hidden fees and puts the power back in the employer's and their employees' hands. Rather than having to deal with complicated and elusive hospital chargemasters, an RBP solution allows patients to pay for the true cost of the services as reported by hospitals. The best RBP solutions will also provide support for any balance billing. This takes a significant financial burden off patients, and their employers too.
With record inflation affecting every aspect of our lives, the cost savings an RBP solution provides gives workers financial flexibility when they need it most. Employers can also reduce costs and reallocate the savings to other business needs. Having the flexibility to reinvest in employee benefits and perks is a powerful option to attract candidates in today's competitive job market.
Huddle with your clients
Employers are facing difficult business challenges in today's economy. Now, especially, they will rely on their brokers to help uncover cost-effective solutions. Brokers are in a unique position to help their clients see that there are solutions to combat rising healthcare costs. Health insurance price hikes are coming, and by acting now, brokers can help their clients reduce costs and enjoy immediate and long-term savings.
Jeff Bak is President and CEO of Imagine360.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
