How Price Transparency Data Can Fuel Growth for Physician Practices

Healthcare price transparency data is a powerful tool that can help physician practices improve their negotiations with insurers and their competitiveness in their markets. But most physician practices aren’t using it.

Under federal rules published in 2020, group health plans and health insurance issuers must disclose “in-network provider negotiated rates, historical out-of-network allowed amounts, and drug pricing information” to the public. This allows both consumers and physicians to “understand health care pricing and potentially dampen the rise in health care spending.”

The group health plans and health insurance issuers make these data sets available to the public, but there’s a catch: The data sets are vast and complex. The largest healthcare systems in the country struggle to derive insights from public price transparency data, and the typical physician practice lacks the experience, expertise, and time to benefit from it.

By choosing an experienced data partner, practices can derive insights from price transparency data and better align with their markets, putting them on stronger financial footing and improving affordability for their patients.

Benefits of Healthcare Price Transparency Data for Physician Practices

When physician practices access, analyze, and extract insights from price transparency data, they can:

Improve their negotiating position with health plans and payers

Physician practices historically have been hamstrung in negotiations because they don’t have data to back up their assertions that the plans and payers are under-paying them. Price transparency data levels that playing field and allows physician practices to see the contracted rates for all payers in their market by clinical service line, giving them the ammunition they need to negotiate from a position of strength.  

Make strategic financial decisions

Price transparency data can also help practices make decisions about with whom they contract. For example: If a practice is contracted with two of the four health plans in their market, but they notice that the other two plans are contracted to pay higher rates, the practice could choose to contract with those plans instead of, or in addition to, their current plans.

Reduce wasted time and money in contract negotiations

When providers and payers each have access to the same price transparency data, it helps reduce the back-and-forth that these protracted negotiations typically require. That makes negotiations more efficient, saving both sides time and money.

Gain a competitive advantage in their market

Because patients are often comparison shopping for their medical care, it’s important for physician practices to align their pricing with the market. Price transparency data can help practices understand the landscape, properly price their services, and demonstrate to potential patients their commitment to delivering affordable care.

The Challenges of Leveraging Price Transparency Data

Healthcare price transparency data is an asset for physician practices, but realizing its many benefits is a major challenge. The volume and complexity of price transparency data are well beyond the capacity and expertise of most physician practices. Accessing and analyzing the data requires practices to:

  • Download thousands of rate files, each of which contains several gigabytes, and then load the data into a large and well-structured database.
  • Mine the data for their rates and their competitors’ rates. Health plans and payers don’t submit their price transparency data with easy labels for each item such as, “We paid provider A for service B at rate C on date D.” Instead, the data is masked by ID numbers, billing codes, and other difficult-to-decipher identifiers that must be decoded.
  • Weed out “noise” in the data—outliers that can skew the distribution of the data and produce false results. This requires advanced analytics to clean and normalize the data. For example, when an outpatient surgery is performed at an ambulatory surgical center (ASC) versus an office setting, there can be a substantial difference in the contracted rate. If the procedure is being conducted in an office setting, it is important to identify and remove procedures performed at ASCs in the analysis.

Very few physician practices, if any, have the staff or time to tackle these three challenges. But they can still harness the power of price transparency data by working with a trusted partner.

Choosing a Trusted Price Transparency Data Partner

There are generally two types of consultants that physician practices can choose from.

The first option is a data provider. These firms will load all the contracted rate information into a database and incorporate a search engine. But this doesn’t solve the entire problem for physician practices. Most don’t have staff with the skills to run structured query language (SQL) commands on a database to mine the data. In the rare case they do, there’s no guarantee that the database can deliver reliable results if it hasn’t been cleaned and normalized.

The second option is a data solutions partner. These firms work with physician practices to:

  • provide and house analytic-ready data that is continuously validated to ensure quality.
  • deliver a custom analytic tool that focuses on the unique aspects of a practice’s market to deliver relevant and precise insights.
  • ·offer consultation that’s rooted in the partner’s expertise in healthcare markets and policy landscapes.
  • understand a practice’s goals and help inform decisions that matter most to that practice’s success.

Make Healthcare Price Transparency Work for Your Practice Today

Now is the time for physician practices to put healthcare price transparency data into action to benefit their bottom lines. Early adopters will have the first-mover advantage; they’ll know where the market is, seize opportunities to negotiate the best rates with plans and payers, and offer the most competitive prices for patients. Physician practices that wait to capitalize on price transparency data will find themselves in the dark about their markets’ pricing trends. They will struggle to improve their financial performance and provide the best value for their patients.

With more than five decades of experience in data analysis and health care policy, Mathematica has become a powerful data solutions partner for early-adopter practices. We offer comprehensive access to data from national and regional health plans, provider-specific Medicare rates, and Medicare and Medicaid claims data. Our health care data experts help transform massive amounts of price transparency data into structured, trusted insights. Through one-on-one consultation with clients, Mathematica can turn insights into strategies that help practices navigate complex negotiations and overcome financial challenges.

To learn more about how Mathematica can help your practice get the price data insights it needs to grow, please contact us today.

About the Authors

Suhui Evelyn Li

Evelyn Li

Director, Advisory Services
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