As transparency rules enter their fifth year, advanced uses gain traction

With price transparency rules becoming more entrenched in the healthcare system, applications are growing more sophisticated.

“There’s this treasure trove of data out there, and a lot of interest in how it can best be leveraged to support not just consumers but also broader policy goals to improve healthcare affordability,” Sabrina Corlette, JD, co-director of the Center on Health Insurance Reforms at Georgetown University, said during a panel discussion hosted by Health Affairs.

The discussion delved into the state of healthcare price transparency with less than a month remaining until several compliance provisions begin for hospitals in the new year. Those mandates follow a slew of 2024 changes to the reporting template and requirements (see the chart on page 3 of the link for 2024 and 2025 updates).

Meanwhile, the Transparency in Coverage (TIC) rule for health plans offers a more comprehensive price assessment for commercially insured patients by including access to listings for physicians and other types of providers and pinpointing the out-of-pocket cost. However, the sheer size of the TIC files has made finding and extracting information difficult.

The Dec. 4 discussion was sponsored by Arnold Ventures, an LLC that has funded content criticizing hospitals for their influence on healthcare costs. Although some of the conversation focused on reported compliance rates, which have been a contentious point among hospital advocates throughout the history of the regulations, insights also described key trends to watch as the price transparency era moves forward.

Price transparency “really was designed to disrupt the market,” said Steve Parente, PhD, a professor at the University of Minnesota and formerly a top healthcare policy advisor in the Trump administration, which drafted the hospital and health plan rules. “It’s a necessary but not sufficient condition to do [that] type of work.”

Enterprising approaches

Some of the most notable functions of price transparency are being implemented by employers.

With the help of third-party data crunchers, employers are using price transparency insights to establish narrow or high-performance networks, said Shawn Gremminger, president and CEO of the National Alliance of Healthcare Purchaser Coalitions.

“It’s very helpful to know what [providers] have agreed to in other networks,” he said. “You can compare them even all the way down to a service-level question.”

As another option, employers may implement stricter cost-sharing requirements for employees who visit hospitals with prices that are above a certain threshold relative to Medicare.

“We’ve been working on high-performance networks and tiered networks for years, but having this price transparency makes it easier,” Gremminger said.

Transparency also helps employers engage in contracting directly with providers, some of which may choose to accept lower payment rates because they won’t have to accommodate an insurer’s administrative requirements.

“Using this price transparency information, we are able to find providers that would be potentially more amenable to direct contracts,” Gremminger said.

As employers carve out ways to apply the data, providers need to consider ramping up their pricing defensibility strategies.

Similarly, when employers manage to get ahold of their claims data from insurers, Gremminger said, they sometimes find “really surprising and sketchy discrepancies between the amount they paid in their claims data and the amount the provider got paid,” as cross-referenced in the TIC data. “We’re seeing a lot of [insurance] carriers that are engaging in spread pricing without telling employers.”

He added, “By being able to look at the TIC files, we can say, ‘Here’s what you paid to this clinician for this service, and we know we are paying twice that much.’”

Transparency as a policy driver

Industrywide, substantial thought needs to be given as to how to best deploy pricing insights, said Michael Conway, Colorado’s insurance commissioner.

“There’s always a lot of conversation about creating tools and building capacity for individual consumers to be able to use transparency,” Conway said. “That’s important so that folks who want to be really sophisticated shoppers have the ability to do that. But I don’t think that [aspect], candidly, is going to be the best use of this data.”

The most impactful approach, he said, would entail incorporating the data in core regulatory work such as rate review by state insurance commissions and using it to inform future healthcare policy.

Acknowledging Gremminger’s allegation of spread-pricing practices by insurers, Conway said such a concern hints at where price transparency can drive needed change.

Insights into such practices “are the perfect illustration of how we can combine that type of information with state regulatory or legislative action,” Conway said. “I think you would find there are a number of states that would be very interested in having some conversations about outlawing that exact type of activity, especially if we can show, because of the TIC data, that it’s happening.”

A better way

The requirement for hospitals to show prices for 300 shoppable services is unlikely to move the needle on healthcare spending, Gremminger said, in part because insured consumers probably are not paying the displayed price.

A more practical solution might be illustrated by a UnitedHealthcare zero-deductible health plan in which copays vary based on cost and quality. Consumers can easily calculate the permutations in the insurer’s app.

“What we’re finding is that most people who are [using] this are, not surprisingly, choosing the lower-cost provider, which saves them money but also saves their employer money,” Gremminger said.

It’s hard to verify whether UnitedHealth is truly directing consumers to high-value providers that help all parties save money, he added, but as long as the insurer does so, the program can be “the future of what consumer-directed healthcare looks like. You’re not just saying, ‘I think they might be cheaper based on what I’m seeing on this website.’ [You’re] like, ‘I know they’re cheaper because it’s literally an all-in price. This is going to cost me $200 full stop. I’m not going to get balance billed. There’s nothing hidden.’

“I think that’s where we’ve got to get if we’re going to actually get consumers directing themselves toward lower-cost, higher-quality providers.”