We all recognized the wide variation in prices paid by employers in the commercial market compared to public programs. Over the past year, the push for greater price transparency has resulted in the release of large chunks of hospital and insurer price data, also known as machine-readable files (MRFs). In a groundbreaking story based on the initial release of hospital data files, The New York Times
As part of our initial internal review of public insurer and hospital data files, our colleagues at JPMorgan Chase
These early insights reinforce a number of troubling cost trends and further raise a number of questions and considerations for employers. Do employers really get the best unit cost from hospitals and insurers? Are employers in a better position to negotiate and develop direct contractual relationships with preferred suppliers in key markets? Will hospitals heed the call to action to adjust outlier prices? Will price transparency finally help accelerate the adoption of responsible care strategies in the commercial market? How should employers assess quality alongside MRF data to assess the value of their medical networks? To what extent can employers adopt a more patient-centric benefit design to counter some of these cost pressures?
The last question might be the most important. Widespread use of high-deductible plans was adopted by the Fortune 500 as a way to encourage price-sensitive consumers to seek out the most affordable hospital or provider. But the widespread price disparities suggest that years later, some facilities are still driving up costs for consumers. And if a consumer cannot see price clearly, judge it against quality, and discuss alternatives with a care navigator or physician, a high deductible may act as a deterrent to care rather than an incentive to profitable management.
This should be one of the many reasons why employers should expect more from the healthcare system and, above all, take action. Information from the latest MRFs provides meaningful data that employers can leverage at the bargaining table. For example, employers have a real opportunity to tackle the unit cost of services – which is one of the drivers of increased spend in geographic markets – by taking advantage of direct provider contact opportunities and responsible care partnerships with high-performing physicians and specialists.
Combining this information with quality data related to provider performance – data critical to the Embold Health and Castlight platforms, two Morgan Health portfolio companies – has the potential to dramatically improve and improve the design of benefits as well as information available to consumers when selecting a doctor.
CMS should be applauded for its years of work bringing this data to light. Yet we know that there is still work to be done. For all stakeholders to ultimately benefit from price transparency, policy makers, including federal agencies, must actively engage to ensure that future releases of MRF data are accurate, complete, and truly reflect the market price in each geographic region. This data will accelerate much of the important early work that employers like Wal-Mart, Boeing