Hospitals’ compliance with price transparency laws has increased significantly in the past year, with most hospitals currently displaying the cost data they need to in order to adhere to the regulations. That wasn’t always the case, though. Hospitals had a difficult time meeting CMS’ price transparency requirements during the first two years they were enforced — a JAMA study published a year and a half after the rule went into effect showed that fewer than 6% of U.S. hospitals were fully compliant.
To achieve compliance, many health systems had to turn to technology vendors for assistance. One of these vendors — Turquoise Health, a San Diego-based startup selling software to reduce the complexity of healthcare pricing data — announced a new funding round on Tuesday.
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The startup, which was founded in 2020, completed a $30 million Series B round, which brings its total funding to date to $55 million. The financing round was led by Adams Street Partners, with participation from Andreessen Horowitz, BoxGroup and Yosemite. Adams Street Partner Tom Bremner will join Turquoise’s board of directors.
“Healthcare pricing remains frustratingly opaque for many industry stakeholders, including patients,” Bremner said in a statement. “Turquoise tackles this problem head-on with a sophisticated, multi-stakeholder platform that ultimately makes healthcare pricing and packaging look easy. I am excited to partner with the team as they scale towards a seamless healthcare transaction.”
CMS began enforcing its price transparency rule on the first day of 2021. The law requires hospitals to post their gross charges, payer-specific negotiated charges, de-identified minimum negotiated charges, de-identified maximum negotiated charges and cash prices on their websites in a machine-readable file. It also mandates that hospitals must publish pricing for the 300 most commonly used services to their website in a consumer-friendly manner.
In July 2022, CMS began requiring payers to post price transparency data as well. Payers are required to post rate data for more than the services they cover at hospitals — they must publish data for all types of providers, such as imaging centers, family practice clinics, and ambulatory surgery centers.
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Both hospitals and payers are required to post massive amounts of data in a consumer-friendly manner, which isn’t an easy task given the highly complex and variable nature of healthcare financial data, Turquoise CEO Chris Severn pointed out.
The complicated structure of the healthcare system — from care variance to deductibles to billing codes — means that producing an accurate price estimate is incredibly challenging. For instance, there is no single price for a colonoscopy or hysterectomy. In order to figure out how much a procedure will actually cost a patient, a number of variables need to be considered, such as the facility fee, doctor’s procedure fee and anesthesia fee.
That’s why Turquoise built software to quickly gather that information and determine what a patient’s health plan will pay for. The startup’s platform provides direct access to price transparency data via a search engine, as well as tools for data views and reporting. Overall, this platform makes it easier to quickly provide patients with an accurate price quote, Severn explained.
Turquoise has more than 160 customers, including providers, payers, employers, consultants, health tech companies, pharmaceutical firms and medical device makers. These customers contribute to the startup’s revenue via three streams, which Severn categorized as “data, contracts and compliance.”
The data revenue stream refers to customers that buy access to negotiated rates and cash prices from providers and payers across the country. The contracts stream encompasses those that use Turquoise’s contract intelligence platform, which leverages AI to enable contract organization and insights. As for the compliance stream, this involves customers that use Turquoise’s compliance tools designed for CMS’ price transparency laws and the No Surprises Act.
There are other companies out there that also help healthcare organizations understand costs and negotiate accordingly, like Accenture, Deloitte and Healthcare Bluebook. Severn declined to answer MedCity News’ question asking how Turquoise differentiates itself from competitors such as these.
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