Editor’s note: Niall Brennan is the chief analytics and privacy officer at Clarify Health. He was previously the president and CEO of the Health Care Cost Institute, and served as the chief data officer at the CMS, where he led the Obama administration’s healthcare transparency efforts.
In today’s digital age, people are empowered with access to knowledge like never before. With one exception — most Americans still have no idea what their healthcare visit will cost prior to receiving the bill. In fact, one in five U.S. adults has received an unexpected medical bill in 2022, even after federal protections were introduced to shield patients from surprise medical billing. Patients are often left in the dark when it comes to the cost of care and what is deemed a “covered service,” and this inability to effectively research and compare services acts as a major barrier to achieving health literacy and equity.
On the heels of a similar price transparency rule for hospitals to comply with, The Transparency in Coverage Final Rule for payers went into effect last month aiming to further lift the curtain on healthcare pricing. The rule lends itself to create a more equitable, cost-effective market for medical coverage and introduces a level of transparency that has long been needed in the industry. All purchasers of healthcare insurance will get a window into what their premiums are and in turn, consumers will be empowered with the information needed to make more informed healthcare decisions.
While it remains unclear how this rule will affect the future of U.S. healthcare spending in the long-term, and whether it will succeed in arming patients with the information needed to ‘comparison-shop,’ one thing is for certain: It is a historic step toward building a culture of transparency in healthcare and has proven to be promising in its early stages.
Payer rate transparency compliance: so far, so good
In January 2021, the Hospital Price Transparency Rule went into effect, mandating that hospitals publish their prices online in a consumer-friendly format. Since its enactment, compliance with has been lacking, with estimates of “full” compliance with the rule ranging as low as 14%.
However, this hospital rule no longer exists in isolation with the recent rollout of its payer counterpart. While it is still unclear how the payer rule’s rollout will pan out, early signals are positive for compliance — especially among the large National and Blue Cross health plans.
Big industry players including UnitedHealthcare, Aetna, Cigna and Centene already made efforts to promote greater price transparency shortly after the rule went into effect. Smaller health plans may be slower to follow suit but having the largest U.S. health insurers comply in these initial stages ensures the vast majority of rates affecting the greatest population of patients are being captured.
Health insurers are also in a better position to comply with this rule than hospitals, who often bury information deep in spreadsheets and antiquated financial management systems. Claims data are the bread and butter of how the U.S. healthcare system operates, and health plans generally have strong analytical and IT capabilities that make it easier to access and share pricing information.
Beyond insurers’ technical advantage, the federal government will also allow insurers to use incentives, such as lower deductibles, as a means of encouraging members to shop for services from higher-value, lower-cost providers. When enrollees take advantage of such incentives, health plans can give consumers a part of the savings and include the “shared savings” in the numerator of medical-loss ratios rules to reduce what they pay in rebates.
Promise, perils of massive data
Still, delivering on this rule is proving to be no easy feat. While the data specifications and layouts for the payer transparency files are reasonably straightforward, and had been made available well in advance, the raw data files themselves are overwhelming in size, even for experienced users and organizations that are used to handling massive amounts of data.
For example, the downloadable data from a single national payer, albeit the largest, United Health Group, requires over seven terabytes of storage and will be updated every 30 days. By my estimate, all the rate information across all payers will be over a petabyte of data and possibly more. To put that into perspective, a single year of claims data for the Medicare program, which includes every hospital visit, physician visit, lab test, and prescription drug, could exceed over two terabytes in size. So, while the information at face-value will likely be valuable for industry players and researchers, there are no consumers who will be able to use the hefty datasets at scale — at least for now.
Much is at stake if this information remains unusable for consumers, and employers who continue to be the primary source of health insurance coverage for more than 160 million Americans. A lack of price transparency continues to drive unsustainable increases in our national healthcare spending and leaves many patients with mounting medical debt. In fact, nearly one in 10 U.S. adults owe significant medical debt, with minorities, people with disabilities and those in worse health most at-risk. Meanwhile, the average cost of employer-sponsored health insurance per employee increased 6.3% in 2021, and although employers expect a more standard 4.4% rise this year, several factors such as higher utilization due to “catch-up” care and high costs of drug therapies, could result in ongoing price acceleration.
Innovators in the healthcare industry are working to ingest the data to make it easier for employers and consumers to access and interpret, in addition to delivering insights that support further provider-payer collaboration. When that goal is reached, data will become more than just JSON files — it will become intelligence, a tool that consumers can use to take charge of their healthcare journey.
The future of price transparency is at a crossroads
Historically, price transparency rules have been met with opposition from healthcare stakeholders, who, candidly, were fine with the status quo that kept predatory pricing a closely guarded secret, and the Transparency in Coverage rule is no exception. Yet, it is important to acknowledge that just a few years ago, the notion of this type of data existing at all was almost inconceivable. This rule reflects giant steps for the industry, as it aims to empower patients to make more informed decisions.
The public release of pricing data is largely unchartered territory in the healthcare sector. And while the U.S. has a long way to go in achieving the intended outcomes of price transparency, the payer rule — in combination with the previous hospital rule — is a key illustration of the significant progress that healthcare has made over the last decade. It will inevitably spark lasting change in the industry, promoting greater transparency and choice in healthcare.