What do the price transparency rules mean to physicians and will they really lower prices?
Price transparency is a popular idea, but it’s proving harder to implement than expected. Hospitals and payers haven’t been great at compliance, and the arbitration process to sort out disputes ground to a halt after the number of cases far exceeded projections.
Niall Brennan, chief analytics and privacy officer, Clarify Health, presented on the latest trends in price transparency data.
Payer data includes the negotiated rates for hospital-employed physicians, so it may be possible to compare what physicians are charging compared to their peers. But finding it might be challenging.
Each payer posts their data in different ways, making it difficult to compile the data. The sheer volume is also proving difficult – there are six trillion rates and counting, as an example, requiring a supercomputer to process it. Brennan says that there is massive amounts of duplication, adding to the problem. In addition, plans that have a national presence file their information not by the local region, but nationally, making comparing local rates time consuming.
To make the data meaningful, Brennan says more identifiers are needed to be added to the data so that it is more easily compiled and then searchable. Payer data has many holes in it, where compliance rates might be in the single or low-double digits for some services or regions, so if someone is trying to analyze costs in particular markets, much of the data may be missing. One sample compliance rate ranged from 0% to 100%. If a payer has 1,000 contracts, but one price for the same treatment, they will often submit 1,000 files, adding to the data overload.
The benefits of price transparency data is clear. Initial data analysis shows that negotiated rates are often far beyond the Medicare rate on the physician fee schedule. The median rate for cardiac services was found to be almost 250% of the Medicare fee schedule rate, with the 90th percentile over 400%.
This means prices can vary widely. For example, a c-section was shown to range from about $5,000 to over $37,000 nationwide. Within markets, that difference ranges between $0 to $46,123. Zoomed in to just Michigan, the median rate ranges from $6,883 to $14.049. If the data was complete, patients could look at this to find the best provider at the lowest rate, and physicians could see exactly what is being paid for various procedures.
Once the price transparency data is in a usable format and analyzed, here are the benefits outlined by Brennan:
However, for any of this to happen, Brennen made the following industry recommendations:
Despite the promise price transparency offers, there is the possibility it could backfire. If hospital A sees that hospital B is getting $4,000 more for the same procedure, what’s to stop hospital A from raising their price to match, or even just adding $1,000 to their current price, which would still undercut their competitor, Brennan said. “No one is going to look at the data and decide they are being paid too much,” he said.