The hospital price transparency rule has been celebrated as a big win for patients, while also being decried as a burden on healthcare stakeholders. The rule took effect on Jan. 1, though providers snagged a win on Tuesday when the Centers for Medicare & Medicaid Services proposed repealing a part of it for the next fiscal year that begins Oct. 1 this year.
But it’s shortsighted for providers to begin celebrating and not just because the regulation as a whole is expected to stand.
Something that has been missing from the debate about the price transparency rule are the opportunities it affords payers and providers.
In fact, there are ways in which they can use the rule’s requirement of publicly sharing pricing data to their advantage. These include being able to leverage pricing information to sharpen their competitive edge, support contract negotiations and foster trust with patients.
For providers, the first big opportunity the rule presents is a better understanding of their competitors’ services and contractual rates, said Joseph Boschert, product manager at risk management, benefits and technology firm Milliman, in an email.
“With this knowledge, providers will potentially be able to communicate to the market their unique value-added differentiation or add new services or bundled offerings to attract new patients,” he said.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
For example, if a cancer specialty hospital is administering higher amounts of chemotherapy drugs — making their services more expensive than their competitors — they can prepare to engage patients more effectively by showing them the outcomes they can achieve and providing context around those costs.
Further, publishing and comparing pricing can help hospitals cut the fat. They can use the data to assess the underlying cost structure of their services and identify redundant ones offered within a market, or even within a health system, said Kaveh Safavi, senior managing director, global health at international consultancy firm Accenture, in an email.
“Providers need to consider this regulation as an opportunity to re-evaluate their strategy for service line delivery,” he said.
Similar to providers, payers can use the visibility into payment rates to support advantageous contract negotiations, said Mike Gaal, principal and consulting actuary at Milliman, in an email.
If, for instance, a payer sees that one of its key competitors is achieving lower contractual rates with a specific provider, which will ultimately result in lower premium rates, that payer now has data to support negotiations for a lower rate.
“[And] if the provider is unwilling to provide more competitive rates to the payer, then the payer can consider options such as removing the provider from its network or having the provider in a non-preferred network tier,” Gaal said. “In doing this, the payer can entice other providers in the market to contract more aggressively with the opportunity for increased market share.”
Perhaps the biggest opportunity the price transparency rule provides for both stakeholders is the ability to strengthen relationships with patients.
“Ultimately, transparency shifts the focus of the relationship between payer and provider from winning a zero-sum game to looking for ways to give back real value to members and patients,” Accenture’s Safavi said.
Though providers may fear patients switching facilities due to price, research shows this is not necessarily the case. Nearly half (46%) of 2,000 U.S. consumers said they want pricing information for financial planning purposes rather than to shop for care, according to a 2018 Accenture report.
Providers and payers can help patients plan for expenses by offering them resources to better understand the “price-to-me” and member benefits, said Robert Murphy, managing director, health and public service, payer practice lead at Accenture, in an email.
“Both providers and payers have an opportunity to build greater trust with members by sharing timely and accurate pricing information for decision making,” he said. “It’s essential to move from thinking about compliance to empowering members.”
Early reports suggest that compliance with the price transparency rule is low. But as providers and payers explore the various nuances of the rule, they may find that it does work in their favor and not just against them.
Photo: feellife, Getty Images
