RE-RELEASE
The Sky’s the Limit: How Price Transparency Can Empower Healthcare Providers
With Kevin Chmura, CEO of Panacea Healthcare Solutions
Grace Walsh speaks with Kevin Chmura, CEO at Panacea Healthcare Solutions, to explore an extremely timely topic: price transparency and its far-reaching impact on how healthcare providers interact with consumers, with each other, and with the market at large. Tune in as Kevin shares some important insights about how price transparency has opened the door to a whole new world of data analysis and strategic business strategies for healthcare providers, and covers what we might expect to see for the future of price transparency. We also include some key resources for listeners hoping to boost their knowledge of CMS price transparency regulations and learn how they can leverage price transparency data to empower their own strategic initiatives.
The Sky's the Limit: How Price Transparency Can Empower Healthcare Providers
Episode transcript available below.
Grace: Hi, Kevin. Welcome. It’s great to have you back.
Kevin: Thanks, Grace. It’s great to be back.
Grace: So, price transparency. We’re several years into the CMS regulations. Could you give us a recap of where we are now with price transparency?
Kevin: So, price transparency has been around for a few years now, as you pointed out. I think it would take the entirety of this recording to really catch everybody up. So, what I’ll do is, I’ll fast forward right to where we are right now, but I’ll encourage you all, if you don’t have a good frame of reference, feel free to go to our website, panaceainc.com There we have a lot of content and webinars and other things we’ve done that were really catch you up on high levels of detail.
I’ll avoid the detail today, but what I will say is that in the 2024 rules for machine-readable files published by the Centers for Medicare & Medicaid Services (CMS), there were some newly introduced complexities to a number of fields and other compliance rules, coupled with an increase in scrutiny into the quality of the files and a compressed amount of time that any provider has to get compliant if they receive an out-of-compliance letter from CMS, all of which has caused an uptick in both paying attention to this and also it’s really caused a lot of kind of heartburn for healthcare providers right now.
Most have taken price transparency seriously but have treated it as a bit of a side project. People are starting to realize that it’s not going away, that it’s difficult to be in compliance and that there are real penalties for not being in compliance. The 2024 new rules really underscored that CMS is scrutinizing the files that are being put out there and they’re advancing towards the goal of providing information that consumers and other entities can use with the goal of driving down cost.
So as they analyze what’s out on the files in their original requests, they’re continuing to revise that to make it better. Each one of those annual revisions, though, causes lots of complexities, and then it’s also causing a fair amount of inconsistency in the files that are being produced, because you think you have it set and then you realize as you publish your next file, you get the next set of rules and you’ve got to almost start all over again from time to time.
So do the catch-up from Panacea—we share a lot of information there—but pay particular attention, if you’re new to this, to some of the complexities in the 2024 rules.
Grace: Thanks, Kevin. So, Kevin, from your perspective, what does the near-term future in price transparency look like?
Kevin: Yeah. And that’s a great question because we’re very focused now on where we’re heading with all of this. So, as I’ve mentioned before, there are annualized shifts in the rules that make compliance complicated. I think it’s fair to say, given the past trend of other major initiatives from CMS, that eventually that year-to-year shifting of rules will settle down, that there will be little tweaks here and there, but that you won’t really need to shift your mindset year over year. It’s not really in the nature of CMS to do things that way anyway.
If you think of price transparency not as a compliance requirement, but if you thought of it as a product going out to market, that’s when you’d move into what we would typically call the “acceptance phase,” meaning the early adopters have done their thing, the mavericks have been out there, they led the way, and now everybody understands and accepts what they need to do, and they’ve gained some level of proficiency in getting compliant with the rules.
What we’re looking forward to in the acceptance phase, as I call it, is that that’s when the quality and reliability of data that’s being published by both providers and payers will improve greatly. And right now, because of the shifting complexity the difficulties in compliance year over year, the files lack a level of consistency. So, we can look at a given provider’s file year over year and really see shifts in the quality of the data that’s coming. We’re also in the business of producing machine-readable files, and while we’re proud to say that our files have reached 100% compliance with CMS rules, I will attest that it’s difficult and the data quality and validation is often the last thing that’s done after you just create the file itself.
So once we move into that acceptance phase, once we start to really be able to rely on data, that’s when to a certain degree producing the file will be somewhat commoditized. Today it’s highly important that you’re focused on that, because there’s a high level of scrutiny. Once scrutiny starts to die down because people are generally compliant, that’s when you need to start to build out a strategy that says, the data is good, how else can I use it, right? What can I do with this? If the ultimate goal of price transparency rules was to drive down cost, there’s lots of ways that can happen, not just the consumer shopping, but also the providers finding ways to either increase revenue, gain market share, or drive down their own costs and pass those savings back on to the consumers.
And there’s a number of business opportunities that we think are presented through the use of the data that are already emerging now and that will only get better as time goes on.
Grace: That’s interesting. As you mentioned, providers now have some experience navigating price transparency compliance requirements and meeting those initial regulatory requirements. Now that we have some experience under our belt, how should providers think about the long-term future of price transparency?
