Over the last year, Third Horizon Strategies (THS) developed a dedicated analytics team and data platform to help mission-aligned organizations access and make sense of new price transparency data released under the Centers for Medicare & Medicaid Services (CMS) Hospital Price Transparency and Transparency in Coverage Rules.
THS made this investment because the posting of the negotiated rates by providers and payers is the most significant step to counteracting the lack of price and cost transparency in the U.S. health care system.
Unfortunately, most organizations can’t access and evaluate the new data due to its sheer size and lack of standardization. Further, many organizations are unaware of these new datasets and don’t understand the “why” behind all the new transparency regulations and laws.
THS has stepped into the price transparency market to address the barriers to access the data and to offer a process and tools to show why this pricing data is so critical and how to apply it in a business context to lower health care costs. Read on to see how the THS approach is making a real difference.
Behavioral Health Providers
THS is working with several mental health and substance use disorder treatment facilities to develop a data story that substantiates rate negotiations in specific service lines.
Access to and coverage for behavioral health services have been woefully inadequate in-network because of commercial carriers’ take-it-or-leave-it fee schedule approaches. Historically, behavioral health providers haven’t had pricing strategies because no comparison rate data has been accessible. This is all changing at a time when mental health parity enforcement is ramping up as a key priority at the Department of Labor and Health and Human Services.
The business outcomes derived from leveraging the data insight include becoming part of the carrier’s in-network program at an acceptable rate, increasing rates for high-volume services not in line with market averages, adding reimbursable services/billing codes to contracts and opening conversations on value-based payment arrangements.
In one client case, 125 detox beds have now been added in the state due to a successful negotiation with a carrier who the addiction treatment center was not in-network with because of atrociously low payment levels. The data, therefore, has potentially saved hundreds of lives in this state, which has the highest overdose rates in the country per capita.
THS is also helping health systems gain a more precise view of payment levels across facilities and payers in operating markets to better understand their competitive position and service line growth opportunities. The outcomes have included validating pricing strategy for low-acuity surgical lines moving to the ambulatory surgery center market, increasing inpatient rates to align with market averages, and operationalizing direct-to-employer bundled service programs to help create more stable pricing for employers. At one mid-sized regional health system, the payer contracting team was able identify certain short-term acute hospitals being reimbursed an average of 17 percent below market for certain inpatient surgeries. The health system brought this information to the negotiating table; the situation was acknowledged, opening the door to a different type of dialogue and negotiation.
Employers and Benefits Advisors
As the largest purchasers of health care, employers may have the most to gain from the additional insight provided by price transparency data. Until now, self-funded employers haven’t had line of sight into the negotiated rates between their third-party administrators and provider network. The new pricing data changes that by lighting up what rates providers are getting, which means employers and their advisors can now evaluate provider rates within their plan and across plans to identify precisely where their spending is optimized and where it is not.
Further, this information allows employers to reprice their claims with a high degree of confidence, thus enabling much more accurate comparisons among carriers and decisions about network selection and preferred/non-preferred providers. For one 3,000-life employer case, THS repriced claims for a benefits advisor that lit up the actual altitude of the carrier discounts. This led to discovering that the incumbent plan really isn’t the best deal.
Repricing claims using the actual contracted unit price can help employers make more rational purchasing decisions in health care. Unfortunately, the need for more completeness and accuracy of the price transparency data makes it difficult for employers and their advisors to trust the data and turn it into actionable insight. The good news is that the data quality can be increased if HHS, employers and benefits advisors scrutinize the files. Read more in the article, Real-World Validation of Payer Pricing Files, THS co-authored in Health Affairs.