Price Transparency: Lessons from a Large Healthcare Payer
by Mike Looney, Scot Alexander and Doris Lin
As employers seek to limit exposure to rate increases from their health plans, patients face increased deductibles and cost-sharing. This pattern has increased demand for price transparency across the country.
In 2020, the federal government issued mandates[1] requiring health insurance payers and providers to post medical services pricing to members. In addition, in late 2020, Congress passed the No Surprises Act, which is designed to protect patients from surprise out-of-network care costs, provide them with an improved dispute resolution process, and increase overall price transparency. Requirements for payers under this law will gradually increase through July 2023.
Why Does Price Transparency Matter?
This law will impact your business, whether a provider or payer, and not just in meeting regulatory compliance deadlines. Providers have an opportunity to leverage this law, intended to get members and patients more involved in their own healthcare decision, to build trusting relationships. Rather than just meeting minimum requirements and posting pricing, which could create confusion for patients, we help payers and providers create the right communications and the right digital solutions so members truly understand their costs and feel empowered in their healthcare experience.
Impact on Providers
According to the new law, out-of-network providers will only be able to bill more than the in-network amount if patients are notified of estimated charges within specific timeframes. Providers also will now have to submit dispute resolution reports to the federal government. This could have immense financial implications for providers. In addition to building these new reporting systems, providers must also stay organized to seamlessly implement changes.
Impact on Payers
Price transparency puts the patient in the middle, between their health plan’s pricing and their provider’s pricing, causing member confusion that results in more phone calls and overall decreased member satisfaction. Further, aligning the provider contracts and recognizing the patient’s accumulators (e.g., deductible, out of pocket, etc.) to calculate a price that is meaningful to the patient can be confounding to payers.
Here’s an example. What are the chances the price posted by the provider will match the price posted by the health plan? How many procedures are actually known to the patient in advance, recognizing that many provider procedures are not fully recognized until the doctor interacts with the patient?
How We Helped a Major Payer Use Price Transparency to Improve Member Satisfaction
Recently, a major healthcare payer was facing backlash from its provider network about rapidly increasing amounts of bad patient debt. To remediate the situation, Optimity initiated a Price Transparency and Payment Assurance program to help providers and members better understand estimated out-of-pocket liability for both prior and current services.
Optimity conducted surveys to measure the following:
Member opinions on medical bill payments
Member perceptions of billing and collections accuracy
Provider challenges in estimating and communicating liability to patients
Decreased provider accounts receivable
Improved patient satisfaction with care
Improved member satisfaction with health plan
To achieve the following results:
Decreased provider accounts receivable
Improved patient satisfaction with care
Improved member satisfaction with health plan
Learning from Experience: Optimize the Current State & Plan to Build a Robust Future State
Government regulations are constantly fluctuating; whether a payer or provider, it is vital for your organization to build dynamically and adaptably.
Optimity believes providers and payers that correctly plan and implement price transparency initiatives can provide a more positive member experience. The patient and provider experience are foundational to patient satisfaction with their payer. We know from experience the ability for payers and providers to communicate and provide both price and outcomes is key to informed member decision-making on where and when to receive medical services. With proper planning, these new federal laws can catalyze members to use cost-effective service providers.
For a detailed look at transparency in coverage requirements for payers and the wide-reaching impacts across payers’ lines of business, download our Orange Paper here.
[1]2020-24591 - Federal Register - Transparency in Coverage: https://www.federalregister.gov/documents/2020/11/12/2020-24591/transparency-in-coverage
Federal Register Medicare and Medicaid Programs CY 2020 Hospital Outpatient PPS Policy Changes:
Federal Register Medicare and Medicaid Programs Contract Year 2022 Policy and Technical Changes: https://www.federalregister.gov/documents/2021/01/19/2021-00538/medicare-and-medicaid-programs-contract-year-2022-policy-and-technical-changes-to-the-medicare
Text H.R.2328 116th Congress (2019-2020) Reauthorizing and Extending America’s Community Health (REACH) - Title IV No Surprises Act: https://www.congress.gov/116/bills/hr2328/BILLS-116hr2328rh.xml