How Payers Can Prepare for the Payer Price Transparency Rule

Payers should prepare for the payer price transparency rule to go into effect by building clear communication paths with members, reassessing their contracting processes, and asking themselves a couple of key questions, according to a report from PricewaterhouseCoopers's Health Research Institute (HRI).

“The Biden administration has not indicated what it plans to do with this piece of regulation,” the HRI report explained. “The administration could let the rule continue, or Congress could stymie it through the Congressional Review Act.”

For payers, the price transparency rule would mean that shared savings with consumers would factor into medical loss ratios. Payers would also have to publish their negotiated, in-network rates, out-of-network provider payments, and the negotiated and historical rates for prescription drugs by pharmacy site.

Moreover, payers will have to display cost-sharing information for 500 items and services, which CMS will determine.

Payers have resisted the rule.

“Many of our members have terrific transparency tools, including price and quality data, and are highly personalized, so consumers could get their own information about their copayment, their deductible, and locations where services are offered,” Ceci Connolly, president and chief executive officer of the Alliance of Community Health Plans (ACHP), told HRI.

“We believe that is the kind of user-friendly and useful price transparency consumers want and need. Before this regulation takes effect, we do hope the Biden administration will be looking at practical elements here and making some adjustments.”

If the payer price transparency rule survives the new administration’s scrutiny, it will instigate massive changes in the healthcare system. Thus, although the industry continues to lobby against the price transparency hospital and payer rules, payers need to move forward under the assumption that this change will take place in order to be prepared, according to HRI.

First, HRI recommended that payers and providers build trust with members and patients. If these regulations remain in place, they will initiate many changes in the industry that could cause more confusion for members.

Payers should keep in mind members' preferences. Over eight in ten members say that they prefer focused and easily digestible communications, instead of thorough but complicated information, according to a previous study conducted on behalf of America’s Health Insurance Plans (AHIP).

Additionally, payers should be aware that the media may portray them negatively and should prepare their public relations response.

Second, with the hospital transparency rule already in effect, payers should start improving their data accuracy.

Third, HRI recommended conducting a market-based analysis of the information that competitors have already posted. The researchers suggested considering how consumer-friendly competitors’ resources are, discrepancies in pricing, and factors that may explain pricing differences.

“Employers also may be interested in a market-based analysis to see if their networks include providers that are higher cost than average for the geographic area, or if other health plans are negotiating better rates,” HRI suggested.

Fourth, payers should strategize about how to develop contracts under this new model of price transparency.

“Payers may look to drive down their rates with high-cost providers or bring out-of-network providers in network for lower rates,” the researchers acknowledged. “Employers also may play a more activist role in response to the public information, exerting more pressure.”

Competitive providers may tie price to quality of care and convenience.

Lastly, payers should remember that the price transparency rules will also have an impact on the pharmaceutical industry.

“The insurer price transparency rule would make public additional pricing data, including in-network negotiated rates and historical net prices for all covered prescription drugs at the pharmacy location level,” the researchers stated.

These changes could create openings for new entrants who might use payer-released data to disrupt the pharmaceutical industry.

HRI recommended three key questions and three preparatory steps for payers and providers to take.

Payers should ask questions related to compliance. They should confirm that their processes would pass periodic audits and that they can produce the appropriate machine-readable files.

Payers should also ask themselves about public relations. They should analyze how this change might bolster member engagement and member experience as well as how to protect the company’s reputation.

Lastly, payers should question their pricing strategy. Specifically, they should assess the impact that market pricing will have on the company’s pricing and contract negotiation approach.

To prepare for the shift, payers should gather, analyze, and clean their pricing data. They should also create consumer education programs and platforms to enable member engagement and clear communication. And finally, they should establish reporting and analytics technologies and processes to assess the results.

The price transparency rule's major requirements for health plans will not go into effect until 2022 and 2023. However, payers can take steps in 2021 in order to be prepared.