September 2019, Volume XXXIII, No 6


Posting the cost of health care

Complicated compliance issues

innesota providers should review their practices now to ensure compliance with new pricing transparency requirements that took effect on July 1, 2019. The Minnesota Legislature approved amendments to Minnesota Statutes 62J.81 in the 2018 legislative session; Gov. Mark Dayton signed the bill on May 19, 2018.

The law also adds new transparency requirements for health insurance companies.

Requirements prior to the new bill

Health care providers had been required to provide information about payments at the request of a consumer, and at no cost to the consumer. “Provider” was broadly defined to include persons or organizations providing health care or medical care services for a fee, but excluded nursing homes.

The prior requirement was to provide a good faith estimate of the amount the provider had negotiated as payment from the consumer’s health plan for any services specified by the consumer. If the consumer had no health plan, the provider was to provide a good faith estimate of the average payment the provider would accept from private third parties for the services, and the estimated amount the consumer would be required to pay.

Health plans were subject to a similar disclosure requirement. They were to provide an enrollee (i.e., the consumer member of the health plan) with a good faith estimate of the amount the health plan had contracted for with a specific provider in the plan’s network as total payment for the specified service.

The health plan was further required to estimate what portion the member would be required to pay of the total, effectively requiring the health plan to make a prospective application of the member’s expected insurance benefits such as copayments, deductibles, and coinsurance. However, the estimate was not binding on the health plan.

The amendments to the bill expand current transparency requirements significantly.

New requirements

The amendments to the bill expand prior transparency requirements significantly. All providers are now required to provide information on other fees or charges that the consumer is likely to incur in conjunction with a visit, including any related facility fees.

Additional disclosure requirements applicable only to primary care providers include the top 25 most commonly billed procedures. These are to be identified as the most frequently billed current procedural terminology (CPT) codes, including the 10 most common evaluation and management (E&M) codes, and the 10 most frequently billed codes for preventive services. If a provider is part of a health care system, the list may be developed using the mix of services provided across the system. Primary care providers are defined to include a provider or clinic specializing in family medicine, general internal medicine, gynecology, or general pediatrics.

For the 25 top CPT codes, several different amounts must be disclosed, including:

  • The provider’s charge.
  • The average reimbursement received from commercial health plans.
  • The Medicare allowable payment rate.
  • The Medical Assistance Fee-For-Service Payment rate.

The provider’s charge is defined as the amount that must be paid by a consumer with no public or private insurance.

This information on the top 25 services must be made available on the provider’s website, and be posted in the reception area of the office or clinic.

Timing requirements are now specified, and apply to both providers and health plans. Once a complete request for information is received by either a provider or health plan, the information must be provided to the consumer or enrollee within 10 business days.

The final change clarifies that the transparency requirement may not be avoided through the application of any contractual language between a provider and a health plan company.

Providing price information to a consumer isn’t so easy

Providing patients with information about expected prices is a laudable goal. It is valuable to a consumer as a tool for decision making on elective procedures, for managing benefits under high-deductible plans, and potentially for comparing one provider to another.

However, while data on prices and consumer experience may be generalized, each patient will have an individual experience that may be significantly different from a “typical” experience.

For example, a colonoscopy is a common procedure. For a typical case, expenses might include the CPT code for the procedure, a facility charge, and fees for anesthesia. With normal results, these would all be typically paid by the health plan as preventive services and the enrollee would likely incur no out-of-pocket expense.

However, if even the smallest polyp is found and removed, the procedure is no longer preventive. The consumer in this situation would likely be facing a higher bill for a CPT code reflecting the more complex procedure, plus additional fees for lab services to test the sample. And, because the service is no longer preventive, the consumer might be facing a very large out-of-pocket expense.

Costs for maternity care can also vary broadly. Many complications relative to the desired normal delivery at 40 weeks are possible. Variations in cost could develop from a broad range of factors. Examples include an unexpected need for screening tests for the fetus, delivery by caesarean section, pre-term delivery, identification of multiples, need for anesthesia, complications from infections, etc. The list of variables is very long even for this very common condition.

These examples help show how different a patient’s costs might be relative to an expected average. Communicating assumptions used to develop an expected cost provided to members will be extremely important; the “small print” type of footnotes will be very important to help make it clear to patients that the good faith estimate is truly only an estimate, and that each procedure may entail additional unexpected costs.

Developing an approach to respond to requests for best estimates

To provide a best estimate of costs, a provider needs to be ready to identify both the fees for services they will provide as well as the services and fees that the consumer may receive from other providers or facilities. A structured approach to identify these components’ affected price will be needed.

While providers will have information about their own practices, they will not necessarily be privy to the expected costs for a hospital admission, outpatient facility services, outpatient drugs, or therapies. For providers working in an integrated system, this information will likely be more available, and ideally provided in some centralized way to the staff who must complete the good faith estimates.