Kevin: Yeah. As I said before, price transparency is here to stay. It’s survived several administrations at this point. We’re into an election year, I think regardless of the next administration, we don’t anticipate that it would go away. There may be changes to how the rules work, but we’re looking at this as this will become as embedded in the system as HIPAA was when it first rolled out.
So, when you think through the long term, as I said before, moving past compliance, moving past the commoditization of the data, that’s when you really start to need to think about how can we put this data to good use. And really what you’re saying to yourself there is not our data; I’m a hospital. I produce my file, I publish it, I put that out there. Everybody can see it. All of my peers, all of my friends, all of my competitors, they’ve done the same, right?
And so now that I have that data, how can I use my data and their data to benefit me?
In the near long term, if you will, the medium term, I think the first thing to be thinking about is, how do you access and interpret the data, right? These are massive files that are being produced, often hundreds of thousands, even millions of lines. Tons of columns, lots of data, and just breaking them open can be complicated and a little bit mind-numbing. When you look at it and so, you know, medium term, what we’re telling people is: either develop tools internally or find tools that you can use to access and analyze the data and start to familiarize your entire organization with your data and the data from your competitors.
It’s not the job of, say, a Chief Financial Officer, Chief Compliance Officer, even the CEO of a health system to think through all of the uses of this data. If you introduce it into your organization and say, look at this interesting thing we found from the hospital down the street, what they’re reimbursement rate is for this particular service from this particular payer—let the ideas bubble up through the organization to say, you know, what we could do with that is X or Y or Z. And those ideas are out there. There are probably people in your organization today that are just starved for data. They have some good ideas. They don’t have the data to support bringing something say to market or to bring something up through the organization to make suggestions. What we’re doing with price transparency is, we’re opening up a rich data source—a valuable data source—to everybody.
In earlier parts of my career, I spent a fair amount of time working with the managed care departments at hospitals and health systems, and we did contract modeling and contract negotiation support, those types of things. And we would sign myriad NDAs promising that we wouldn’t disclose negotiated rates from any given pair. Everybody felt like they had the best rates and they didn’t want the guys down the block to know what those were. Well, that’s all out there right now, right? That all gone, right? It’s out there. It’s available. Anybody can go download it right now, and with the payer files, if you can break those open, which is a challenge, but once you’re able to do that, you have that data updated on a monthly basis. So, it’s very timely and detailed as well.
And so the first step in the long term is find some tools, get your hands on some data and really start to familiarize your whole organization with what’s out there, both for your data and then how it compares to your competitors. And so that comparative set of analyses and tools [is] likely the first stop in the long-term use. And then, think creatively; start to think through how you can use this data to benefit yourself. And we have some progressive customers now that are already starting to move past the phase of, “Okay, we just need to have compliant files” and [onto], “What can we do with this data?”
Grace: That’s great. I’d actually love to dive into the specifics of how Panacea’s customers are using, and planning to use, price transparency data. Could you expand on that?
Kevin: Yeah, sure. So, you know, we have been leaders in the price transparency services really since it was invented. Our background was in chargemaster optimization and strategic pricing, and when you think about what price transparency represents, in some ways it’s the offspring of those two things, right? And so we were natural contenders to move into this business. Our customers turned to us when the first sets of rules came out and asked us to help them, and we built a pretty robust business around it.
From the very beginning, though, we could see that, okay, this is very important, producing a machine-readable file, a consumer display, a good faith estimate—I’m focusing a little bit on the CMS rules, but really all of the price transparency rules, we’re immersed in all of that—but we can see from the beginning that the publishing of machine-readable files and accessing them was going to open up some opportunities for our customers and their competitors to learn a lot about each other. And so, from the beginning we started developing products that would help in the most logical ways. And then we’ve watched our customers use data beyond our tool set. So, I’ll touch on a few of them.
First and maybe the most obvious, if you will, is using price transparency in contract negotiations with your payers. Back in the old days, we would play poker with the payers. We didn’t really know what anybody else around the table had in terms of their cards. Now you do. Right? Now you can look at a payer’s file or your local competitor’s file and drill right down to a payer, a product, a service, and say, this is the reimbursement that they’re getting for it.
The one thing we caution people is, you know, what they’re getting for any given service—you don’t know why. So negotiations take on many forms and their customer may have given a little bit here to get something there. So we give a level of caution, but in the simplest terms, having additional information to go to battle with your payer negotiations is always helpful. We have a product in the market right now called RateAnalyzer™ that does exactly that, and it organizes and speeds the process, but these are things if you’ve got access to some good data tools, you would be able to do yourself.
So, contract negotiations, that was the obvious one. What we’re seeing customers do that’s really interesting to us is starting to integrate this data into other business and into other business initiatives. One of them is marketing. And so, we’re starting to see customers look and say, we’re the best value in the market. We’re looking at this service, our underlying charge, our negotiated rate for this, we’re comparing that to our local competitor who is in the area that this patient may drive to get this service. And now we’re going out to the physicians. We’re putting together marketing campaigns to say not only is our quality better than everybody else’s, but our value is better than everybody else’s, and you’re likely to walk away with a smaller out-of-pocket with us because of the negotiated rate that we have.
And that’s a really powerful tool.
