Turning price transparency into an opportunity for health care payers
As healthcare payers begin efforts to comply with a new US regulation to publish pricing information, they must also align with member engagement and digital transformation strategies.
On November 12 on behalf of multiple agencies, The Centers for Medicare and Medicaid Services (CMS) finalized the Transparency in Coverage rule. It will require group health plans (insured and self-insured employers) and health insurance issuers to disclose detailed pricing and cost-sharing information.
This regulation is designed to help patients understand the costs of services ahead of time to enable them to shop for services from lower cost, higher value providers and drive down the costs of healthcare.1 Additionally the agencies intend to help remove variance in costs through required file sets that disclose negotiated rates, historical allowed amounts and prescription drug rates.
What the Transparency in Coverage rule will require
The final rule, which is detailed in more than 500 pages2, has some key deadlines for issuers and group health plans, which include:
- Publish publicly available, machine-readable files for in-network provider negotiated rates, historical out-of-network allowed amounts and drug pricing (by Jan. 1, 2022)
- Provide online tools for members, with specific search functionality that give pricing and cost-sharing information for 500 shoppable services that are defined by CMS. (by Jan. 1, 2023)
- Using the same online tools, give pricing and cost-sharing information for all items and services. (by Jan. 1, 2024)
In our experience, the final rule has elicited mixed reactions from industry stakeholders, ranging from applauding efforts to empower healthcare consumers, to sharp criticism that the rule could inadvertently dampen competition, and invite unanticipated security risks.
5 considerations for healthcare payers making investments in price transparency solutions
To help realize the vision of this regulation, healthcare payers (issuers and group health plans) should focus on making technology investments that go beyond the mandate to drive meaningful engagement and consumer experiences. Specifically, healthcare payers need to transform the information used for contracting and billing into information relevant and understandable for consumers.
Healthcare payer solutions for price transparency can help organizations improve member experience, with the addition of technical solutions designed to:
1) Bundle costs
The mandate requires payers to publish information at a granular service level. Yet what consumers really want is a ‘no-surprise experience’ where they receive transparent, complete estimates for the full service, not just a component.
For example, the procedure to remove a gallbladder may include separate charges from the facility, surgeon, anesthesiology and potentially others, depending on the course of the surgery. To deliver a meaningful experience, healthcare payers need to have methodologies to create meaningful ‘bundles’ of services and help consumers understand the full costs of their care over time, as with surgeries that include a set of services over time.
2) Simplify processes to navigate healthcare complexities
Consumers need simpler options to navigate the complexities of healthcare. Let’s look at an example of a patient who needs a knee replacement. On the list of 500 “shoppable” services for which health plans will need to provide pricing information, “joint repair service” appears multiple times, with the only difference being the procedure codes. The patient would have to do other research to understand which option to select.
Payers can create an experiential overlay that helps consumers by incorporating benchmark data to start with what’s most likely, and then use conversational AI with natural language processing to help people find the right service. Design Thinking methodologies can help create a productive consumer experience that is clear and efficient.
3) Enable accurate calculation of out-of-pocket costs
An out-of-pocket calculation engine can provide accurate estimates. To balance giving consumers choice and help manage costs, we have seen benefit designs become increasingly complex in the last decade. Payers need to ensure their solutions address complexities in benefit coverage, narrow networks and reference pricing as they deliver solutions for determining consumer out-of-pocket liability.
4) Drive engagement – surface the tools where people can find them
Many healthcare payers have developed or adopted price transparency solutions and have been disappointed at the low utilization of these solutions. To drive engagement, payers need to think through how to surface these tools and information in the path of consumers.
For example, payers can increase awareness through messages that highlight opportunities to save money. Another excellent strategy is designing a digital experience that prompts consumers about cost information when they ask a virtual assistant about benefit coverage or search for a specialist.
5) Design innovative plans
Payers should explore new options in their member engagement strategy related to the medical loss ratio (MLR) section of the price transparency rule. Payers may be able to design new types of plans that would effectively share cost savings with the consumer. To operationalize this cost sharing, payers will require additional reporting capabilities.What consumers need is a well-designed, efficient digital experience that enables them to make more well-informed decisions about healthcare. Healthcare payers that consider how complying with the price transparency mandates will complement their overall digital transformation and member engagement strategies will be the ones that provide a better consumer experience.