North Carolina’s opportunity to ban healthcare industry gagging clauses and unleash price transparency

This piece was co-written with Cynthia Fisher.

[Editor’s note: This opinion piece was originally published at Forbes.com and is reprinted with permission]

Jason Dean from Tennessee points needed on his knees after a minor accident last year. He went to a local hospital who told him insurance would cover the procedure. A few weeks later, he received a bill for $6,500, of which his insurer only covered about half.

Jason thought the bill was a joke, but in the opaque American healthcare system where prices are hidden until consumers receive care, the joke is on him. Adding insult to injury: urgent care clinics provide the same care for approximately $275 without insurance.

New federal rules on healthcare price transparency allow patients like Jason to avoid this common nightmare of overcharging. A Hospital Pricing Transparency Ordinance that came into effect on January 1, 2021 requires hospitals to publish their actual prices, including their cash rebates and negotiated rates by insurance plan. And on July 1, a health insurance price transparency rule comes into effect, requiring insurers to reveal their historical claims data and negotiated rates so patients can access upfront prices wherever they receive care. Armed with these real, up-front prices, consumers like Jason can prevent hospital overcharging through their choices and seek an easy remedy and remedy in the event of overcharging.

Unfortunately, North Carolina law has a gag clause for public employee health care plans that keeps negotiated rates and historical claims data confidential. To align with federal law, hold state employees accountable, and unleash price transparency for all North Carolina consumers, this law should be immediately repealed or revised.

Hospitals and state health insurers have long taken advantage of this gag clause to profit from keeping patients in the dark about prices. In 2018, the nonprofit health system UNC replied to a request for public records regarding the actual rates he charges the North Carolina state health plan with a heavily redacted document and prices erased. Even more interestingly, UNC Health employees are members of the North Carolina State Health Plan.

Federal law issupremeunder the US Constitution and prevails over state law. In a legal challenge to North Carolina’s opaque pricing rules, federal law would supersede it. Consumers have fought hard for these rules, including winning industry-backed challenges to the hospital rule in the Federal District and appellate courts in 2020.

Yet competing state and federal laws threaten to delay the release of these actual prices for consumers who need them now to protect their financial and personal health. North Carolina insurers will use state law as justification to continue to hide their true prices from state employees and the taxpayers who fund their care.

Consumers can’t wait and need access to real prices now. Last week, the Kaiser Family Foundation released a new analysis stating that a shocking 100 million Americans have medical debt. According to the Urban Institute, almost One out of five North Carolina has medical debts in collection. Another one report published last week by the Consumer Financial Protection Bureau finds that members of the military regularly see their credit ruined due to hospital overcoding and fraudulent billing. Employers, who provide most Americans with health care, had to cut employee wages as coverage costs soared at the worst possible time as inflation soared.

On Wednesday, North Carolina lawmakers will vote on a bill to bring state law into line with federal law. However, major hospital systems are secretly trying to kill this pro-consumer bill.

Lawmakers can ensure North Carolina consumers get all the transparency benefits of federal price transparency rules by simply repealing the state law that mandates secret pricing. A recent study by PatientRightsAdvocate.org finds that only 14.3% of hospitals nationwide – and only 19% in North Carolina – comply with the hospital price transparency rule.

When all the true prices for care and coverage are known in advance, a functional, pro-consumer health market will emerge. Patients and employers will be able to buy the best care and coverage at the best prices, sparking competition that reverses sky-high costs and fights inflation in health care.

Josh Archambault is the founder of Presidents Lane Consulting and senior researcher at the Cicero and Pioneer institutes. Cynthia Fisher is the founder and president of PatientRightsAdvocate.org and the founder and former CEO of ViaCord.

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