Want a clue on health care costs in advance? New tools take a crack at it

Need medical treatment this year and want to nail down your out-of-pocket costs before you walk into the doctor's office? There's a new tool for that, at least for insured patients.

As of Jan. 1, health insurers and employers that offer health plans must provide online calculators for patients to get detailed estimates of what they will owe — taking into account deductibles and copayments — for a range of services and drugs.

It's the latest effort in an ongoing movement to make prices and upfront cost comparisons possible in a business known for its opaqueness.

Insurers must make the cost information available for 500 nonemergency services considered "shoppable," meaning patients generally have time to consider their options. The federal requirement stems from the Transparency in Coverage rule finalized in 2020.

So how will it work?

Patients, knowing they need a specific treatment, drug, or medical service, first log on to the cost estimator on a website offered through their insurer or, for some, their employer. Next, they can search for the care they need by billing code, which many patients may not have; or by a general description, like "repair of knee joint," or "MRI of abdomen." They can also enter a hospital's or physician's name or the dosage amount of a drug for which they are seeking price information.

Not all drugs or services will be available in the first year of the tools' rollout, but the required 500-item list covers a wide swath of medical services, from acne surgery to X-rays.

Once the information is entered, the calculators are supposed to produce real-time estimates of a patient's out-of-pocket cost.

Starting in 2024, the requirement on insurers expands to include all drugs and services.

These estimator-tool requirements come on top of other price information disclosures that became effective during the past two years, which require hospitals and insurers to publicly post their prices, including those negotiated between them, along with the cost for cash-paying or uninsured patients.

Still, some hospitals have not fully complied with this 2021 disclosure directive and the insurer data released in July is so voluminous that even researchers are finding it cumbersome to download and analyze.

The price estimator tools may help fill that gap.

The new estimates are personalized, computing how much of an annual deductible patients still owe and the out-of-pocket limit that applies to their coverage. The amount the insurer would pay if the service were out of network must also be shown. Patients can request to have the information delivered on paper, if they prefer that to online.

Insurers or employers who fail to provide the tool can face penalty fines of at least $100 a day for each person affected, a significant incentive to comply — if enforced.

And there are caveats: Consumers using the tools must be enrolled in the respective health plan, and there's no guarantee the final cost will be exactly as shown.

That's because "unforeseen factors during the course of treatment, which may involve additional services or providers, can result in higher actual cost sharing liability," federal regulators wrote in outlining the rules.

Insurers will not be held liable for incorrect estimates.

Because the cost estimates may well vary from the final price, either because the procedure was more complex than initially expected, or was handled by a different provider at the last minute, one risk is that "I might get a bill for $4,000 and I'm going to be upset because you told me $3,000," said Gerard Anderson, a professor of health policy and management and of international health at the Johns Hopkins University Bloomberg School of Public Health.

Many insurers have offered versions of cost-estimator tools before, but small percentages of enrollees actually use them, studies have shown.

Federal regulators defended the requirement for estimator tools, writing that even though many insurers had provided them, the new rule sets specific parameters, which may be more detailed than earlier versions.

In outlining the final rule, the Centers for Medicare & Medicaid Services pointed out that some previous calculators "on the market only offer wide-range estimates or average estimates of pricing that use historical claims data" and did not always include information about how much the patient had accumulated toward an annual deductible or out-of-pocket limit.

The agency says such price disclosure will help people comparison-shop and may ultimately help slow rising medical costs.

But that isn't a given.

"CMS has a lot of people who believe this will make a significant impact, but they also have a long time frame," said David Brueggeman, director of commercial health at the consulting firm Guidehouse.

In the short term, results may be harder to see.

"Most patients are not moving en masse to use these tools," said Dr. Ateev Mehrotra, a professor of health care policy at Harvard Medical School.

There are many reasons, he said, including little financial incentive if they face the same dollar copayment whether they go to a very expensive facility or a less expensive one. A better way to get patients to switch to lower-cost providers, he said, is to create pricing tiers, rewarding patients who seek the most cost-effective providers with lower copayments.

Mehrotra is skeptical that the cost estimator tools alone will do much to dent rising medical prices. He's more hopeful that, in time, the requirement that hospitals and insurers post all their negotiated prices will go further to slow costs by showcasing which are the most expensive providers, along with which insurers negotiate the best rates.

Still, the cost-estimator tools could be useful for the increasing number of people with high-deductible health plans who pay directly out-of-pocket for much of their health care before they hit that deductible. During that period, some may save substantially by shopping around.

Those deductibles add "pressure on consumers to shop on price," said Brueggeman, at Guidehouse. "Whether they are actually doing that is up for debate."