Healthcare Price Transparency is Here. Now What?

Healthcare providers and insurers are now required to publicly disclose what they pay hospitals, doctors, and other medical providers. We’re in phase 1 of healthcare’s price transparency movement – internet data dump – but what’s next? Will posting rates online actually help patients shop around for the best, most affordable care? A panel of experts at AHIP’s Consumer & Digital Experience Forum hosted a discussion to answer these questions and more. In this article, we’ll share some key perspectives from the panel, reactions from the audience, and our takeaways. But first, let’s introduce the speakers!

Niall Brennan, a leading expert on healthcare data use, privacy, and policy, moderated the discussion. Niall is the former Chief Data Officer of the Centers for Medicare & Medicaid (CMS), where he led groundbreaking efforts to release hospital and physician data for research, including the creation of the Virtual Research Data Center (VRDC) and Qualified Entity (QE) programs. Niall was also responsible for leading CMS’ first price transparency efforts, which are the foundation for the policies we have in place today.

Dr. Melinda Buntin, a leading health economist and professor at Vanderbilt University School of Medicine, joined the panel to share her perspective on health policy and economics. Dr. Buntin previously worked for the Congressional Budget Office (CBO), where she formed opinions on healthcare price transparency. At CBO, Dr. Buntin was responsible for managing and directing studies of healthcare and healthcare financing issues in the Health, Retirement, and Long-term analysis Division. Prior to her work at CBO, Dr. Buntin established and directed the economic analysis, evaluation, and modeling group for the Office of the National Coordinator for Health IT. She also served as deputy director of RAND Health’s Economics, Financing, and Organization Program, director of Public Sector Initiatives for RAND Health, and co-director of the Bing Center for Health Economics. Her research at RAND focused on insurance benefit design, health insurance markets, provider payment, and the care use and needs of the elderly.

Dr. Greg Sweat also joined the discussion, bringing both a physician and payer perspective to the panel. A trained physician, Dr. Sweat serves as the Chief Medical Officer and SVP of Health Services at Blue Cross Blue Shield of Kansas City. He is responsible for positioning the company to provide value to its members, partners, and community through innovative and affordable patient care. Dr. Sweat oversees Spira Care Centers, population health, networks and contracting, pharmacy, community health, and government lines of business. In this role, he works closely with the provider partners in their network and has been able to collect several perspectives around price transparency and the impact it may have in a competitive market like Kansas City.

After introductions, the first thing the audience wanted to know was: will price transparency be a good or bad thing – for the industry and for individual healthcare consumers?

When asked if healthcare price transparency will be good for consumers, health economists like Dr. Buntin often cite a 2003 study that analyzed how a Danish regulation aiming to improve competition in the concrete industry affected manufacturers. The regulation required concrete companies to disclose negotiated prices. The study found the requirement led prices to increase by 15 to 20 percent. Dr. Buntin also cited an example from her childhood in which price transparency about neighborhood children’s allowances led to higher earnings for the kids and, thus, higher prices for the parents. You might be wondering how similar US healthcare is to Danish concrete from an economic perspective. Dr. Buntin posited they might be more alike than you’d think in the short term.

“I think the healthcare market is probably very similar. We’re going to see some changes in the healthcare market due to price transparency regulation, and whether they’ll be the steady state, I doubt it; but I do believe that they’ll affect price trajectories over the long term. In the short term, though, there may be some market disruptions and some higher prices that we see.”

Reflecting on the highly competitive Kansas City market, Dr. Sweat had a similar take. He already sees the impact of price transparency in local contracting negotiations and predicts networks may narrow as rates become even more competitive.

“Is it a good or bad thing? I wish I knew; I really do. I think there’s going to be disruption in the market; the discussion and the issues surrounding it are going to be immense. We already see it locally in Kansas City, and I’d be surprised if you weren’t seeing it in your markets if you’re involved in those negotiations. The kid next door that’s getting that lower allowance is already asking – already looking to the payer to find out how they can get more. And I think the implications are going to be widespread. I think the disruption’s going to be enormous. I think fragmentation could occur… and I think one of the last bastions to actually benefit from this will probably be the consumer.”

Looking at price transparency from a user experience perspective, the panel shared their doubts about individual consumers’ ability to use hospital and payer rate data to make more informed decisions about their care – at least for now. Niall pointed to low compliance on the hospital side, with reports from earlier this year showing only 14 percent of hospitals were fully compliant with the ruling and the fact that many hospitals hide their pricing pages from showing up in search engine queries. He also explained that even though early signals indicate health plans are more compliant, the raw data files are so overwhelming in size – even for experienced users and organizations that are used to handling massive amounts of data – that they’re effectively unusable.

Dr. Sweat brought in some humor saying, “when you look at these machine-readable files, and I did discover the reason they’re called machine-readable… they’re called machine-readable because you can’t read them. They’re awful. When I first got it, I thought, ‘well, I’ll get it, and surely I can figure out at least one code of one price.’ Can’t. It’s just not there.” He continued, “The amount of data that’s gone out there is far too massive to be consumable by anybody other than a truly great vendor to a degree to actually be able to provide information back to us where we sit in our own market.”

To give a sense of just how big these files are, Niall shared an example from United Health Group (UHG). A single month of downloadable files from UHG requires over seven terabytes of storage – and this data is going to be updated every month. To put this into perspective, one month of rate data from UHG is the equivalent of three full years of Medicare hospital physician and drug claims. So, while the information will likely be valuable for industry players and researchers who can find a way to wrangle the data, consumers will not be able to use this data just yet.

It’s not all bad news, though. Dr. Sweat believes it’s all about incentives when it comes to compliance and making this data useable.

“Is there a way to get it to where it’s consumable? I would like to say it is. Surely it’s possible. I think with the right incentives, it’s possible. We’ve had conversations with our health systems about how we pay them, and they’re pretty transparent about it. ‘If you change the way you pay us, we will change overnight.’ It’s all about incentives and how we get there.”

On the topic of incentives, the audience wanted to know if the price transparency regulations incumbent upon payers are increasing payers’ willingness to enter value-based contracts for bundles with providers or to sub-capitate risk.

Dr. Sweat thinks it’s a possibility, but his ultimate hope is that the industry will go beyond price transparency to what he calls value transparency so consumers can shop for care based on quality – not just price.

“My hope is that this will go beyond price transparency to value transparency and that we will start to publish quality data because one of the things I can say as a physician is that we’re not all the same… And so if we can risk adjust and give a good quality score, I would love to publish that, too. Make that about the choice, not just about the cheapest price. Make it about value.”

In summary, while the panelists and audience believe that healthcare price transparency is good in theory, everyone acknowledged there is a lot of work to do in order to provide a better consumer experience for patients and members. In a crowd of over 100 audience members, not a single person raised their hand when asked if they believe the current healthcare system provides a good patient experience. Dr. Buntin and Niall both made the point that the industry has a bad habit of pushing work onto the patient. The panel challenged the audience and the industry to roll up their sleeves to make sure we don’t let price transparency become another burden for patients. They called on experienced data analytics companies and research organizations to get to work processing this data to provide insights that will make healthcare more affordable, accessible, and higher quality.