Since July 2022, CMS has required most group health plans and issuers of group or individual health insurance to post price information for covered items and health services. For most, the concept of price transparency has been approached as a compliance necessity. However, it offers far more than just adherence to regulations. Price transparency stands as a strategic asset with the power to significantly help payers. 

This blog explores the transformative potential of price transparency, illustrating how it can transition from a regulatory requirement to a formidable competitive advantage, yielding substantial benefits for health plans and their members. 

More price transparency means better rate negotiations for health plans

At its core, price transparency is meant to give all players – patients, providers, and payers – the insight they need to make the right decisions for themselves or their business. It helps benchmark rates to the market, identify cost inefficiencies, and highlight where providers may be overcharging for services against a health plan’s competitors or the market in general. When payers know where there is price variation, they can then target services or procedures and negotiate for cost reductions or change contract relationships based on the cost data they have on hand.  

With steep competition for employer groups and individual plan businesses, detailed pricing information helps health plans not only secure more competitive and cost-effective contracted rates but also share the details to demonstrate their value. Savings derived from better rates can help reduce total care spend and out-of-pocket costs, and those savings can attract new employers and members and increase market share. This larger membership base gives payers more leverage to negotiate, thus completing the cycle of cost savings and affordability.  

Price transparency adds fuel to the case for alternative payment and pricing strategies

With greater price transparency, health plans can explore different approaches to pricing, such as reference-based pricing, bundled payments, and value-based care (VBC). VBC shifts the focus from the quantity of care to the quality of care with provider agreements that are tied to outcomes rather than the number of services rendered. Visibility on costs means providers are compelled to provide more cost-effective and high-quality services, aligning their interests with those of health plans and their members. 

This approach positions health plans as innovators in cost-effective healthcare, giving them a competitive edge in attracting cost-conscious members and employers seeking high-quality yet affordable health plans. When groups and members get what they want and need – higher quality care at affordable prices – they become more loyal. This provides significant benefits to health plans around risk.  

Health plans (and providers) are using price transparency insights to create a strategic advantage

In today’s rapidly evolving healthcare environment, one thing remains unchanged: the ability to cover services in the most cost-effective and efficient manner possible is the only way for health plans to rise above the competition. Price transparency regulations spurred much-needed visibility, but it is important to remember that price transparency is a true strategic opportunity.  

When leveraged appropriately, price transparency allows payers to better negotiate with providers, design more attractive plans, attract more members, and ultimately save money and reinvest in their business. It’s a win-win: health plans gain more – and more attractive – members through increased price transparency, and patients can better identify the providers and, thus, the health plans they want access to because they have the price information that allows them to make the best choice.  

To illustrate this point, consider some examples of how health plans are using price transparency and rate intelligence from Clarify to their advantage.  

• One health plan in the Northeast projects $100M + in savings using price transparency rates data to understand their competitive rate position and using the data along with insights on provider performance to optimize their networks. 
• An innovative plan on the East Coast is powering better provider negotiations. They are ensuring their negotiated rates and actual paid amounts are in line with the market median. Knowing the benchmarking against the competition and market allows them to realign their rates. The plan is expecting hundreds of millions of dollars in savings over a multi-year period. 

Health plans aren’t the only ones seeking a competitive advantage with price transparency insights. One academic medical center (AMC) embarked on a strategic initiative to understand which services represented opportunities to secure more favorable rates with a payer partner. Utilizing Clarify’s price transparency solution, their team was able to compare their system’s rates against local competitors across various code types and service lines. This gave them a much better understanding of their market, enabling them to expedite the negotiation process. The team uncovered disparities in reimbursement rates for multiple service lines compared to neighboring health systems, with outpatient cardiology procedures showing the most significant potential for rate improvement. By proposing a 2% rate increase on these procedures with their payer partner, the AMC estimated a substantial opportunity to increase revenue by $2.1 million. Read more about this.  

Price transparency insights will become a non-negotiable in strategic planning processes

Healthcare price transparency data provides health plans with a valuable tool for gaining a competitive advantage in the market. By analyzing this data, health plans can identify cost variations among different providers and services, enabling them to negotiate better rates with providers and offer more competitive pricing to their members. Additionally, transparency data allows health plans to develop more accurate cost estimates for procedures and treatments, helping them to attract cost-conscious consumers seeking value-driven healthcare options.

Moreover, armed with comprehensive pricing information, health plans can enhance their marketing strategies by highlighting their cost-effectiveness and transparency compared to competitors, thereby appealing to potential members seeking affordability and clarity in their healthcare choices. Overall, leveraging healthcare price transparency data empowers health plans to differentiate themselves in a crowded market landscape and ultimately improve their competitiveness.