Without tech to make sense of the data, price transparency rules won’t help consumers
On July 1, 2022, health plans joined hospitals in publishing price transparency data in a “machine readable” format on their public-facing websites. The requirement stems from a 2020 rule designed to aid cost comparisons for shoppers and, as a bonus, potentially expose some of the exorbitant costs or questionable variation in the pricing for common supplies and services.
The rule debuted to high hopes of a new era in open, honest communication between healthcare stakeholders, where consumers could easily estimate the costs of elective care and choose their providers accordingly. But in reality, the results have been a bit discouraging.
At the end of 2021, only two-thirds of hospitals had published any data, regardless of completeness. Just one third had met all six of CMS’s data requirements. Researchers found lower levels of compliance in tightly competitive markets, indicating that health systems are still resisting some of the basic principles of consumer-centric, value-based care.
CMS has responded with warnings and penalties for at least two hospitals that have allegedly failed to meet the criteria.
With this rocky start as a backdrop, payers are now entering the fray. Many of the nation’s largest companies have been proactive about the rule to head off any questions about their commitment to members. UnitedHealthcare, Aetna, Centene, Anthem, and many more have already made their files available, and hopefully the nation’s hundreds of smaller plans are prepared to follow suit.
However, there are still a few roadblocks on the journey to a seamless shop-and-compare experience for consumers.
For one thing, there is no real requirement for the data to be natively friendly to the average consumer. The hospitals that are complying with the rule are generally publishing their files as massive, raw spreadsheets organized by CPT code, with broad price ranges based on maximum and minimum negotiated rates.
To accurately estimate a final cost, consumers will need to know the CPT codes for every single service they are likely to need during an episode of care and then guess where their anticipated costs will fall within the available range.
The health plan data is similarly opaque to shoppers. Plans are making their files public in the JSON format, which is very familiar to health IT developers but not particularly useful to health plan members.
To turn the machine-readable data into human-readable information, consumers will need a translator: a price transparency application that can combine public health plan and hospital pricing information, accurately bundle disparate services into episodes of care, and share realistic, personalized cost estimates for care.
Price transparency apps aren’t a new idea. Some hospitals, health plans, and even state governments, like Connecticut and Florida, already offer cost calculators using regional averages and historical data. But now that so much current data is available in common formats, there will be an increasing opportunity for startups to find a foothold in a relatively unexplored segment of the health IT marketplace.
It won’t necessarily be easy, given the poor rates of compliance, lack of standardized definitions for care episodes, and likely disconnects between hospital and health plan data sets.
App developers will need to carefully consider the way they make decisions about these data sets to avoid unintentional inaccuracies. They must also be sure to create user interfaces that are accessible and equitable for a wide variety of consumers, including those with lower levels of health literacy.
These apps should be available in multiple languages, use easily understood visualizations and color coding to present data, offer resources to help users navigate their individual situations, and possible include additional helpful information, such as provider quality scores and patient safety track records.
They also need to find a way to make money. In a perfect world, both hospitals and health plans would wish to go above and beyond the basics of the rule and provide highly detailed, easy-to-use tools to accurately estimate consumer costs. This would create an opportunity for mutually beneficial partnerships between providers, payers, and price transparency app developers.
But not every organization will be so forward thinking, especially without additional motivation in the form of regulation or incentives. That means some developers will have to find an alternate source of revenue to fuel their innovation. Charging a subscription fee to consumers may not be viable, given the infrequency with which most people shop for large healthcare purchases, and venture capital investment will only go so far.
It will be interesting to see how the market unfolds given the absence of strong incentives for payers and providers to adopt more sophisticated pricing tools. Without the right technology, it’s possible that the price transparency movement will fall flat for the consumers that need it most.
Regulators and lawmakers may or may not consider raising the bar for more actionable, consumer-friendly tools in the future. Controlling healthcare spending and reducing out-of-pocket costs for consumers are important bipartisan issues, and both sides of the aisle acknowledge that price transparency is an important first step.
Either way, it’s clear that publicly available spreadsheets on their own will not do much to achieve those goals. A new breed of price transparency apps will be essential for making the most of the industry’s progress so far and for equipping consumers with the knowledge they need to make the best possible decisions about their own care.
Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry. Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.