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"The Dish on Health IT"

Engaging discussion around Health IT with perspectives from across the healthcare landscape. This informative and entertaining rotating panel of senior health IT consultants and their guests will keep you in the know about the latest innovations, policies and industry shifts impacting healthcare and point out the opportunities that lie within.

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Episode 13: The Latest on Price Transparency

This episode focuses on the recent CMS price transparency rule. Hosts Gary Austin, Ken Kleinberg and Pooja Babbrah discuss the new rule, break down its components and outline what it will mean for the industry across stakeholders including opportunities that shouldn't be missed..

Gary begins by asking Ken to summarize the concept of price transparency. Ken notes that in the past, consumers were not concerned with healthcare costs because it was handled by insurance companies. It was a fee-for-service model. The challenge was costs kept going up. Our costs here in the U.S. are nearly doubled of any other country in the world. For a long time, our model has been deemed unsustainable and it makes it difficult to compete on a world stage. Over the years, the government started to move towards a pay-for-performance model, value-based care and all the way up to a more advanced model, accountable care. As part of all this, patients, with their co-pays and deductibles, are becoming much more engaged. Now we are looking at requiring providers to disclose how much they charge and payers to disclose how much they pay. Consumers should get a better view of what they have to pay. In theory, this should increase competition, give us more of a market and reduce costs.

Gary asks Pooja to give an overview of the pending CMS rules around price transparency directed at providers. Pooja explains that if you count everything over the past few years, there are five rules around price transparency. We’ve seen a couple of those get finalized in the past few weeks. The goal around all this is to make sure providers and payers are letting consumers know how much things are going to cost them. The provider rule was finalized almost a year ago and as of 1/1/2021, providers are required to give a machine-readable file of standard charges. That can include gross charges or payer-specific negotiated charges. Pooja says it really just allows a consumer to better understand what their charges are going to be if they are going in for some type of service or procedure. The other piece of this is providers are required to provide consumers with the price of 300 shoppable services, in an accessible manner.

How do providers look at this rule? Pooja notes that from the initial lawsuit, it was not received well. But depending on the way providers look at this, the rule could be to their advantage. We’re trying to push for value-based care and this could accelerate that. The forward-thinking provider groups and hospitals should be thinking of it that way.

Gary asks Pooja to speak to the new payer price transparency rules. Pooja explains that from a payer perspective, a lot of it is the same thing. As a payer, you must provide to the patient what it’s going to cost for a cost-sharing portion. This allows patients to price shop for coverage and understand what they are getting for their coverage. Usually, when we see rules from CMS, it only applies to Medicare/Medicare Advantage plans. However, the payer rule applies to commercial plans as well, which is a change we haven’t seen in the past.

Pooja notes that in the past, there have been two rules around real time benefit check, which required payers to provide consumers and providers the ability to understand the price of medications. From a PBM standpoint and a pharma manufacturer standpoint, there’s information required to be shown to the provider when they are going to prescribe the medication.    

Gary asks Ken why we need governmental intervention in healthcare. Ken notes that in healthcare, we are only in the early stages of how we are going to deal with price transparency. Healthcare, due to its complexity, is the most difficult industry to go after.

Will bundled options become a problem here? Ken notes that for anything that is very repeatable, it should be possible to get a clear price. Then, it comes down to can you deliver at that price with greater and greater efficiency. That is the direction we want this to go.

Gary asks Pooja if these rules will help alleviate the surprise billing situation. Pooja says that is one of the downsides of all these price transparency rules, it doesn’t account for every cost. The mandatory list of 300 shoppable services will not cover everything. 

Gary asks Pooja what this will do for providers. As much as we all think consumers are looking for this information, there are studies out there that say even if a patient is given all this information, they’re not actually going to look at it. This is going to help the industry move to capitation, which means you are paid a specific amount, you are not negotiating all these different rates. Providers need to be thinking of these rules a positive thing. If you can get this information into a patient’s hands, they are able to shop around and look at outcome. They know if they go in for a procedure, they will come out better. That’s the way providers need to be thinking about this as opposed to a required mandate. Pooja doesn’t think a lot of providers are there yet.  

Gary asks Ken if quality is something needing to be published in order to compete. Ken points out that CMS has been requiring quality measure reporting for years which can be accessed through Hospital Compare but also points out that most consumers may not even be aware that this site exists but thinks people will find it illuminating as he did when he looked up his local hospital only to find that it had only one-star.  

Ken wonders why we can’t extend healthcare to other parts of the clock to take advantage of less demand at those times and to provide lower pricing at those times. Consumers should have that choice. And for many people, they would take advantage of demand care pricing. 

 Gary asks what the opportunity is here for payers. How can they differentiate themselves in the marketplace? Pooja zooms out to talk about interoperability rules, which require payers to provide their members with their data they have on you, clinical, claims, all of that. So, if you look at that and add on the fact that you’re now letting the patient know how much it’s going to cost them for these services, this could be a huge advantage for you. Make it easy for members to understand everything about your plan, their coverage and how much it’s going to cost them and give them access to everything. I think as a payer, you should really be looking at this as engaging the member and patient, which is really what all these rules are about. We want patients and members to take greater control of their care. I think this does provide a huge advantage and if you wrap it up with everything else you are doing as a payer, you can go out to the market with great advantage. It’s just a matter of thinking about it a little differently.

Ken says if you are the organization that’s educating your consumer, then you are effectively making a better customer and they are going to want to stay with you.

Pooja’s closes by saying to payers and providers, don’t look at this as a mandate. Shift your thinking around this to better understand how you can use this to your advantage. If you are one of those groups that do that, you will have a greater advantage in the marketplace until people catch up with you.