Three transparency rules have come out of CMS in the past months. My guest in this health care podcast, Jeff Leibach, calls these three rules three steps on a ladder. They build on each other.
The first rule was announced last year, and it was for hospitals to post their chargemasters. You could consider this a baseline step. It’s not really all that useful in practice as many discovered.
The next step on the ladder (which is coming out on 1/1/21): Providers (hospitals) for all services have to post a machine-readable file—all of their negotiated rates for all service categories. They also have to post a shoppable service file and/or some kind of patient estimator tool so patients can estimate the cost of the most shopped services.
Then there’s the payer rule. This is more comprehensive than the provider rule, and the payers have some extra time—actually, they have an extra year (till 1/1/22). But basically, payers have to comply at a higher level. They have to allow price shopping across all sites of care.
My guest in this health care podcast, Jeff Leibach, is a director with Guidehouse in the Healthcare Practice. He focuses on how health care services are priced and paid for, working with a lot of payers and providers. Thus, he is the perfect person to discuss these transparency rules with because of his deep knowledge of payers and provider contracting and also how pricing impacts patients, employers, and stakeholders across the industry.
Jeff and I get into these three transparency rules and their likely impact and also kind of their philosophical underpinnings. We also talk about what might happen with them under a Biden administration. After our conversation, I started to think about these transparency rules in the broader context of what’s going on in the health care marketplace.
There’s kind of a constellation of market factors, and these market factors increasingly seem to be necessitating hospitals and ambulatory practices to really differentiate themselves in ways that employers and patients/consumers care about. I mean, these CMS transparency rules for payers and hospitals are but one thing that is going on. But these rules ultimately mean that it’s easier for patients and employers to price shop. It also makes it easier for employers to narrow their networks and exclude providers.
Consider this impact and then think about how that fits with the ONC TEFCA (Office of the National Coordinator for Health Information Technology Trusted Exchange Framework and Common Agreement) rule. So, that ONC TEFCA rule means that it’s gonna be a less effective tactic to prevent network leakage by hoarding patient data. So, if patient data is portable, patients can seek out the best care provider without the friction of some kind of PHI (protected health information) transfer.
Okay … so now prices are available because of the transparency rule, and patients can walk more easily because of the TEFCA rule. So, these two together could be a forceful combination.
We also have the rise of consumerism. I just saw a study the other day kind of validating that consumers are voting with their feet if a provider does not meet the quality of care, the supportive patient experience that they believe could be found elsewhere. And add to that the at-risk PCPs (primary care providers) cropping up in various concentrations across the country.
But then also, you’ve got payers buying PCPs. And what that means is that you get these PCPs who control the referral flow, and they’re taking an active interest in the downstream costs and population outcomes of specialists in their referral networks. So, you’ve got specialists who maybe lack processes to minimize inappropriate care or who do not deliver consistently high patient experiences and outcomes. They could easily get excluded from those referral flows.
So, you take all these things together—the transparency, the ONC TEFCA rule, consumerism, and the disruption of certain referral flows—and, if you ask me, I think all of this together means that providers who are more commodity and less brand may need to consider ramping up their Triple Aim endeavors.
You can contact Jeff at jeff.leibach@guidehouse.com. You can also connect with him on LinkedIn and Twitter.
Jeff Leibach, MBA, is a director with Guidehouse’s Healthcare Practice. Over the last decade, Jeff’s main area of expertise has been in developing and implementing managed care solutions for payers and providers. These solutions include development of several analytic solutions, alignment of clinical and financial models, and negotiation training and preparation. Jeff has significant experience building and leading teams to deliver complex analytical tools to quantify opportunities into business strategies for clients. Jeff currently leads Navigant’s Strategic Pricing and Revenue Rebalancing Solutions for Navigant.
Prior to his consulting career, Jeff led national nonprofit Camp Kesem, a summer camp for children affected by a parent’s cancer.
Additional information: Price Transparency White Paper and 2019 Massachusetts Attorney General Report
05:31 What are the two pieces to the new transparency rule going into effect on January 1, 2021?
06:58 “Any negotiated rate … is required to be disclosed.”
07:43 What’s the payer rule, and how does it differ from the hospital rules?
10:24 Where are direct comparisons going to come in most useful with transparency rules?
11:16 How does CMS intend these rules to be used?
14:34 “I anticipate employers having a newfound power here.”
17:27 Why is there opposition to transparency in health care?
18:27 “The administrative burden is real.”
21:03 “I think commoditized is a word we’re going to hear a lot more.”
22:55 Where is CMS headed under a Biden administration?
26:22 What barriers can tech help break down, and what other opportunities are there for tech right now?
28:49 What should payers be preparing for right now?