Employers seek healthcare price transparency to control costs

Healthcare price transparency benefits employers

New laws and regulations seek to increase healthcare price transparency across industry stakeholders to empower consumers to shop around for affordable services. For example, hospitals must now publish their pricing data, including negotiated rates with payers, in machine-readable files on their websites. The Transparency in Coverage rule from CMS also requires similar files from health plans and carriers that provide in-network rates and allowed amounts.

While price transparency benefits for consumers remain to be seen -- most people do not understand the prices given and the costs rarely reflect a complete patient encounter -- employers should be taking advantage of this newfound look into healthcare pricing, Gremminger said.

"We've actually started to see some real movement by employers and purchasers usually through hiring somebody with the analytical capacity to actually look across all payers and all providers within a geographic area and determine who is offering the best prices on services," he explained "And we've started to see employers actually making coverage, contracting and network decisions based on price transparency files."

Price transparency enables direct contracting

Employers are embracing direct provider contracting as a way to cut costs and complexity. A 2024 survey conducted by Brighton Health Plans found that three-quarters of benefit leader respondents engage in direct contracting, and 41% of the benefit leaders not yet involved in direct contracting were likely to consider it by 2025.

Additionally, about half of respondents also said direct contracting can control rising healthcare costs, and 49% said it would enhance benefits.

"We are really interested in following and trying to be a catalyst toward direct contracts between employers and healthcare providers," Gremminger said, naming direct contracting one of employers' top 2025 priorities.

"To disintermediate ourselves from providers to a greater extent is a good thing. Carriers have often not done a terribly good job of negotiating good contracts on our behalf. So, this is an area I think of growth for us and for employers and purchasers broadly."

Leveraging new healthcare price transparency requirements can support better contracting without the middleman, Gremminger continued.

"When you know what negotiated prices are, you know what their cash price is and you know what they've negotiated with other carriers, it's much easier to go to them and say: Hey, I want a direct contract with you. I want the best price you're offering to whoever that is, but I'm going to bring you huge volume because I'm a big employer," he explained.

Ongoing issues with pricing data access

CMS price transparency rules have made it easier for employers to understand healthcare pricing and costs. However, the rules have not solved persistent challenges employers have had with healthcare costs.

"The biggest problem we have in the price transparency world now isn't access to other people's prices because that's mostly in the Transparency in Coverage and hospital price transparency files. It's actually knowing what you, the employer, are paying yourself, and that's, ironically, the biggest sticking point right now," Gremminger explained.

The problem is especially salient among smaller employers but also affects the "jumbos," who Gremminger said are employers with thousands of employees.

"Even the 'jumbos' will have a hard time getting access to their claims data, and when they ask for it, they will either be told no, or they can only access particularly high-level data, so it's not actually digging into each of the inputs cost that get to this price," Gremminger said.

Using the example of a knee replacement, he explained that price estimates from the mandated price transparency files do not include key aspects of the entire encounter, such as the price of rehabilitative post-surgery or even anesthesiology care. Without complete data, employers may contract with a hospital based on a price that could be double when factoring in other inputs associated with a knee replacement.

The National Alliance is working on policies to give employers more access to their own claims data.

"We want the receipts when we pay for a service at a hospital or any other provider," Gremminger said. "We want to be able to see down to the line what we paid for and how much it cost, and, to the extent that there's quality information. We're not quite there yet, but it makes it extremely hard for employers to negotiate better prices and makes it harder to even deal with price inaccuracies that they have within their own plan."

"How are you supposed to be a prudent fiduciary as a health plan sponsor if you can't get access to that kind of information?" he asked.

Meeting fiduciary standards is also a burgeoning area of interest for employers as policymakers set their sights on employers as health plan sponsors. But being a prudent fiduciary also benefits the employer, who can tighten the purse strings without sacrificing quality, and, ultimately, employees, who can access the care necessary to keep them healthy.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.