Overview

About price transparency in healthcare

Price transparency in healthcare is about making consumers feel more prepared, involved and informed. Although some payers and providers have already been providing pricing estimates for select items and services before care is delivered, healthcare is not like other goods. It is more expensive, confusing and personal, and involves decisions that can have life-long consequences. In addition, more than half of U.S. consumers – 50% of whom are college educated – don’t understand the healthcare system well enough to effectively navigate their healthcare benefit choices and services utilization. The inability of consumers to effectively research and compare healthcare costs and quality is a barrier to achieving high health literacy, and ultimately, lowering costs.

To help consumers improve their understanding of costs, The Centers for Medicare and Medicaid Services (CMS) has issued two final rules – one addresses Hospital Price Transparency, and the other Transparency in Coverage. Pairing “high-tech” solutions with a “high-touch” approach to consumer engagement healthcare providers and payers can help comply with the new rules.

US regulations

Hospital price transparency

Under the Hospital Price Transparency Final Rule, each US hospital is required to:

  1. Publish clear, accessible pricing information for 300 “shoppable” services. This information must be published online, require no login or personal health information (PHI) for access, and be offered in a consumer-friendly format.
  2. Publish a machine-readable file including rates for all services (not just shoppable services).

The Hospital Price Transparency Rule went into effect on 1 January 2021. Failure to comply will come with penalties of 300 USD per day. However, there are solutions available that can help hospitals avoid fines and quickly comply with the new rule.

Payer price transparency

The Transparency in Coverage Final Rule, issued in October 2020, requires health plans and self-insured employers to disclose detailed pricing and cost-sharing information to consumers and other stakeholders. The final rule takes two approaches to making pricing information more accessible, which must be executed by three key deadlines: 

  1. Publish three publicly available, machine-readable files, updated monthly, for in-network provider negotiated rates, historical out-of-network allowed amounts and drug pricing. (by Jan. 1, 2022) 
  2. Provide an online self-service tool 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) 
  3. Using the same online tool, give pricing and cost-sharing information for all items and services. (by Jan. 1, 2024) 

Penalties for failing to comply with the new rule have yet to be announced.

Role of technology

Technology is key to achieving price transparency

The role of technology in helping realize the full promise of price transparency in healthcare cannot be understated. For example, interoperability and secure flow of information between healthcare providers and payers will be critical so when a patient “shops” for services, the healthcare provider they select has access to the medical and insurance records necessary to deliver care.

Consumer-friendly tools that make data actionable will also be important. Technology can play an important role in helping consumers understand pricing and schedule the right bundle of services as advised by their physicians, so they get the care they want at the location of their choosing. In addition, tools such as price schedules and healthcare cost estimators can ensure healthcare providers and patients have access to the same pricing information as they partner in navigating the healthcare system.

Healthcare consumers need timely, accurate and trusted information to make important healthcare decisions, and providers are well-positioned to fill this need. Payers can play a critical role by making comparative cost and quality information available to their members — even without large market share or spending the time and resources to build a price transparency solution on their own.

 

Pursue a “consumer first” strategy

Payers — as well as providers — should be aware of how consumers might respond to potential cost savings. That’s why insights into consumer behavior are critical to informing any successful strategy related to price transparency. Understanding consumer knowledge, attitudes and behaviors can help organizations design more effective pricing strategies, and potentially become first movers in their markets.

Guide strategy with market insights

In addition to understanding general consumer behavior, knowing dynamics specific to your local market can help produce a winning strategy under price transparency. Competitive intelligence on pricing and accessibility of services, as well insights into internal costs, can help healthcare organizations understand which shoppable services are best to offer in their geographic region.

Solutions

Succeed with healthcare price transparency tools and services from Watson Health

Solutions and services from Watson Health can help payers and providers successfully engage consumers — turning the new mandate for price transparency in healthcare into an opportunity for financial growth. Apply IBM’s deep insights into consumer behavior and local markets to help formulate a strategy that puts you ahead of the competition.

IBM Price Transparency

Meet CMS requirements and support patients by implementing a consumer-friendly price transparency application.

IBM Treatment Cost Calculator

Help provide consumers with accurate, real-time estimates of their out-of-pocket healthcare costs.

Healthcare provider consulting

Guide your price transparency strategy and help ensure compliance with expert insights into consumer behavior, market dynamics.