Information on the top 25 services must be made available.

For health care providers working more independently, a process to obtain cost estimates for hospital admissions and average outpatient facility charges at the facilities where the provider typically performs procedures will be needed. These estimates will likely need to be less specific than those for services provided at the provider’s own office or clinic.

The requirement that the estimate be specific to the payments that are expected for the consumer’s specific health plan is likely problematic. While the law makes it clear that contracts cannot impede release of information to a consumer, it does not require one type of provider to share information with another.

Similarly, expected costs for prescription drugs are likely to be of much interest to patients and valued if available, but highly problematic for both independent providers and for those in integrated systems, since drug costs are likely subject to contracts between a health plan and a Pharmacy Benefits Manager (PBM), or between a self-funded employer and a PBM.

If providers take care in developing the list of related fees and charges that are likely to be associated with a particular service, the educational benefit to consumers will be significant. Consumers will be in a better position to understand all the requirements of care before and after a health care procedure.

The fact that a consumer may request an estimate from both their health plan and their provider may create some challenges for both. The health plan is likely in a better position to access and summarize data related to all the expenses associated with a particular service.

If this information is presented in a different format, or in a significantly different level of detail, or with a materially different estimate of costs, consumers may become frustrated. Consumers are likely to demand time from providers to discuss the expected costs and mix of related services.

Developing an approach for reporting the top 25 primary care services

Identifying the top 25 procedure codes for primary care provider practices should be a more straightforward analytical exercise. Data on charges by CPT code for the practice could be summarized for a recent calendar period (e.g., a recent 12-month period) and sorted by code and volume of procedures. The top 10 E&M codes and the top 10 preventive codes could be selected from this ranked list, and the next five additional CPT codes selected based on volume.

This data could then be further sorted by payor category to develop the required averages for payments by commercial insurance plans, Medicare, and the Minnesota Medical Assistance (Medicaid) fee-for-service program. Charges should be readily available, since they are established by the provider. If data on payments by the Centers for Medicare & Medicaid Services (CMS) or by Minnesota Medical Assistance is not of sufficient volume to determine average payments, methods to determine them are publicly available through CMS and the Minnesota  Department of Human Services (DHS).

In developing the list of averages, the primary care providers would wish to consider the optimal time of year to develop the lists, and how frequently they should be updated. If health plan contract renewals and charge master changes generally occur each January, it may be desirable to create the initial list in the fourth quarter of the year and then finalize it to reflect contract changes each January.

Analytical resources to support compliance

The data expertise and resources needed to create the process to prepare estimates and the analysis of average costs for the top 25 services may be in-house for large integrated provider systems. Alternatively, consultants with expertise in analysis of medical claim and encounter data could provide the needed support to help ensure a provider practice is ready with the required tools and information to ensure compliance under the new law.

Additional transparency requirements may be added by CMS

The need to support consumers by making cost information—including expected out-of-pocket amounts—available is also recognized by CMS. On July 12, 2018, CMS announced release of a Request for Information (RFI) seeking comments regarding “whether providers can and should be required to inform patients about charge and payment information for health care services and out-of-pocket costs, what data elements would be most useful to promote price shopping, and what other changes are needed to empower healthcare consumers.” The RFI may be found at with a search for July 12, 2018, or Agency/Docket Number CMS-1678-P.

Specific concerns identified by CMS regarding price transparency include “surprise” bills for services provided by a non-network provider at an in-network facility and bills for services that are part of an episode of care but not part of a hospital stay, such as home health or therapy services.


Minnesota providers and health plan companies face steep new requirements regarding price transparency under the new law. Both must be prepared to offer best estimates of not only the cost of a specific service, but also of any charges and fees for related services that might be incurred as a result of the service for which the estimate is requested. Health plan companies are further burdened to provide an estimate of the portion of the fee that a member will pay. Primary care providers must further be prepared to publish information about their charges, and average commercial, Medicare, and Medicaid fee-for-service reimbursement of a list of the top 25 services they provide, with an emphasis on E&M codes and preventive codes.

Providers should review their practices now to ensure compliance. In many cases, the provider’s own data will not be sufficient to respond to provide a best estimate of costs.

Providers and health plans must also consider what new processes are needed to manage the flow of requests for the cost estimates; a timely response to a complete request must be provided in no more than 10 business days.

Nancy F. Nelson, FSA, MAAA, is a Principal at Cirdan Health Systems Consulting in St. Paul. Cirdan provides actuarial and data consulting services to health plan and provider clients, including extensive work with claim and encounter data. 


PO Box 6674, Minneapolis, MN 55406

(612) 728-8600

follow us

© Minnesota Physician Publishing · All Rights Reserved. 2019


Nancy F. Nelson, FSA, MAAA, is a Principal at Cirdan Health Systems Consulting in St. Paul. Cirdan provides actuarial and data consulting services to health plan and provider clients, including extensive work with claim and encounter data.