Price Transparency Has Limited Value if Not “Done Right”

Advance Transparency in Coverage (TiC) rules require employers to provide employees with easy access to an online shopping tool featuring 500 shoppable services and highlighting personalized out-of-pocket cost information for covered healthcare items and services. These pivotal transparency mandates are intended to spearhead a massive shift in the role of the patient as a healthcare consumer.

Price transparency, however, has limited value because:

Half of all hospital utilization comes through the emergency room,

The other half of all hospital utilization typically comes from scheduled treatment where the participant didn’t get sufficient detail to price shop, and

Those who did get sufficient detail tend to accept the recommendations of the provider and the network “negotiated” price.

To be effective at changing consumer behavior:

An Advanced Explanation of Benefits, “done right” (a side-by-side comparison of the proposed treatment against the lowest cost alternative) is needed in advance of every scheduled service, before the consumer becomes the patient,


Price transparency can continue to be ignored by the 50% who are consumers (scheduled services) and the other 50% who are patients (when walking/carted into the emergency room) when the plan uses a “Pure” RBP design.

According to Trilliant Health CEO Hal Andrews, “….only 12% of all healthcare encounters happen at hospitals and half of those admissions originate in an emergency department, leaving only planned visits as a chance to take advantage of hospital price transparency.”

As a result, he believes the hospital price transparency data have less utility than the health plan price transparency, and the proposed rule only offers value if you have a scheduled hospital admission, easily identifiable shopping objectives and nothing unplanned pops up after entering the hospital. Hospital price transparency also does not include the cost of services in ambulatory care settings.

“Even if hospitals comply perfectly with what is included in the [Outpatient Prospective Payment System (OPPS)] proposed rule, hospital price transparency will not cover almost 90% of healthcare encounters,” he said. “On the other hand, health plan price transparency data includes a 100% sample, allowing consumers to search for any and every service covered by their insurance.”

A normal hospital chargemaster has about 40,000 to 50,000 items, he added, but hospitals are only required to post consumer-friendly descriptions for around 300 items. That number will rise to about 500 if the proposed rule goes through, a small percentage of total chargemaster items. Even if all chargemaster items were given a description outside of medical nomenclature, the average consumer would still struggle to make sense of everything, although generative artificial intelligence could start to help translate medical definitions.”

Value of a Medical Billing Partner

A quality health plan should provide easy, direct access and understanding of pricing and advanced explanation of benefit information so participants can make informed and cost-effective decisions. Cost-management strategies include effectively designed acquisition cost-based pharmacy pricing, HSA-capable coverage, reference-based pricing and adequate participant protections against balance billing.

Harnessing technology to understand the vast amount of data can identify potential areas of escalating health costs and identify opportunities to control medical spending. Innovative medical billing services utilize powerful data-driven software and online data analytic tools that can provide a degree of price transparency and new insights by harnessing price data electronically – allowing fee comparisons that identity fair and reasonable prices.

The right medical billing partner can facilitate all these strategic designs and processes – acting as an agent of change, embracing technology innovation and advocating for “what is fair and just.” The right partner will also provide value-added services through turnkey solutions, innovative plan designs, administrative and compliance support, as well as participant legal representation.

As your partner, aequum can help lower costs, achieve savings, enhance member experience, and maximize your plan’s success in 2023/24 and beyond. Please contact us if you have any questions or need support.