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January 21, 2022

Price transparency gives payers a new role in member healthcare decisions

Through compliance with the new price transparency rules, payers can boost their influence, insight and relevancy.

In healthcare, it’s difficult for consumers to get a straight answer to a simple question: “How much will this cost?” New regulations are expected to change that by giving consumers clear healthcare prices so they can comparison shop before receiving care. The Centers for Medicare & Medicaid Services (CMS) currently is enforcing these price transparency regulations for providers, with payer price transparency rules taking effect January 2023.

Payers should seize the opportunity now to turn compliance with these rules into a powerful new engagement lever with members. The price transparency experience will become a primary member touchpoint and a key competitive differentiator.

Moving from compliance to a more strategic role

Today, payers typically learn about members’ healthcare decisions after the fact, such as when they receive a claim or preauthorization request. By viewing price transparency compliance as merely serving up pricing data, they’ll maintain this passive stance.

Innovative payers, however, will use the rule’s requirement for a price comparison tool to take on a new role: helping members decide what care to pursue and from whom. Doing so will give payers insight, influence and a relevant role in members’ care decisions.

As we help clients assess opportunities in this space, we see three critical components for designing a robust price transparency experience:

  • Education for members about total cost, quality and value. It can be misleading to present cost information tied to a single diagnostic code. Because the lowest-cost service may not include required ancillary care and follow-up, a higher-priced bundle may actually be the greater value once all costs and quality of outcomes are factored in.

    Further, quality data — such as length of stay and readmission rates — may reveal, for example, that a specific surgeon gets better results at a lower overall cost when she operates at hospital A vs. hospital B.

    Payers need to help members understand these relationships. They are in the best position to provide total cost of care and bundled services estimates, scanning across diagnostic related groups (DRG), claims data and provider contracts. 

  • Price transparency tools. The regulations require payers to offer a shopping tool that presents price comparison data. When working with clients in this space, we recommend designing an experience that helps members explore these questions:

    • Am I aware of or have I explored alternate or less invasive options?

    • What is the relationship between price and quality/outcome data for a provider?

    • What is the complete cost of care (preparation, procedure, therapy, medications)?

    • How well do I understand this information?  Are there resources to provide more clarity?

Payers must integrate this shopping experience into the member’s journey because it has a direct impact on other touchpoints. A member searching for spinal disc surgery prices, for instance, could be presented with information about consulting with a physical medicine and rehabilitation (PM&R) physician. The next steps, such as provider search, scheduling and pre-authorizations, should flow from the member’s decision.

Disclaimers will be essential because the payer can only calculate cost estimates based on the member’s input. Members should be informed that complications or additional services rendered at the actual point of care could increase costs. Nonetheless, price visibility is so limited today that a good comparison tool should greatly improve the overall member experience by reducing unpleasant billing surprises.

  • Integrate transparency with care coordination. Some members may need additional guidance to ensure they’re seeking the right care in the best place. Care managers or coordinators could help members navigate data points and better understand the implications of their choices.

    For a client focused on preventive care for pregnant women at risk of developing gestational diabetes, we collaborated on a tool to enable care managers to identify the most susceptible members and guide them toward appropriate places of care, whether home, clinic or hospital.

Taking steps toward compliance and greater relevancy

Presenting meaningful price and quality data will be an iterative, ongoing process, with increasing sophistication based on advanced analytics tools. That said, payers must supply pricing data on 500 CMS-selected procedures and services by Jan. 1, 2023.

Here are initial steps to meet that deadline with a competitive offering that goes beyond cursory compliance:

  • Determine the costliest procedures and high-utilization populations. While payers must price all 500 procedures and services, they can prioritize which ones they’ll provide  cost comparison and quality data details on. Using analytics, payers can identify utilization trends among the initial procedures and services so that they can direct their efforts toward developing personas and designing personalized, relevant experiences for high-use populations.

  • Ensure the core system is up to date. Our initial assessments show payers will need to link claims, provider contracts, quality and benefits administration systems/modules to generate a price based on provider, member and service or procedure. Operating a standards-based modern core platform will make this integration more efficient.

  • Address information gaps. Where minimal claims data exists on some of the required 500 procedures and services, payers can generate average costs and benefits using their fee schedules.

  • Integrate the shopping tool with existing member communication channels. Our work with clients designing member, patient and provider portals underscores the need to apply design thinking and human-centric design principles to map member journeys and understand their attitudes toward healthcare costs, comparison shopping and health decision making. It also shows the need to integrate data from various payer systems in real-time, create insights from these and incorporate them into the shopping experience. Clients using our EngageMember module in their portals can equip members with personalized cost estimates.  

  • Design an adoption campaignOur industry research indicates health payers lag other industries in adoption of digital tools. A strong shopping tool should be a competitive differentiator, particularly when payers tout its benefits to prospective and existing members via their preferred channels.

For payers, price transparency is an opportunity to create new relevancy in the industry and fulfill their obligation to ensure members are receiving the right care in the best setting. Doing so will lead to higher satisfaction, better outcomes and reduced costs. Those outcomes will benefit the entire industry while also positioning the payer that delivers them as a market leader. 

Sahil Chaudhry (Senior Consultant, Healthcare Consulting) also contributed to this blog.

Laura Topor

Healthcare/Pharmacy Consultant

Picture of DIgitally Cognizant author Laura Topor

Laura Topor is Sr Manager, Healthcare/Pharmacy, Cognizant Consulting. She has experience in pharmacy benefits management, payer & provider ops, health IT, e-prescribing, regulatory compliance, process improvement & strategic planning.

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