Employers Face Liability over Hospital Prices in Health Coverage

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Employer-run health plans must learn to use newly available hospital price data to determine fair prices or they could face legal action from plan members.

The Consolidated Appropriations Act of 2020 requires employer-sponsored health plans, acting as fiduciaries, to pay a fair price for services provided, and it requires hospitals and health plans to make the prices paid public.  If health plans do not, there could be legal action from plan members.  

The new transparency requirements of the Consolidated Appropriations Act and regulations issued during the Trump administration are pushing employers that sponsor health plans to provide more information about, and justify, the prices they pay hospitals.  At the same time, the rules provide them with an opportunity to negotiate for better prices.  Hospital costs make up the largest segment of health-care costs.  

Most plan sponsors are not sure what their transparency responsibilities are under the Consolidated Appropriations Act.  Prior to passage, employers did not have the information needed to determine fair prices. 

In addition to employers being able to get information on what prices hospitals charge for their services, the new law requires employers to provide more information on how their mental health benefits compare to medical and surgical benefits.  

The latest version of RAND's hospital transparency study, based on a comparison of hospital prices and Medicare prices, was released May 5 at the Employers' Forum of Indiana National Hospital Price Transparency conference.  The RAND studies have become a benchmark for comparing hospital prices throughout the U.S. The study will continue to increase the number of hospitals and amount of claims data under analysis  

Employers also should consult https://employerptp.org/sage-transparency/ to obtain hospital pricing data from several sources.

This is part of our June 2022 Newsletter.

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