skip to Main Content
 

Healthcare Price Transparency

  • This page as PDF

Summary

Tune into another episode of Avalere Health Essential Voice in our Start Your Day with Avalere series. In this segment, our policy experts discuss the topic of healthcare price transparency in terms of policy, compliance, and the potential impact of making previously confidential pricing information public.
“The goal here is not necessarily to change consumer behavior, but to enhance it and give consumers additional information so they can make better-informed decisions.” Andrew E. Van Ostrand

Panelists

Moderator
Kolton Gustafson , Consultant II, Policy

Kolton Gustafson assists clients in evaluating the impact of federal health policy developments on their business priorities and policy engagement strategies.

Speaker
Myra Simon , Principal, Policy

Myra Simon provides strategic insight to health plans, providers, drug manufacturers, and advocacy organizations to help them understand existing federal healthcare policy, identify how policy proposals impact their businesses, and develop advocacy plans.

Speaker
Andrew E. Van Ostrand , Principal, Policy

Andrew supports and advises a range of payer, medical device, life sciences, and association clients with research and analysis focused on healthcare policy and payment reform.

Transcript:

Kolton: Hello and welcome to another episode of Avalere Health Essential Voice in our Start Your Day with Avalere series. My name is Kolton Gustafson, and I’m a Consultant in the Policy practice here at Avalere. I’m joined today by my colleagues, Myra Simon, a Principal in our Policy practice, and Andrew Van Ostrand, also a Principal in our Policy practice.

Today’s episode will focus on healthcare price transparency efforts and the anticipated impact of making previously confidential pricing information accessible to the public. Let’s jump in.

Andrew, when we discuss price transparency, a few different policies may come to mind. Can you highlight some of the key transparency proposals that have been advanced in recent years? Tell us a bit about why this has been such a hot topic.

Andrew: Absolutely, and thanks Kolton. I think when we talk about price transparency, at least within the last couple of years, the emphasis has really been around providing patients or enrollees with more information about what their out-of-pocket costs will be for health services or drugs. The idea of course is to get more information to consumers sooner. Implicit in these policy concepts is an assumption that more information will allow patients to engage in new ways, that it may positively impact their shopping behaviors and generally create a more competitive transparent market.

So, when we talk about this from a policy or regulatory perspective, there have been several specific efforts targeted at various parts of the healthcare channel and various stakeholders. For example, we’ve seen efforts that will require hospitals and providers to provide price transparency information. We’ve also seen efforts to target healthcare payers to release the type of information that’s shared with enrollees, ideally before they seek care.

We’ve also seen more targeted efforts around specific types of tools and technologies like real-time benefit tools. In general, the goal here is to not only increase the type of information, but also the speed and consistency through which it’s provided to better arm consumers as they seek care across the care continuum.

I’d also say that there’s been a specific effort around eliminating surprise billing and clearly highlighting for patients what their in- and/or out-of-network costs will be. Myra, I’ll kick it to you to add a little bit of transparency (wink wink) on that topic.

Myra: Thanks, Andrew. Surprise billing is the issue that’s really galvanized the general public around some of these transparency efforts. Surprise billing is when someone goes to get medical care and thinks they have some idea about what costs they’re going to encounter, but when they receive a medical bill, it is a surprise to them.

The one that’s gotten the most attention from healthcare reporters and policymakers is the situation when you have a medical emergency. The Affordable Care Act is clear that benefits should work the same way if you need to go out of network in a medical emergency. But the reality of the way that the law is implemented is that patients have seen some astronomical surprise medical bills after an emergency from out-of-network hospitals. There’s lots of momentum among policymakers and consumer advocates to try to address that problem.

At the end of last year, the COVID package addressed the problem by including the No Surprises Act, which says in some pretty defined situations—in a medical emergency, or when somebody goes to an in-network facility and somehow an out-of-network provider ends up providing services—that there’s some protection. They can’t be balance billed. This will be good for patients who find those themselves in those situations.

Now, a person might say, “I also think it’s a surprise bill when I thought my out-of-pocket cost sharing was one thing, but I didn’t understand the situation with my deductible. So then I got a big bill.” The No Surprises Act eliminates some surprise billing situations but still leaves some jeopardy in other situations.

