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A new healthcare cost transparency law in New York State created to protect consumers requires insurers to publish clear information about health plan rules.
A new healthcare cost transparency law in New York State aims to protect consumers from health plan cost issues that have challenged even the savviest consumers. The law, which other states are watching closely, requires insurers to publish clear information about plan rules for apples-to-apples comparsions.
Plan documents must provide detailed explanations and examples of reimbursement calculations that will enable consumers to compare the benefits of various plan options and, once enrolled, make better informed treatment decisions.
The new law defines a specific standard, “usual and customary cost” or “UCC,” against which every plan’s out-of-network reimbursement benefits must be compared. FAIR Health’s 80th percentile benchmark for healthcare charges has been officially designated as the UCC standard. The law also requires plans to provide public, accessible and up-to-date information about their networks and requires providers to disclose publicly their network affiliations and charges. In addition, the law creates consumer protections against high expenses for emergency services and “surprise” out-of-network bills, while offering payors, providers and consumers a new, independent dispute resolution process to resolve disagreements about charges.
By requiring detailed disclosure of plans’ reimbursement terms, the new law will help consumers understand that plans’ formulas for determining reimbursements can vary significantly. Too frequently consumers research fees for services but still incur unexpected out-of-pocket costs because they do not fully understand their plans’ out-of-network reimbursement method. For example, some individuals may assume that a reimbursement formula based on 140% of the Medicare fee schedule will result in higher reimbursement than 70% of a traditional “usual, customary and reasonable” formula, when generally the reverse is true. New York’s law will help consumers grasp such differences, thereby transforming information into understanding and creating clarity.
While the New York law imposes disclosure obligations on payers and providers, it also requires that plan members bear some responsibility for managing their own costs. With current network information available, consumers will be equipped to take full advantage of their benefits. Often consumers are unaware that at an in-network hospital, they might be treated by healthcare professionals who are not in their plan’s network. Prior to the law, hospitals did not always inform patients about professionals’ network participation. Now, health plans must provide publicly available up-to-date lists of physicians, hospitals and other providers belonging to their networks. And hospitals, medical practices, diagnostic and treatment centers must disclose which providers are out-of-network.
The law recognizes that in emergency situations, consumers cannot research networks and costs in advance, but that in other circumstances, they can ask questions and plan their treatment. Insured New York consumers can rely on the law to protect them against unexpected out-of-pocket costs for out-of-network emergency bills for life-threatening conditions and severe injuries. In these cases when consumers have no choice but to seek immediate care, usually from the nearest hospital, the law limits individuals’ liabilities to the amount that they would have had to pay if they had obtained the emergency services in-network.
The law also protects insured individuals who make good faith efforts to obtain services in-network but inadvertently receive “surprise” bills for services that were out-of-network. Consumers who make inquiries and seek assurances that their professional providers and facilities are in-network but nonetheless incur out-of-network charges also are protected from bills that exceed the amount that they otherwise would have paid in-network. Consumers who fail to seek information about providers’ network affiliations, or who choose to obtain out-of-network services, are not entitled to these statutory protections.
The entire healthcare sector will be watching New York’s experience with its new law. Meanwhile, plans and their sponsors can offer their own support for healthcare cost transparency and clarity. By offering cost estimation tools and consumer-friendly educational materials, they can help plan members deal effectively with the trend to higher deductibles and greater cost-sharing while realizing the greatest value from their plan benefits.
FAIR Health offers consumers free tools and educational materials on insurance and healthcare costs generally at www.fairhealthconsumer.org and in Spanish, www.consumidor.fairhealth.org. More detailed information about the New York law and FAIR Health resources can be found at www.FAIRHealthNY.org.
Robin Gelburd is the founding President of FAIR Health, an independent nonprofit with the mission of bringing transparency to medical and dental costs and insurance information.