Payer Price Transparency: Use it to Increase Rates & Revenue

While the CMS’s 2020 Transparency in Coverage ruling intended to primarily benefit patients and drive down healthcare costs, providers, too, reached for their party hats. 

The Rule has resulted in a massive amount of payer data made public in what was possibly “the largest government-mandated release of data in history,” according to an article in Health Affairs.  

Prior to the ruling, providers had no way to verify payer claims of 'market rates' and often had to negotiate based on anecdotal information or simply accept outdated contract terms. Confidentiality clauses in payer contracts prevented providers from knowing the reimbursement rates paid to their peers, hindering their ability to identify and address disparities and unfair market rates.  

Publications and even CMS lauded TiC as a way for providers to:

• Gain access to previously private competitor and payer pricing data.
• Perform accurate competitive analysis.
• Gather data needed to justify higher rate / better term requests.  
• Pressure payers to adjust their rates to reflect indisputable market realities. 

For providers, transparency promises empowerment, and yet…

A recent NPR article calls finding current payer prices an “ordeal,” explaining how this disclosure,

“can be hard to access — mainly because of [enormous file] size, but also because each insurer approaches it differently. Some, like Cigna, require would-be viewers to cut and paste a very long URL into a browser… UnitedHealthcare's webpage warns it could take "up to 5 minutes" for the page to load. When it does, there are more than 45,000 entries.”

Some suspect that, by failing to standardize files and limit their size, payers are putting up roadblocks to pricing accessibility by providers. 

But for every digital obstacle, there’s an enterprising entrepreneur ready to create a solution. 

Review how you can access these machine-readable files (MRFs) that payers have released and use the data inside to see which payer brings the most value, get reimbursements your competitors are getting, and marshal the firepower to negotiate more favorable rates. 

What is payer price transparency?

Payer price transparency is the practice of making healthcare costs and pricing information more readily available to patients, providers, and other stakeholders. It involves health insurance companies disclosing data detailing their negotiated prices with providers for healthcare services. This CMS resource goes into detail. 

CMS explains that the goal of payer price transparency is to empower patients to make informed decisions about their healthcare by allowing them to compare costs and understand their financial responsibilities. It also acknowledges that making standard prices transparent to all market participants, like providers, to use information about actual transaction costs. This knowledge helps all involved to sharpen payer contracting, reduce costs, and heighten price competition.  

Transparency in Coverage rule: how it’s faring now

With the federal penalty for non-compliance up to $100 per day per affected enrollee, payers must disclose prices or face significant financial impact and even a hit to their reputation once the news spreads. 

Federal agencies and CMS state that as of July 1, 2022, most group health plans and issuers are posting the required pricing information online. 

However, by making these files so complicated, they are inaccessible, payers overwhelm busy revenue cycle teams at healthcare organizations, thereby escaping repercussions while keeping accurate prices hidden. A lack of standard file structure, little index information, and enormous file size make them almost impossible to process on a normal computer. Healthcare RCM staff struggle to even access and analyze payer contracts, let alone badger payers to list accurate prices. Payers depend on this lack of bandwidth and time to keep their advantages. 

To address this dodge on the part of payers, Senators Margaret Wood Hassan (D-NH) and Mike Braun (R-IN) wrote to CMS expressing their concerns about “technical loopholes.” The Senators asked CMS to create a standardized template for the machine-readable files, limit the file sizes, and reduce the frequency of reporting. They also requested that CMS increase enforcement efforts targeting plans that provide low-quality data. 

With payers able to technically say they’ve made their pricing filing accessible, so far, they’ve managed to keep prices obfuscated. Federal agencies have not revealed any enforcement actions taken against non-compliant health plans. As a result, the usability issues raised by the senators persist. 

At this time, CMS advises users who cannot find a plan's MRFs to use search engines with specific keywords or contact the plan directly. CMS shares that it still does not provide a central, easily searchable pricing file repository. 

Increase revenue by benchmarking against payers, other providers, and Medicare 

Today, patients are calling around to get the best prices on their medical treatments. The Transparency in Coverage Rule helped that happen.

