As anyone monitoring the industry is well aware, the U.S. healthcare marketplace has undergone significant changes in recent years.
Many of these changes can be attributed to the efforts of the Centers for Medicare & Medicaid Services, or CMS. The agency has worked to try to create a more equitable market for patients, putting forth efforts like price transparency in order to allow consumers to make better informed decisions about their healthcare options.
While these transparency efforts had been discussed for some time, one of the agency’s biggest steps occurred at the beginning of 2021, at which point the group required that all hospitals operating in the country “provide clear, accessible pricing information online about the items and services they provide,” per the CMS website.
This alone was a major shift. However, what the agency couldn’t have expected is just how dramatic the impact has been on the American healthcare landscape. In this piece, we’ll lay out just how much this rule has changed how hospitals operate, as well as what additional problems need to be solved in order to fully realize the goals of the rule.
To provide some background, patients have long had access to data showing the quality of medical services provided by a hospital. While this was helpful for those shopping around a procedure, it frequently did not paint an adequate picture for those seeking care.
For example, price and quality of care are often not as correlated as one might expect, and as a result, patients searching for high-quality care might see a highly-rated hospital and assume an equally high price, or run the risk of being overcharged for lower quality care.
Once hospitals began to be required to publish pricing data, this changed, albeit at a frustratingly slow pace. Many hospitals have taken a relaxed approach to putting together and publishing their data, and issues with the data’s accessibility and clarity have persisted.
CMS quickly became aware of this, and as a consequence, the agency began levying harsh penalties on hospitals that failed to comply with the transparency mandate.
Then, just as the industry began grappling with hospital pricing transparency, CMS expanded its requirements. In July 2022, the agency turned its focus to insurers, mandating that they publish their contracted payment rates with hospitals, clinics, and physicians.
Consumers are now provided with two sets of data: hospital charges and insurance payment rates. These two moves were a significant step toward creating a healthcare landscape more friendly to consumers, as patients can now take both cost and quality into account when making decisions about their healthcare.
This transparency has also impacted the behavior of insurers.
Historically, antitrust laws made it difficult, if not completely impossible, for provider groups to see what their peers were being paid by insurers. With payment rates now published for anyone to see, provider groups and hospitals have a new tool at their disposal when negotiating contracts with insurers.
There is hope that this information will lead to a more equitable and competitive marketplace, one in which providers can engage in transparent negotiations armed with knowledge of the payment landscape in their geographic area. However, there’s a major problem that could make such a prospect difficult: the sheer volume of data.
While all of the aforementioned information is now public or in the process of being made public, it’s not easily readable in its current form due to its overwhelming size and complexity. Several companies have emerged to turn this raw data into usable information, but consumers and providers who do not have access to these tools may still find it difficult to get the information they require to make an informed healthcare decision.
CMS’s transparency regulations are reshaping the healthcare landscape, offering both opportunities and challenges. Now, more of this information becomes public, and more companies work to make it digestible to the average consumer, there is a strong possibility that the healthcare system will see a shift toward more value-driven care.
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