The end-of-year COVID package included some provisions similar to provisions Andrew will talk about in a moment to give consumers better access to what they’re going to pay out of pocket before they go to care. This activity overlaps with transparency rules, but also tries to get at this issue of consumers wanting to know what they’re going to pay before they get care.

Kolton: Thanks, Myra. We’re seeing a lot of movement here. Some of this was advanced over the previous administration, but of course, the Biden administration began in January. Do we expect to see these efforts continue under this new administration?

Andrew: Yeah, that’s a great point, Kolton. I think that all depends on who you ask in terms of where the nexus of this transparency movement really started. You could even argue that the real foundations of this were laid in some of the disclosure requirements for health plans that were baked into the Affordable Care Act. Others have pointed to efforts under the Office of the National Coordinator within CMS under the Biden administration, where there were large, sweeping sets of regulations targeting data interoperability and the exchange of health and healthcare information, as well as the prohibition of providers blocking that information.

That’s a long way of saying, absolutely. This most recent salvo of regulations targeting hospitals and providers was born in the Trump administration. I think it’s increasingly clear that transparency is one of those rare bipartisan issues that has support under the current administration. In fact, newly confirmed HHS Secretary Becerra affirmed during his confirmation hearing that HHS plans to robustly enforce price transparency.

I don’t think that this is going to slow down. As is the case with any administration transition, there’s going to potentially be a rejuggling of priorities and a close look at timelines and enforcement, but I don’t think the issue goes away.

As we examine these regulations for scope of impact, it’s important to keep in mind the unintended consequences. As folks look to comply, you really have to look at these regulations through the lens of the full arc, going back all the way back to the late 2000 aughts, where some of this was grounded.

Kolton: Thanks, Andrew. One of the big developments we also saw this year was around hospital price transparency, where a lot of information was disclosed starting in January of this year, but this has been ongoing for several years. Can you explain how we started in this space with the disclosure of the charge masters for hospitals, and where we are now?

Andrew: Sure, happy to. As part of the Affordable Care Act, Congress enacted a specific subsection of the Public Health Service Act that required hospitals, in accordance with a range of guidelines developed by the Secretary, to make public a list of charges for services provided by that hospital. They had to update that list annually.

For years, hospitals were able to satisfy that statutory requirement by publishing their charge master, pursuant to CMS guidance. Over time, CMS has become concerned that charge masters are not helpful to patients for determining what they’re actually likely to pay for a particular service or hospital stay.

That brings us to November 2019 when the new price transparency requirements for hospitals to make standard charges public was passed. That final rule greatly expands the definitions around standard charges and is going to require hospitals to make 5 types of charges public. In fact, that rule has gone into effect as of January 1 of this year and we’re now seeing compliance begin to take shape.

Standard charges now include a lot more specificity. They include gross charges, discounted cash prices, and payer-specific negotiated charges, as well as deidentified minimum negotiated rates and deidentified maximum negotiated rates, all of which must be published in several different formats, including a machine-readable file that contains those types of charges for all the items and services provided by the hospital, as well as a more consumer-friendly list of these 5 charge types for the hospital’s 300 most shoppable services. These are essentially services that can be scheduled by the healthcare consumer or patient in advance of them seeking that care.

Again, what we’re seeing here is a trend toward more specificity, and from CMS’s point of view, a more accurate, advanced look at what those actual patient-incurred charges will be.

Kolton: That is a ton of information. How are the disclosures and the rollout of all this information going so far?

Andrew:  Yeah, it is a lot. It’s important that we don’t gloss over the compliance burden that this will have, potentially disproportionately, on smaller, rural, or independent hospitals. Folks who have been critical of compliance to date have pointed to the fact that the rule was passed in late 2019, essentially giving hospitals over a year to comply. The reality, of course, is that between late 2019 and now, we’ve had the COVID-19 pandemic, which has hammered hospitals and providers in a range of ways. So 2020, from a compliance preparation standpoint, was hardly a normal year.