Payers: who’s paying what?

Providers, too, should have the flexibility to determine which payers will reimburse at the highest level. If Humana is paying 15% more for a shoulder replacement than BCBS, a provider has the right to chase that higher rate. It's the free market way. For instance, you might take work to bring in more Humana than BCBS patients. Benchmarking payers against each other helps you steadily gain more power and better revenue. 

Other providers: what are they getting? 

The benefits in payer price transparency don’t stop with payer rates analysis. Providers can also use this data to see the rates a competitor down the street receives from your payers. If Humana is giving this other practice or physician group 10% more for the same services you provide, you can negotiate for similar rates.  Of course, you need to make the case that your value to the payer is similar or better. Explore how to define your group’s value. 

Medicare: the biggest benchmark

Payer price transparency has a lot to do with benchmarking rates against Medicare because Medicare reimbursement rates act as a baseline in healthcare pricing and negotiations. By comparing rates as a percentage of Medicare (such as 150% or 200%), payers and providers share a common reference point. This transparency or clarity helps to streamline negotiations and reduce disputes between providers and payers. Medicare rates are non-negotiable.
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Here's how benchmarking against Medicare helps you win more revenue:

• Negotiating leverage: Providers can use Medicare rates as a foundation to justify their reimbursement requests from commercial payers. For example, if you are being paid 120% of the Medicare rate for a service, you can argue for a higher rate, such as 150% of Medicare, based on the value and quality of your services.
  
  
• Identifying underpayments: By comparing their commercial rates to Medicare rates, you can identify instances where you are being underpaid by commercial payers. (“We’ve been getting only 95% of the Medicare rate for this Level 4 office visit!”) Since Medicare rates are very low, using this percentage puts the underpayment in stark relief for the payer rep. Use this convenient data to negotiate for higher reimbursement.
  
  
• Market analysis: Benchmarking against Medicare rates allows providers to assess their competitive position in the market. By comparing their rates to those of their peers and to Medicare benchmarks, providers can gain insights into their pricing strategies and identify opportunities for improvement.

For example,  a Midwest health system may analyze its payer contracts and discover that one payer reimbursed $2,100 for a laparoscopic cholecystectomy (gallbladder removal), while another payer reimbursed $3,400 for the same procedure. Further analysis may reveal that the $2,100 reimbursement was only 110% of the Medicare rate, while the $3,400 reimbursement was 180% of the Medicare rate. By comparing these rates to both their peers' rates and the Medicare benchmarks, the health system identifies the underpaying payer and successfully renegotiates the contract to achieve a more equitable reimbursement closer to the 180% of Medicare common in their market.

• Reference-based pricing: Some payers use reference-based pricing (RBP) models that directly tie their reimbursements to Medicare rates, paying providers a multiple of those rates or using other Medicare-based benchmarks.
  
  
• Comparison in the payer mix: Benchmarking against Medicare can expose inconsistencies where one payer might reimburse at 1.6x the Medicare rate while another pays 2.3x for the same service, enabling providers to address discrepancies in negotiations.

In an environment where healthcare organization margins are increasingly tight, getting payers to reveal their prices could be one of the most pro-revenue moves you make this year. Just last month, research consultancy Mathmatica hailed “A New Era of Price Transparency” for healthcare. At least having awareness of how you will achieve payer price transparency establishes you as an early adopter. 

Caveat: the 1- to 2-payer geographic market

Knowing which payers pay the most, what they’re paying your competitors and how they compete based on Medicare benchmarks promises to empower healthcare organizations. 

However, in certain areas, just one or two payers cover healthcare consumers, making the pursuit of payer price transparency a non-starter. These payers may have cornered their markets, but they flirt with anti-trust crackdowns, too. 

Recently, legislators have found too much consolidation in certain locations. To counter this, several legislative and legal actions are underway to rectify situations where a few payers dominate a geographic area. The big anti-trust lawsuit occurring now is The American Medical Association (AMA) and the Illinois State Medical Society (ISMS) against MultiPlan Inc., alleging a multilateral price-fixing conspiracy with the nation’s largest insurance companies. 

