New federal healthcare price transparency regulations could cost employers in Washington state and across the country $100 per day if they don’t comply. Despite the potential for steep penalties, many industry groups in Washington state say they were unaware of the new rule.
This includes the Association of Washington Business, which has 7,000 members employing 700,000 workers, the Washington Food Industry Association, which represents more than 23,000 workers, and the Washington Retail Association.
The new requirement, enacted through the Affordable Care Act and expanded upon in the 2020 No Surprises Act, requires health insurance carriers to publicly disclose their in-network negotiated rates or the actual price versus the “official” or retail price, along with other information via an online tool.
The goal is to increase transparency in healthcare pricing, which can vary widely depending on the provider and whether they’re in-network or out-of-network for a specific plan. The lack of transparency is due, in part, to the fact that healthcare costs aren’t typically disclosed until after services are provided, and legally, health providers don’t have to disclose them prior to treatment.
The new rule places the burden of enforcement on employers who offer health insurance to their employees and face fines of $100 per day per business for noncompliance, or $36,500 a year. While the fines may provide a financial spur for businesses to insist on transparency from their insurance providers in the long term, it is not yet clear which federal bureaucracy will issue the fines. The rule involves three agencies: the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury.
The new regulation went into effect in January, and all covered healthcare items like prescription drugs must be part of the carrier’s online transparency tool for plan years that begin on or after January 2024. Despite the potential penalties, some industry experts see the new rule as a positive step towards transparency. Mark Galvin, President and CEO of Talon, a software services provider that offers a smartphone app allowing users to compare health insurance plans, called the switch from “zero transparency to 100% transparency” a “huge success.”
However, he acknowledged that healthcare providers have a First Amendment right to keep their negotiated rates private and that the fines may not be enough to incentivize transparency.