Editor’s note
This article is the latest in Forefront Health Matters series, Provider Prices in the Commercial Sector, featuring an analysis and discussion of the prices of physicians, hospitals, and other health care providers in private sector markets and their contribution to total costs there. Additional articles will be published in 2023. Readers are encouraged to review the call for submissions for this series. We are grateful to Arnold Ventures for their support of this work.
To improve access to pricing information for commercial consumers of health care and other stakeholders, the Departments of Health and Human Services, Labor, and Treasury introduced the Coverage Transparency Final Rule (the Insurance Price Transparency Rule) in October 2020 d. The rule has two key provisions for all insurers offering individual and group commercial health insurance plans (including fully insured and self-insured plans). First, they must publish machine-readable files containing in-network negotiated prices for specific health care services, as well as out-of-network charges and permitted rates, effective July 1, 2022. Second, insurers must provide members with both in full—and self-insured plans with online pricing and comparison tools for 500 certain services effective January 1, 2023 and for all services effective January 1, 2024.
Another important healthcare price transparency rule – the Hospital Price Transparency Rule – went into effect on January 1, 2021. However, this rule only applies to hospital charges. The scope of price disclosure required by the Insurance Price Transparency Rule is much broader, including all medical services and products paid for by insurers. Moreover, the significant noncompliance penalty—$100 per day per affected person—probably contributed to high compliance among insurers compared to hospitals.
Previously, states sought to improve price transparency in health care, such as by creating price transparency websites and an all-payer claims database. However, state requirements generally do not apply to self-insured plans, and data are not always comparable across states. Proprietary commercial claims databases, such as those from the Health Care Cost Institute and Merative™ MarketScan®, have national price information for segmented markets, but they typically do not include detailed insurer, plan, or provider information due to data confidentiality agreements. The Insurance Price Transparency Rule is designed to fill the gaps left by existing federal and state price transparency policy efforts, as well as commercial claims databases—by providing a comprehensive repository of pricing information for the U.S. commercial market. The combination of all information about insurers, plans, providers, procedures and prices is a major strength compared to alternative sources of data on commercial healthcare prices.
The Insurance Price Transparency Rule provides a potentially excellent opportunity for patients, payers, researchers, policymakers, and other market participants and stakeholders to understand pricing behavior in the broader health care market. In this article, we describe the amount and content of pricing information disclosed by insurers in the first six months after the rule was implemented, identify its limitations, and suggest research, practice, and policy implications.
What is disclosed by insurers?
We checked price information across the country’s network of insurers, revealed through machine-readable files. The volume of in-network price data is significantly greater than that of out-of-network price data because the former contains prices negotiated between a health plan and different network healthcare providers for a procedure.
The files we reviewed were collected, compiled and updated by Turquoise Health, a healthcare data platform company whose national Hospital Price Transparency dataset has been used in studies published in academic journals and Forefront Health Matters. We analyzed the data updated as of December 29, 2022, and described the content of the data from five aspects: insurer, plan, provider, procedure, and price, and compared the volume of data to that of data disclosed under the Hospital Price Transparency Rule , compiled and updated by Turquoise Health as of December 29, 2022. Appendix 1 summarizes our findings.
Appendix 1: Descriptive characteristics of data on negotiated prices in the network of insurers
Source: Authors’ analysis of data collected and updated by Turquoise Health as of December 29, 2022.
Insurer
As of December 29, 2022, a total of 240 insurers have disclosed their pricing information for plans offered to both fully insured and self-insured customers. Most of these are the main national payers, with some disclosing as a single legal entity and others as multiple legal entities (including country-level subsidiaries and branches). For example, insurers that filed include Aetna (18 entities), Blue Cross Blue Shield (including Elevance Health) (43 entities), Kaiser Permanente (10 entities), and United Healthcare (46 entities). In contrast, large insurers such as Cigna and Humana have uploaded all their data under one legal entity name.
Plan
The data includes a total of 317,987 health plans, defined as unique products offered to consumers, each identified by a unique plan identification number. Among them, 298,806 are employer-sponsored health plans, including fully and self-insured plans. These plans are identified by the Employer Identification Number (EIN) of the insurer or employer. In addition, the data contains 19,069 individual and small group plans sold in the Affordable Care Act’s health insurance marketplaces.
Supplier
When disclosing pricing information for a health plan and procedure at a network provider, insurers identify providers by a National Provider Identifier (NPI) or Employer Identification Number (EIN), without additional information. There are 850,863 unique NPIs and 569,728 unique EINs that include facilities (eg, hospitals, ambulatory surgery centers, etc.) as well as physicians (both individual and groups of physicians).
Procedure
The data contained 599,204 unique procedure codes; 35 percent of these are National Drug Codes (NDCs), 34 percent are International Classification of Diseases (ICD) codes, 18 percent are Current Procedural Terminology (CPT)/Healthcare Common Procedure Coding System (HCPCS) codes, and one percent are diagnosis-related group (DRG) codes.
Price
There are 56,525,823,501 negotiated rates on the network that can be further categorized by service setting: 4 percent are institutional charges and 96 percent are professional charges. These prices can also be grouped based on their type of pricing, namely negotiated (92%), fee schedule based (6%), percentage off fee (2%) and daily and derivative price (less than 1%).
To illustrate the relative volume of insurance price transparency data, let’s consider the much smaller volume of nationwide hospital price disclosure data under the Hospital Price Transparency Rule. As collected and updated by Turquoise Health as of December 29, 2022, hospital price transparency data includes a total of 1,840,187,215 price observations from 119,531 health plans and 193 insurance entities, limited to 95,510 procedures per hospital facility (identified by CPT or DRG codes) among 5261 hospitals.
Data Limitations
As we have described, insurance price transparency data is extensive in size, scope, and content. However, they are subject to several important limitations. First, insurers are not required to disclose their plan size, benefit design, service utilization, patient characteristics, quality outcomes, provider location, or other information that may be relevant to some stakeholders.
A second limitation is that only 40 percent (7,568 plans) of the 19,069 individual and small group plans sold in the Affordable Care Act’s health insurance marketplaces disclose their standard 14-digit Health Insurance and Oversight System (HIOS) identifiers ), which can be linked to external benefit design datasets and provider network information, such as HIX Compare and Ideon provider network. This lack of identifying information limits researchers’ ability to examine questions about benefit design and other features of these plans.
Third, insurers identify contracted providers by EIN or NPI without additional information or explanation as to why one identifier was chosen over the other, creating barriers for consumers interested in merging an insurer’s price transparency data with external data sets that contain supplier characteristics. Because NPIs and EINs may relate to different levels of provider organizations (eg, one hospital campus may have multiple NPIs, but one EIN may relate to multiple hospital campuses), standardized provider identification would facilitate mergers and thus, it would reduce the data processing costs of the users.
Finally, insurers are not required to disclose dosage unit information for physician-administered drugs, making it challenging to understand the cost of these drugs. In addition, price disclosure for prescription drugs has been delayed pending further rulemaking, and it remains unclear whether rebates, fees, rebates, and other forms of price reductions from drug manufacturers will be mandatory disclosure items.
Research, practice and policy implications
Insurance price transparency data have the potential to provide a very powerful resource for (1) researchers interested in understanding pricing mechanisms in US commercial health care markets, 2) policymakers who intend to reduce health care prices, and 3) covered employers and individual consumers through private insurance plans aiming to contain their health care costs through price transparency and price shopping.
In light of data limitations that increase the cost of processing information and impede the potential utility of this data source, policymakers should consider requiring insurers to provide more standardized information for plan and provider identification purposes, and details of the medicinal dosage unit.