Further, when 25 health systems filed antitrust lawsuits against the Blue Cross Blue Shield, they alleged the association and its members conspired to restrict competition and fix reimbursement rates, limiting providers’ ability to negotiate fair contracts. Mount Nittany Health filed a similar lawsuit, claiming Blue Cross Blue Shield insurers allocate exclusive geographic areas and use anticompetitive agreements to fix prices.

Legislators and regulators have growing concerns about the potential for payer dominance to stifle competition, limit patient choice, and undermine the financial stability of healthcare providers. Watch the headlines for more antitrust enforcement against payers’ attempts to dominate geographic areas. 

Payer price transparency and organization growth strategy

Payer rate transparency data is also invaluable when strategizing for growth in new markets. By knowing the reimbursement rates for various providers in a target market, an MSO or a provider can assess whether the rates offered are sufficient to support their operational costs and desired profit margins prior to market entry.

Analyze:

•  reimbursement trends
•  negotiated rates
• claims histories
• patient demographics
•  regional variations

… to get an accurate idea of:

•  shifting payer rate and payment model trends, 
• additional services/specialties to consider and 
• markets to prioritize when contemplating location expansion.

With this information, you can model more accurate potential revenue streams, estimate costs, and adjust payer strategy prior to any additional investment or resource allocation. Bolster key decision-making while minimizing risk.

Contract management technology: Access revenue-generating payer price transparency  

Getting all of the data and insights above would be great, but, as we mentioned above, payers are making this access difficult for healthcare organizations. To handle these MRFs in-house, you will need a team of contract and pricing specialists, and that’s expensive. 

We also mentioned above that entrepreneurs have spotted this roadblock and created software and technology to overleap it. Leave it to the nerds. 

Today, healthcare technology companies can aggregate, process, and provide access to the Machine-Readable Files (MRFs) published by payers under the Transparency in Coverage rule. They collect and organize the vast amount of data from payer MRFs into a usable format. You can then make sense of and access this data through Application Programming Interfaces (APIs) or a Software-as-a-Service (SaaS) portal. AI, machine learning, and robotic process automation (RPA) shoulder much of the tedious work that would grind in-house FTEs to the bone. 

With this data, you can research negotiated reimbursement rates by payer, competitor, service, and geographic market. Some even track competitor contracts and pricing trends via competitive intelligence functionalities. Finally, should you need machine-readable files to comply with TiC regulations, they can generate those as well. 

With this technology,  you can: 

• See the actual contracted reimbursement rates that payers offer to their competitors for specific procedures in their market. When payers no longer lock up historical rates, providers can balance the knowledge disparity between you and providers. 
• Compare your own contracted rates against the competitor data so you can see where you are being reimbursed below market. 
• Provide the concrete data to fuel evidence-based arguments for rate increases. 
• Make informed decisions about expansion and which payer networks will provide the most value to your organization. 
• Quickly identify reimbursements in any geographic market, develop pricing strategies, and improve contracting outcomes. 
• Model impact to revenue of proposed payer changes

Take a quick, self-guided tour through a powerful contract management and underpayments identification tool:

Physician groups and MSOs get accurate payer price transparency with MD Clarity 

MD Clarity has unleashed its rigorous software engineering on patient pricing MRFs, freeing you and your staff from this onerous (by design) task and giving you a stronger negotiation stance with your payers. Despite payers’ shenanigans, laws like Transparency in Coverage demonstrate a trend toward improved patient and provider power. The law is on your side, and so is MD Clarity. We purpose-build our solutions to ensure healthcare organizations capture maximum revenue via underpayment recovery, contract management and modeling, and denials management. Our robust contract management platform, RevFind, has helped healthcare organizations across the country capture tens of millions in payer-hidden revenue. 

 With a decade of experience capturing the intricacies of managed care agreements within its software platform, MD Clarity now supports over 150,000 providers.  

Get a demo to discover how RevFind can reveal which payers are giving you their highest rates and which are enriching your competitors.  

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