The promise of payer transparency


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Editor’s Note: Niall Brennan is the Chief Analytics and Privacy Officer at Clarify Health. He was previously president and CEO of the Health Care Cost Institute and served as chief data officer at CMS, where he led the Obama administration’s healthcare transparency efforts.

In today’s digital age, people have access to knowledge like never before. With one exception, most Americans still have no idea how much their medical visit will cost until they receive the bill. In fact, one in five American adults received an unexpected medical bill in 2022, even after federal protections were introduced to protect patients from unexpected medical billing. Patients are often left in the dark about the cost of care and what is considered a “covered service,” and this inability to effectively research and compare services is a major barrier to achieving literacy. health and equity.

On the heels of a similar rule on price transparency that hospitals must follow, the final coverage transparency rule for payers came into effect last month in an effort to further lift the curtain on the pricing of Health care. The rule lends itself to creating a fairer and more profitable market for medical coverage and introduces a level of transparency that has long been needed in the industry. All health insurance buyers will have a window into their premiums and, in turn, consumers will have the information they need to make more informed health care decisions.

While it’s still unclear how this rule will affect the future of U.S. health care spending over the long term, and whether it will succeed in equipping patients with the information needed to “make comparisons,” one thing is certain: it’s t is a historic step towards building a culture of transparency in healthcare and has shown promise in its early stages.

Payer Rate Transparency Compliance: So Far So Far

In January 2021, the Hospital Price Transparency Rule came into effect, requiring hospitals to publish their prices online in a user-friendly format. Since its enactment, compliance with the rule has been lacking, with estimates of “full” compliance with the rule of up to 14%.

However, this hospital rule no longer exists in a vacuum with the recent deployment of its payer counterpart. While it’s still unclear how the rollout of the Payer Rule will unfold, early signals are positive for compliance, especially among large national health plans and Blue Cross.

Major industry players, including UnitedHealthcare, Aetna, Cigna and Centene, already made efforts to promote greater price transparency soon after the rule took effect. Smaller health plans may be slower to follow suit, but having America’s largest health insurers comply with these initial steps ensures that the vast majority of rates affecting the largest patient population are captured.

Health insurers are also in a better position to comply with this rule than hospitals, which often bury information deep in outdated spreadsheets and financial management systems. Claims data is the bread and butter of the operation of the US healthcare system, and health plans typically have strong analytical and IT capabilities that make it easy to access and share pricing information.

Beyond the technical advantage of insurers, the federal government will also allow insurers to use incentives, such as reduced deductibles, as a means of encouraging members to purchase services from higher value providers and cheaper. When enrollees take advantage of these incentives, health plans can give consumers a portion of the savings and include “shared savings” in the numerator of medical loss ratio rules to reduce what they pay in reimbursements.

Promise, Perils of Big Data

However, respecting this rule is not an easy task. Although specifications and data layouts for payer transparency files are reasonably straightforward and have been made available well in advance, the raw data files themselves are overwhelming in size, even for power users and organizations accustomed to handling massive amounts of data.

For example, downloadable data from a single national payer, albeit the largest, United Health Group, requires over seven terabytes of storage and will be updated every 30 days. By my estimation, all rate information from all payers will be over a petabyte of data and possibly more. To put that into perspective, a single year of claims data for the Medicare program, which includes every hospital visit, doctor visit, lab test, and prescription drug, could exceed more than two terabytes. So while the information at face value is likely to be valuable to industry players and researchers, no consumer will be able to use the massive datasets at scale, at least for now.

Much is at stake if this information remains unusable for consumers and employers who continue to be the primary source of health insurance coverage for more than 160 million Americans. The lack of price transparency continues to drive unsustainable increases in our national healthcare spending and leaves many patients with growing medical debt. In fact, nearly one in 10 American adults has significant medical debt, with minorities, people with disabilities and those in poor health being most at risk. Meanwhile, the average cost of employer-sponsored health insurance per employee rose 6.3% in 2021, and while employers expect a more standard 4.4% increase this year, several factors such as higher utilization due to “catch-up” care and high drug therapy costs, could lead to continued price acceleration.

Healthcare innovators strive to ingest data to make it easier for employers and consumers to access and interpret, in addition to providing insights that drive provider-payer collaboration . When this goal is achieved, data will become more than just JSON files – it will become intelligence, a tool that consumers can use to support their healthcare journey.

The future of price transparency is at a crossroads

Historically, price transparency rules have met with opposition from healthcare players, who frankly agreed with the status quo that kept predatory pricing a secret, and the price transparency rule coverage is no exception. Still, it’s important to recognize that just a few years ago, the idea that this type of data existed was almost inconceivable. This rule represents giant steps for the industry, as it aims to empower patients to make more informed decisions.

The public dissemination of pricing data is largely uncharted territory in the healthcare industry. And while the U.S. still has a long way to go to achieve the desired price transparency results, the Payer Rule – in combination with the previous Hospital Rule – is a key illustration of the significant progress health care have achieved over the past decade. This will inevitably trigger lasting changes in the industry, promoting greater transparency and choice in healthcare.

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