I think what we’re seeing now as we wrap up Q1 of this year is that compliance has been variable. I think some hospitals are doing a fairly good job with the 2 types of disclosures that I mentioned, and others are still figuring out exactly how to comply consistently, and how to ensure that they’re actually providing the information to the letter of the regulation.

I would also highlight that the compliance date went into effect as we were changing administrations. For better or worse, compliance is often sped up as enforcement efforts start to take shape. I do think that as hospitals get their arms around the pandemic, have more time to assess what their peers and other stakeholders are doing to comply, and the agencies begin to better define and signal to providers what compliance will look like, we’ll see compliance begin to ramp up and become more consistent.

Kolton: Right. Of all the things that hospitals have to disclose, the one that really stands out to me is the payer-negotiated charge information. That strikes me as very well-guarded, historically sensitive information that providers would not like to have made public. In late fall of last year, we saw additional rulemaking for payers that releases even more of this information in the Transparency in Coverage rule. Can you tell us more about what’s included in that rule and what additional information will be disclosed through that vehicle?

Andrew: Absolutely, and you’re certainly right to flag the parallel and overlapping nature of these 2 rules. So, in addition to that hospital rule that we spent the last few minutes talking about, the newer Transparency in Coverage rule, as it’s called, is going to require that health plans disclose a range of information themselves. You touched on some of the ways they’re going to be asked to do that.

From a top line perspective, what’s new here is that health plans are going to have to disclose a whole host of information, again in 2 formats—public disclosure files and information provided in advance directly to enrollees. It is generally tied to the negotiated rates that they agree to pay for a covered item or service to an in-network provider, as well as the historical net prices, which are inclusive of a range of reasonably allocated rebates, discounts, chargebacks, and fees that they also pay to a provider or dispenser of the services or the prescription drugs.

While we’re in the midst of health plans sorting out exactly how they will comply, the deadline for that begins in the plan year that starts January 1, 2022. You’re right that when you look at this in combination with the payer-negotiated rates that will be disclosed to the hospital roll, this is a whole lot of very detailed new information that the public is not used to having access to or being asked to make sense of. So, I think it’s going to be a very interesting 12 to 18 months as both of these rules start to take shape and take hold in the market.

Kolton: Myra, how are plans reacting to these new requirements? Do you think they’ll be ready to comply 9 months from now?

Myra: Well, that’s a great question. Implementing these requirements is a heavy lift. It’s going to take a lot of IT resources. I will say that the requirement Andrew described to provide what some people are calling “advanced estimates of benefits” for people to find out their out-of-pocket costs before they seek services is something most plans are already doing because they just think it’s the right way to help their enrollees. So that requirement might be a little bit of a shorter path for some plans.

The machine-readable file is a new practice and that one might be hard to get done by the implementation date. We may see some smaller plans that don’t have deep IT benches struggling to meet the 1/1/2022 deadline for the public machine-readable files. Plans are working hard to comply with these requirements, so we will just see how the next 6 months go and if they’re able to get there.

Kolton: Okay, so stay tuned for that. When it comes to these various efforts, what we’ve discussed is the emphasis on consumer behavior and how new information could alter that behavior. What are some of the potential unintended consequences of this rule, and who else might be using the information and for what?

Andrew: It’s important to remember from a policy perspective what the end goals are here for the federal agencies and some of the states that have followed suit. The goal here is not necessarily to change consumer behavior, but to enhance it and give consumers additional information so they can make better-informed decisions. By having this information publicly available, it incents stakeholders, whether it be providers or health plans or other stakeholders within the channel, to reduce their prices and get more competitive, since some of this pricing will be newly exposed.

Of course, given the newness of this, we’re still sorting out exactly how much of that will come true, and what potentially some of the unintended consequences will be. I think it’s pretty clear, even in these early days, that the stakeholders who will be accessing and using this information are not simply going to be consumers, patients, or enrollees. There’s going to be a host of other parties who seek to analyze, assess, understand, and potentially utilize this information for competitive advantage. That includes not only the providers and health plans themselves, but also stakeholders like pharmacy benefit managers (PBMs), third-party vendors who may be looking to assess and compile this information to provide analysis or more streamlined access to it.

