Amid growing focus on value across the health care ecosystem, regulations on hospital price transparency,1 publication of rates, consumer out-of-pocket obligation estimates, calculation of the medical loss ratio (MLR) and other areas relevant to pricing2 have emerged from the Centers for Medicare and Medicaid Services (CMS). These rules were designed to empower consumers to make more informed and cost-effective decisions about the health care services they receive, and 94% of commercial payers are already complying by making cost estimates available to enrollees through sites or apps.3 The majority of these payers also provide enrollees with real-time insights into their personalized cost-sharing liability for specific items and services as well as the accumulated amounts they’ve incurred to date toward a deductible or out-of-pocket maximum.
Despite this progress, consumer awareness and usage of this pricing information has been minimal to date, largely because highly detailed and often complex pricing data isn’t yet available in a medium that’s digestible for the general public. Another barrier hindering meaningful analysis of this data is the lack of standardized, machine-readable files under hospital price transparency rules, and CMS is currently working on guidance to address this issue.
While these and other barriers persist around access to price transparency data, many payer industry leaders believe there’s a lack of ROI around investing in pricing-related strategies that go beyond mere compliance. And for hospital systems in the US, while the rate of compliance with baseline provisions contained in these regulations was initially much lower than that of payers, recent estimates show a big jump in compliance rates as CMS ramped up enforcement efforts, from 27% in early 2021 to 70% in late 2022.4 Combined, these factors signal that much work remains to provide consumers with the price transparency CMS has envisioned. These insights also indicate that health leaders are not yet positioned to drive the enormous cost savings and overall value that come with transforming consumer experience and decision-making through price transparency.
A seismic shift
As organizations across the health care ecosystem prepare for major shifts to its competitive landscape around price, health leaders must leverage more swift and proactive decision-making related to contract negotiation and pricing strategies. From reduced costs to better patient experiences and outcomes, more fair provider compensation, a faster sprint to value-based care and much more, the benefits of bringing a transformation mindset to drive access and transparency in pricing and contracting are significant.
Now that detailed pricing data for health care services is widely available to consumers for the first time, payers can expect major changes in four key areas.