price transparency

While most Americans were setting up their out-of-office email messages and preparing to fire up the grill for the Fourth of July holiday weekend, the rules governing their health insurance were unlikely top of mind.

But on Friday, July 1, 2022, after months of implementation delays, a new rule went into effect that could upend how Americans shop for healthcare services—and how much they pay.

The Transparency in Coverage Final Rule, issued by the Centers for Medicare and Medicaid Services (CMS), requires health insurers to disclose pricing for covered services and items. Insurers must include the rates they have negotiated with participating providers for all covered services and items, as well as the allowed and billed amounts for out-of-network providers. Allowed amounts are the maximum rates insurers will pay for a given service and billed amounts are what providers have actually charged.

Taken together, this information should provide consumers with a clearer sense than they can get today of what their health insurance plan will pay for, even if they see doctors who don’t participate in their health insurer’s provider network. With that information, people can theoretically make informed trade-offs about which healthcare providers to see.

The information should also allow Americans to project their out-of-pocket costs more accurately because the amount the insurer will reimburse should no longer be a mystery. Knowing the out-of-pocket costs before you incur them is a level of visibility Americans have been afternoon lacking.

The new insurance transparency rules follow the January 1, 2022 implementation of the No Surprises Act, which protects consumers from unexpected charges for certain services. The No Surprises Act requires private health insurers to cover certain out-of-network bills at the same rates they would if the services had been provided within the health