Understanding your plan
As a patient in the marketplace, many assume the charged amount set by the healthcare provider is the amount paid for service. However, your specific insurance plan and network with the healthcare provider will determine what is actually owed and paid. In-network providers have negotiated rates with the providers, which may allow a discount from the charge amount set. If you are a patient seeing an out of network provider, you are technically responsible for the entire charge amount.
However, insurance companies will still set some benefit based on your plan if a patient has out of network benefits. The amount contributed and priced by insurance carriers on out of network plans are determined by different pricing models.
These models can be based on several factors, including Medicare, a negotiated percentage of the charge amount, usual and customary pricing, or tapping into a contract with a TPA and applying out of network rates.
Risks to market
All these models make it very difficult for healthcare systems to let a patient know exactly what they will owe or be charged. The new rule with CMS requires health systems to publish their charges, but that still does not let a patient know what they will owe.
The next phase to the CMS rule for Health Systems is to drill down to the insurance level and publish their allowable rates. The major concern is that rates with different health systems vary quite a bit based on population size, location and other factors. If rates were published, it would make it so that insurances have leverage to compare their rates to other insurances and could consolidate the market. This could make the pricing much more competitive, but may have some impact on smaller systems as they will find it tougher to negotiate all of the services.
The price transparency may also have an impact on the value-based model because it is designed on a fee for service type of model and only takes into consideration the actual service performed. The value-based care model is more driven by the outcomes of the service and management of patient care. This will directly go against that type of model since it will require systems to devote more support to unit price competition versus quality and value.