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Price transparency compliance: A strategic opportunity for health plans & TPAs

October 21, 2021
Ashley Taylor Anderson

Health plans and TPAs must take action to comply with new federal price transparency regulations. This industry shift isn’t just a compliance mandate—it’s an opportunity to advance strategic initiatives and stand out from the competition.

Price transparency is not a new concept in healthcare, but in 2021, it made a grand entrance into mainstream conversation. With the finalization of the Transparency in Coverage Rule and No Surprises Act in late 2020, and the Hospital Price Transparency Rule taking effect in January 2021, the topic has been top-of-mind for everyone in the healthcare industry. 

The stakes are high for health plans, TPAs, and the group health plans they support. Under new regulatory requirements, these organizations will face substantial penalties for noncompliance starting in 2022. There’s no question that the work to comply with these new price transparency rules is critical and urgent. The lingering question many plans and TPAs have is: Do these regulations require a short-term compliance action plan, or a more substantial, long-term evolution in business strategy?

The answer to this question has major implications for what kinds of partnerships and tools organizations need to invest in now to set themselves up for the future. Leading indicators point to permanent disruption in the way plans and TPAs must support members on their healthcare evaluation and purchase journey.

Industry impacts of price transparency regulations

The Transparency in Coverage Rule and No Surprises Act haven’t yet taken effect, so it’s impossible to predict exactly what will happen as health plans and plan administrators start to comply. But we can take what we know today and make some hypotheses about what the future might hold.

One thing we know is that healthcare price information will become public at scale for the first time in the US. With this information, consumers have the opportunity to change how they make decisions about where to get care. Using price data, they can choose to go with a lower price provider—or opt for the most expensive care setting. Health plans and TPAs have an opportunity to educate consumers on how healthcare pricing works, what cost-effective rates look like, and how to consider costs alongside other important factors such as quality, safety, and convenience.

Price transparency also introduces new market dynamics that aren’t present when rates are set behind closed doors. In the wake of these regulations, some providers may accept lower rates to win more business. Others may retain higher rates, but launch innovative new business models or tout leading patient outcomes to justify their prices. Still others may not make any changes, and wait out the consequences. Regardless of how individual plans, TPAs, and providers respond, contract negotiations and rate setting will evolve.

Another thing we know is that the medical loss ratio (MLR) equation, which under the ACA has maintained a rigid 80-20 financial split between medical expenses and operating budget, will become more flexible. Under the Transparency in Coverage Rule, plans and TPAs now have the ability to steer members toward lower-cost options and share the cost savings. As a result, organizations could change the way they approach pricing and benefits design, leading to new member incentive programs and unique, cost-efficient insurance models.

Transparency compliance: Cost center or strategic opportunity?

Plans and TPAs are no strangers to changing compliance mandates. Annual updates to state and federal regulations impact operations and business strategies to varying extents. However, when a major set of new regulations come into play, healthcare leaders have a chance to step back and consider the big-picture implications. Is compliance a non-negotiable? Yes, to avoid financial penalties and mitigate risk for self-funded commercial clients. But simply complying with the rules leads to just another cost center. This approach doesn’t ensure plan members will choose more cost-effective care options—the reason the regulations were enacted in the first place—and it doesn’t provide market differentiation or a clear competitive advantage.

Instead of viewing price transparency compliance as a check-the-box activity, forward-looking organizations should dig into the opportunities this inflection point presents. With the right approach, plans and TPAs can leverage these regulations to advance strategic initiatives that not only add long-term value for clients and members, but also increase the value of the short-term work required to comply with these new regulations. 

Some of the high-priority programs price transparency activities can support include:

  • Member experience: Offering consumer-grade, personalized healthcare shopping tools that members enjoy using can drive higher engagement, NPS, and retention.
  • Network utilization & care routing: Transparency solutions that increase utilization of the highest-value corners of your network and prevent utilization of out-of-network services can help your members get great care while reducing costs.
  • Care quality: Implementing a transparency tool that doesn’t just incorporate cost data, but also provider quality and experience, can improve member health outcomes and  drive long-term cost savings.
  • Social determinants of health (SDoH): Transparency tools that connect individuals not just with lower-cost providers, but ones that align with their personal needs, preferences, and cultural norms, can increase trust and improve member experience and outcomes.

Choosing the right price transparency vendor partner

Onboarding the right partner is key to your organization’s ability to stay compliant and make progress on strategic initiatives. Given the relatively tight timelines for compliance, some organizations may be tempted to onboard a basic price transparency vendor that satisfies minimum regulatory requirements, then revisit solutions down the road. While this approach may have some short-term benefits, the long-term strategic impact of a price transparency technology investment may suffer as a result. Basic shopping tools may provide less immediate value to your members and clients—and in fact, could even drive up costs by showing prices without the context needed to guide members to smarter decisions. They may also require an expensive, disruptive transition process later on if your organization chooses to upgrade to a more robust navigation offering down the road.

Healthcare guidance supports immediate price transparency compliance needs as well as high-priority company initiatives that have a broader impact on member satisfaction, care quality, and client retention. Offering an intuitive, guided healthcare shopping experience that points users to the top in-network care options and covered digital benefits can help members actually put data to use in their everyday care decisions. As a result, members get higher quality, less expensive care; plans and TPAs save money on claims costs; and healthcare organizations stand out with a differentiated member experience as every plan and TPA launches transparency solutions. For organizations looking to innovate, an early investment in healthcare guidance technology will yield a significant impact both now and in the future. 

Considering a healthcare guidance offering to support price transparency compliance and beyond? Amino can help. Contact us to learn more.

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