A New Era of Price Transparency

The recent White House Executive Order (EO), “Making America Healthy Again by Empowering Patients with Clear, Accurate and Actionable Healthcare Pricing Information,” aims to build on the Hospital Price Transparency and Transparency in Coverage rules issued during the first Trump administration. This EO represents a significant step forward in the ongoing effort to make healthcare pricing more transparent and accessible to consumers.

In 2019, President Trump ordered hospitals and health plans to deliver “meaningful” price information to patients and employers. This led to regulations requiring hospitals to establish and maintain a consumer-friendly display of pricing information for up to 300 shoppable services and a machine-readable file with negotiated rates for every single service the hospital provides. Starting in 2022, health plans were also required to post their negotiated rates with providers, out-of-network allowed amounts, and the actual prices paid for prescription drugs. Additionally, health plans had to maintain a consumer-facing internet tool through which individuals could access price information.

Despite these efforts, implementation has been hampered by how hospital and healthcare provider pricing data are reported and by inadequate enforcement, making it nearly impossible for consumers to make informed decisions based on the data.

The new EO seeks to address these challenges by mandating actions from the Secretaries of Treasury, Labor, and Health and Human Services by May 26, 2025. These actions include:

1. Requiring the disclosure of actual prices of items and services, rather than estimates.
2. Issuing updated guidance or proposed regulatory action ensuring pricing information is standardized and easily comparable across hospitals and health plans.
3. Updating enforcement policies designed to ensure compliance with the transparent reporting of complete, accurate, and meaningful data.

These measures aim to streamline the path to a more efficient and cost-effective healthcare market, giving patients and consumers greater control over their personal healthcare spending. Improvements in data quality and presentation will ensure greater accuracy and ease when comparing prices across hospitals and health plans.

Price Transparency Challenges and Solutions

Mathematica has identified three areas where improvements under the new EO, including those that make the data more readily usable and the schema more user friendly, can better support price transparency efforts and improve consumer choice:

1. Differentiating between hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs): Currently, professional rates for procedures tend to be mixed with facility rates paid to ASCs and HOPDs. For example, professional rates for cataract procedures are substantially higher for providers affiliated with surgical centers and academic medical centers, suggesting that these rates include both facility and professional fees. The Centers for Medicare and Medicaid Services (CMS) could introduce an additional data field to indicate whether the rate applies to facility only, professional only, or both. Consumers need to make apples-to-apples comparisons between rates to make informed decisions.
2. Requiring payors to report national provider identifier numbers (NPIs) instead of taxpayer identifier numbers (TINs) for healthcare organizations: Current CMS data protocols define a provider using the combination of TIN value, TIN type, and NPI data columns. However, it is challenging to identify organization names and locations based on TINs because such data is not publicly available. On the other hand, CMS makes information on NPIs publicly available, allowing for easier identification and comparison of rates paid to healthcare facilities and practices with a higher level of accuracy. Therefore, consumers will benefit from more complete and accurate organizational NPI information. CMS could improve data reporting by requiring payors to report the billing of NPIs instead of TINs.
3. Adding data that specify plan product: Currently, it is almost impossible for consumers to query rates by their plan products (e.g., United Healthcare Choice Plus or Aetna Choice POS). Payors report plan names and plan identifiers by employer name and employer identification number (EIN). CMS could, without significantly increasing file size, require discrete data fields that specify the plan product name and product type. Consumers would benefit from the ability to look up prices related to their specific plans.

Currently, the files that contain pricing information are extremely large and often contain data that are of limited relevance and utility to consumers. Huge file sizes require long processing times and make the development of user-friendly price tools expensive and ineffective. Reducing file size, without removing any important information, is important to realizing the goals of the new EO. Mathematica has identified three opportunities to reduce file size and improve the utility of price transparency for consumers:

1. Require payors to report providers and services with recent claims history: Two forms of “ghost rates” exponentially increase file sizes: services the provider does not actually offer and outdated TIN-NPI pairs. CMS could require payors to report NPI-performed services where a billing event occurred with at least one claim in the past 12 months.
2. Streamline requirements for payor and hospital price transparency data: Currently, payor and hospital data are not comparable due to differences in reporting requirements and inconsistent reporting behaviors across payors and hospitals. CMS could update requirements to ensure that negotiated rates and cash prices are comparable for the same hospitals.
3. Refine requirements for how payors should report provider groups: Provider information is reported inconsistently across payors and can vary within payors. Currently, CMS allows payors to report provider-rate linkage in three different ways: 1) in the negotiated rates array, 2) in the provider references array within a rate file, and 3) in the external provider reference files. CMS could improve consistency of provider information by limiting the reporting of provider-rate linkages to a single option or by introducing a condition based on file size.

Enhancing Price Transparency Compliance

For the EO to realize its goals, appropriate incentive mechanisms must be in place for plans to spend resources supporting this effort. One possible path is to leverage the authorities and oversight CMS agencies have with payors. For example, CMS, through the Center for Medicare and the Center for Medicaid and CHIP Services, could require price transparency reporting as part of existing requirements for Medicare Advantage (MA) plans and Medicaid Managed Care Organization (MCO) plans, respectively. While traditional Medicare consistently reports rates for services, many larger payors have multiple lines of products that include MA and Medicaid MCO plans, in addition to employer-sponsored insurance, and increased reporting for those other product lines would support the goals of the EO on price transparency.

To augment its ability to influence employer-sponsored insurance, CMS could propose regulations to reduce some reporting burdens on MA plans (i.e., eliminating the Health Equality Index) as an incentive to focus more efforts on price transparency in commercial insurance. And although the Center for Consumer Information and Insurance Oversight has more limited enforcement ability, it collects user fees from participating plans, which could be leveraged as an incentive for plans to spend those funds on price transparency initiatives.

The new EO from the administration will help usher in a new era of price transparency. Practical solutions can be implemented to improve the data, reduce file size, and ensure enforcement. These efforts will ultimately empower consumers to make more informed healthcare decisions and promote a more efficient and cost-effective healthcare market.

Learn more about Mathematica’s efforts with price transparency. Get in touch.