Price Transparency – Is It Coming to Workers' Comp and Auto?

On October 29, 2020, the Centers for Medicaid and Medicare Services (CMS), in conjunction with the Department of Labor and the Department of the Treasury, released a final price transparency rule in health care. The rule language, public comment and CMS responses comprised a 556-page document that details the rationale for the rule and how the rule will be applied and implemented. 

CMS hopes the rule will help rein in the costs of health care by allowing consumers with high deductibles or copays to shop for services among covered providers, with the idea that the disclosure of pricing will bring competitive pressure to bear in the health care marketplace. The rule includes several transparency components for group health plans and individual health plans:

• Disclosure of cost-sharing information to plan beneficiaries, including the individual’s liability for covered services;
• Disclosure of in-network provider negotiated rates;
• Disclosure of historical out-of-network allowed amounts; and
• Disclosure of negotiated drug pricing information.

The rule only applies to group health and individual health plans. There is no mention of workers’ compensation or auto insurance in the rule or comments. However, there could be some indirect impact in workers’ compensation and auto claims, as changing prices for care in the health care market could affect pricing benchmarks like usual and customary or FAIR Health. 

Some have posed the question on whether or not a rule similar to this could be proposed for workers’ compensation. The CMS rule is designed to be a tool used by individual health care consumers to help stretch their deductible dollars and minimize their out of pocket costs. In workers’ compensation, in nearly all cases, injured workers have no out of pocket costs. In auto insurance Personal Injury Protection (PIP) or medical payments coverage, those benefits are typically first dollar coverage and there is no cost sharing for the insured. The “consumer” for these insurance products is the insurance carrier or self-insured entity. 

Most states establish a ceiling for the cost of health care in workers’ compensation and auto by using a fee schedule. In states without direction of care, the “consumers” (insurance companies or administrators) can negotiate with providers for voluntary discounts below the fee schedule. When direction of care is allowed, the insurance companies or claims administrators negotiate discounts and quality of care metrics with the various health care providers as a condition for participating in the network. In exchange, the carrier or administrator directs injured workers or claimants to the in-network providers. This dynamic creates competition in the workers’ compensation and auto insurance marketplaces. Insurance carriers and administrators seeking or renewing a managed care program have no shortage of companies willing to bid on providing those services. The competition is robust and the solutions are becoming increasingly innovative. 

From a practical standpoint, a price transparency rule similar to the one promulgated by CMS may not have as much real value in the workers’ compensation or auto insurance systems. Insurers and administrators already have visibility on pricing either through the fee schedule or through negotiated fees. One of the best tools for price controls in the workers’ compensation and auto insurance markets is allowing for direction of care into a provider or pharmacy network. This not only allows for greater transparency into costs by the ultimate “consumers” via the fee negotiation process, it also provides the carriers and administrators with a tool to encourage their claimants to access better quality care at greater value.

By Brian Allen

Brian Allen is a nationally recognized policy expert for workers' compensation and insurance issues across the country. Allen currently serves as Vice President of Government Affairs for Mitchell's Pharmacy Solutions team. In this role, Allen provides insight into new legislation and regulations in the industry, authors articles and blogs for industry publications and frequently speaks at conferences across the country.

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