Price transparency preparation for payers: lessons learned

Many health plans that initially built their own machine-readable files are now rethinking their strategies. And health plans that haven’t started are behind.

By , Keith Kim, and Steve Kochin | 3 minute read | March 15, 2022

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The first enforcement deadline for The Centers for Medicare & Medicaid Services (CMS) Transparency in Coverage Final Rule is quickly approaching. This price transparency rule requires health insurance issuers – health plans selling to individuals/small groups and employer groups – to disclose detailed pricing and cost-sharing information by specific deadlines.1

The first phase of this rule requires the creation of publicly available, machine-readable files for in-network provider negotiated rates and historical out-of-network allowed amounts. The machine-readable files must be updated monthly. Enforcement begins July 1, 2022 with potential fines of up to 100 USD per day for each violation and for each individual affected by the violation.2

When the Transparency in Coverage Final Rule first emerged, some health insurance issuers opted to create the machine-readable files in-house. Now, many of these organizations are rethinking their strategy, as the process is proving more complicated than anticipated.

Consider the three common challenges we’ve seen:

1) Incomplete and unclear regulations

It’s hard to build something if instructions are missing. For the machine-readable files, the technical guidance isn’t final. CMS has recently shared the first production-ready version of the machine-readable file schemas (v1.0). But as of March 10, 2022, the published schemas do not yet account for how to populate all the data elements or detail how issuers should properly disclose contracted rate information for every situation.3

Another area of concern involves how to properly account for charges from contracts which are built using reimbursement percentages rather than dollar amounts. The method to display this information is just being addressed, leaving limited time to code and test prior to the July 1, 2022 enforcement deadline.

Since the technical requirements aren’t yet final, health plans need to continue dedicating time to monitoring emerging CMS FAQ lists, alerts and updates. Further guidance is forthcoming, but a fully compliant solution can’t be developed until there is more clarity around the requirements.

2) Unexpected complexity

Collecting and processing all the data needed for the required machine-readable files is a complex undertaking that leaves room for error and misinterpretation.Even the acceptable file formats for machine-readable files are a potential obstacle. Only non-proprietary machine-readable formats such as .xml and json are acceptable; more familiar formats like Microsoft Word, Microsoft Excel and Adobe PDF files are unacceptable.4

It’s also important for health insurance issuers to understand how to properly count claims when generating Out-of-Network Allowed Amount machine-readable files. Dual enrollment, adjustments and other scenarios can lead to double counting of claims, providing incorrect metrics toward the reporting threshold.

Another challenge for health plans is integrating data from other networks that are part of their benefits package – rented networks or carved-out vendors for instance. Health plans need to incorporate machine-readable files from those networks into their own, which currently relies on collaboration with partners to share and receive the required data and/or utilize optional Table of Contents files to link to partner machine-readable files.

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3) Resource limitations

Some health plans are struggling with creating machine-readable files simply due to resource constraints. They may have overestimated their in-house capabilities, underestimated the difficulty of creating machine-readable data files or lack other skill sets.

Creating machine-readable files requires being immersed in the minutiae of billing codes, diagnosis-related groups (DRGs), covered items, current procedural terminology (CPTs) and payment rates. Even if a health plan has employees skilled in understanding, interpreting and translating provider-specific charge codes and legal language, they may not have the needed bandwidth to take on a project of this size.

Plus, the Transparency in Coverage Rule is an unfunded mandate. Health plans have multiple imperatives and likley want to focus resources on revenue-generating work instead of creating machine-readable files.

Additionally, the machine-readable files are expected to be data storage intensive. If health plans choose to store and host the files in-house, it may require buying and installing new physical hardware. Additionally, it’s difficult to predict storage needs for machine-readable files as the schema requirements keep changing. This may lead organizations to under or over-invest in storage.

Health plans should evaluate these challenges to determine if they have the necessary internal resources to build and implement CMS-compliant solutions. Health plans that don’t should consider engaging an outside vendor with expertise in creating the machine-readable files and producing the required monthly updates. And health plans that haven’t started are behind.

Understand more about price transparency in healthcare

  1. Transparency in Coverage Final Rule Fact Sheet (CMS-9915-F). October 2020.
  2. Plans and Issuers.
  3. Technical Clarifications. Modified Feb 7, 2022.
  4. Ibid