Health care costs in the United States are usually shrouded in mystery for consumers, who often have little idea what charges are coming for care and few ways to shop around to get the best deal.
But new rules are designed to make health care pricing more transparent, and CPA financial planners could use that information to help clients make more informed decisions about their health care costs.
In November, the Trump administration announced two health care transparency rules aimed at helping patients know the cost of their medications, medical visits, and procedures upfront. The idea is that if patients know exactly what something costs, they have the opportunity to shop around.
The administration said that the price transparency rules are intended to increase competition among hospitals and insurance companies and drive costs down.
The first rule requires negotiated prices between health care facilities and insurance companies to be made public in an online, user-friendly format. It also requires hospitals to list the prices for 300 standard procedures, such as X-rays, lab tests, or a cesarean birth.
This rule is final and set to go into effect in January 2021. Health care associations and hospital systems are already pushing back, with some challenging the rule in court.
The second proposed rule — which is not yet final — would require insurance companies to give health care consumers "real-time, personalized access to cost-sharing information, including an estimate of their cost-sharing liability for all covered healthcare items and services," according to the Health and Human Services Department announcement.
Since the rules haven't been implemented yet, there aren't any established best practices regarding how to use them. So, it's important for CPA financial planners to keep a close eye on the rules as they develop in order to determine how to best help their clients.
Jim Sullivan, CPA/PFS, a CPA financial planner in Wheaton, Ill., who specializes in health care finances, said clients already need assistance in this area, whether they are on Medicare or a private insurance plan. More price transparency among hospitals and insurance companies could help patients and their financial advisers even more in finding the best prices.
Sullivan said he often walks clients through medical bills or assists them in finding better prices for medications. He also helps his Medicare clients navigate the program to find the most cost-effective plan for their needs. Typically, he said, Medicare clients need to reassess their plan options over time as their health needs change. And he advises all his clients to shop around for things such as lab tests and scans.
"That's the most important thing I think I teach clients — and CPAs can teach their clients about — is shopping for health care needs," Sullivan said.
He pointed to a study by Zach Brown, Ph.D., a health economist with the Institute for Healthcare Policy and Innovation at the University of Michigan, who found that price transparency tools currently available on a limited basis have resulted in lower health care costs for consumers.
Brown noted that for nationwide price transparency to be effective in reducing health care costs, there must be a sufficient level of hospital competition. This could be more challenging in areas with fewer options, as hospital mergers become more prevalent.
For price transparency to be helpful to patients, Sullivan believes that many people will need someone — whether a CPA or another adviser — to help walk them through it.
— Taylor Knopf is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Chris Baysden, a JofA associate director, at Chris.Baysden@aicpa-cima.com.