I do think that there’s going to be an evolution here. In the early days, use of the information may be muddied and less than clear, but as third-party analysts, consulting firms, or vendors create new tools and aggregate ways to utilize the information, I think it’ll become clearer exactly what the practical implication of the state of being public is going to be.

Kolton: Myra, do you have any thoughts on how plans might act on this information? Do we expect them to start changing benefit designs? Are we looking at an eventful round of negotiations following all of this information being public?

Myra: That’s a really good question. I think it’s hard to say right now. Most of the plan focus is really on the technical lift to try to meet these timelines with some ambiguity still to navigate in some of the requirements. I do think it’s reasonable to expect that when plans can see all the negotiated rates for services that other plans are paying that it would cause some circling back on how prices are set, and so I do think stakeholders should be aware. There will be consequences of this data being broadly visible and that could drive some changes in how plans are structured, rates are negotiated, and things like that.

Kolton: Great. So, we have covered several different changes and proposed policy actions during this discussion. Andrew, can you bring it all together for us and remind us of some of the dates and deadlines that are associated with these policies?

Andrew: I can certainly try. We’ve mostly talked about 2 core transparency rules, both of which are new within the last 12 to 18 months. We’ve talked about the Hospital Price Transparency rule, and the Transparency in Coverage payer rule. The Hospital Price Transparency data is already being posted. So, while compliance has been a bit variable and slow in some markets, that deadline has passed as of January 1 of this year. Those files are slowly beginning to be posted on hospital websites and available for folks to look at, analyze, and use. In many ways, that compliance deadline is in the rearview mirror.

As it relates to the Transparency in Coverage rule, we’re looking at 2 separate elements there. First, we’re looking at payers publicly disclosing negotiated rates and historical net prices, which begins to go into effect in January of 2022. The second piece is the enrollee cost-sharing tool or that advanced EOB that Myra mentioned, and that begins going into effect in 2023, with an initial batch of 500 services. The remaining services must be added to that tool by 2024.

It’s hard to overstate, however, just how many other ancillary or indirect rules and regulatory proposals intersect with some of these core transparency rules. There are the new Application Programming Interface (API) requirements for health plans under the interoperability rule; new information blocking prohibitions that just went into effect that prohibit providers from not sharing a host of clinical and patient information, either through their EHR or directly to consumers; and there are proposed regulatory changes to HIPAA, which are currently in the comment period. You also have some other smaller pieces, one being the No Surprises Act, which Myra mentioned, as well as a couple of different proposals around the use of real-time benefit tools for pharmacy information.

I think the takeaway here is that it’s really important that in the sea of all of the things that stakeholders are dealing with, that providers and health plans really take stock and assess their readiness to comply. In some ways, they don’t have a choice, but as Myra alluded to earlier, there will be winners and losers here. There will be folks who see these opportunities to share new types of information as a competitive advantage. They will build systems and tools and ways in which the data can be accessed that give them and their organizations a real advantage as it relates to marketing their services and communicating with their enrollees or patients.

So, we’re really urging our life sciences and health plan clients to have these conversations about this Venn diagram and what the various compliance deadlines are, but also the downstream impacts on their businesses. Myra, anything you would add?

Myra: You know, Andrew, I think you’ve made some really good points that there will be impacts, and healthcare companies need to be thinking about that now. While there is some uncertainty around this aggressive timeline to have things out at the end of this year, we know that companies are working to make that happen. This really isn’t an issue that healthcare companies can afford to wait and see on much longer. It’s time to be asking those questions.

Kolton: Right. A lot of moving pieces. We will continue to keep an eye on all of them here at Avalere.

I want to thank you, Myra and Andrew, for joining me today. And thank you all for tuning in to Avalere Health Essential Voice. Please stay tuned for more episodes in our Start Your Day with Avalere series. If you’d like to learn more, please visit our website at www.avalere.com. Thanks.

From beginning to end, our team synergy
produces measurable results. Let's work together.

Sign up to receive more insights about Federal Policy
Please enter your email address to be notified when new Federal Policy insights are published.

Back To Top