Every hospital relies on patients walking in the door every single day, and many of them over the last couple of decades have really become experts in marketing their services.
Because consumerism in healthcare is also driven by price transparency. So, your consumer display is showing people what the charges will be. Use it as a proactive tool. Use price transparency as a proactive tool to go out and gain market share, and we see some really interesting things going on with that.
Really coupled with that as business development, so taking it one step further, not marketing a direct service necessarily to a set of patients, but rather we’re thinking about opening up a clinic in this area, a clinic of this discipline in a particular geography, or a series of [clinics], and we don’t really have these covered in our managed care contracts or we’ve never really focused on this, and so it’s not something that we feel like we’re being reimbursed appropriately for, if we were focused on it. Let’s look at our competitors who already gained some market share in this space and see what they what they have right. See what they’re getting from any given payer, understanding, you might not be able to get there all in one shot. But does the market really open itself up to a profitable business for you, or at least a break-even business for you? Is this a good business move? Will you ever be able to get the rates you need to sustain the service?
Putting mission aside for just one second, you know, without margin, there is no mission at most hospitals. So you use this as a business development tool to say, can I do some market analysis that says this is a good move, I can sustain this; and running it across multiple payers, because all of that data is available to you. So, the business development teams at a number of our customers have asked us for help pulling some specific data for exactly that purpose and that’s a really exciting development.
I’ll just touch on one more, just in the interest of time, that we’re seeing as well, and this is a major trend that’s always happening in our space, and that’s mergers and acquisitions.
And so, the due diligence on a merger and acquisition (M&A) deal or even evaluating a target or wanting to go to market and say, you know what, we want to merge with a bigger facility or a system—this was always something that happened on the other side of a nondisclosure agreement. Show us your contracts. Show us your rates. Let’s see where you are so that we can get a sense of your overall sort of profitability and whether or not you would fit into our organization.
What we’re seeing in services is folks now using price transparency data as a way to identify targets. These guys have a great contract with payer X, Y, and Z. We know that they would be amenable to an opportunity. Let’s go and approach them proactively, not wait for them to put together a request for proposal for partnerships, but let’s be first to the market and try to preempt them doing that to see if we can’t move something forward.
Price transparency data coupled with just a little bit of usage data—which, by the way, you can get from CMS for most providers—really gives you a chance to take a look and say, okay, we can do something with that potential target. So that one’s really exciting. That one’s probably the one that’s most recently emerged and one that I think, because of the nature of it and some of the players that are in it, will very rapidly move to the forefront the use of price transparency data.
Grace: It sounds like price transparency data is really revolutionizing how providers approach contract negotiations and proactively enhance their business initiatives, and that requires a good deal of adaptability as the marketplace changes. In your experience, what are some potential barriers that healthcare providers might face when it comes to getting their hands around price transparency data and putting it to good use?
Kevin: Well, first, just the size of the files creates technical challenges; if you want to use payer data, they’re big. It’s hard to even download the files given today’s systems. Provider files are a little bit more manageable, but because of the various formats that you can publish in and still be compliant, there is no single tool or set of, say, loaders that you could write that you point it at every file and it will load clean. You really have to approach every single file individually, which often exceeds the technical limitations of a lot of our customers, which is why we build tool sets around that.
And then understanding the data, right? So, now you’ve loaded it, you can see it, but really understanding, well, what does this tell me? Remember that anybody that’s spent any time with these files, that there are different reimbursement methodologies that greatly vary. So, any given amount that you would read on a file, so a case rate versus a DRG rate versus a percent of charges, you can have a very, very different output number there. And so, understanding that—which, thankfully, CMS required as a field in 2024 to really give you that context—but you really need to pay attention to what you’re looking at, certainly before you use it to make any decisions. Though, people with familiarity of the reimbursement system and healthcare finance can generally get up to speed very quickly once they can get their hands on the data.
Grace: Great. Thank you. What should providers be doing today to stay current on regulations and prepare for future changes?
Kevin: Yeah, that’s a great question. We’re covering the future here, but I’ll take everybody back to the present. You know, our first advice to everybody is get compliant if you are not comfortable with your current file. If you have a vendor you’re working with, really scrutinize the output that your team or your vendor is putting out there. Make sure that it’s going to be compliant.
What we’re seeing today from CMS is much more detailed letters; when a prospect comes to us and says that they received this letter from CMS, we can tell that CMS is looking at the files. It’s not just simply, do you have one or do you not have one? They can see deficiencies in the files and they’re only going to get better at that, so get compliant, avoid penalties, avoid headaches. That’s always number one.
Then, once you’re there and you start to think about the future, start to really understand who your peers and competitors are. If you’re going to look at somebody else’s data, who do you want to see? Why do you want to see them? Make sure your peers and your comparative groups are relevant. You know, are they of an equal size, payer mix, geographic type, right? The hospital down the block really could be very different than you, and looking at their information can be interesting but not necessarily relevant. And because you’ve got now access to data from across the country, you can build a peer group of really anybody now. So, understand who your peers and competitors are as you start to use and appreciate the data.
And then the last thing is, assess some tools, build them yourself or buy a few, and then the advice we’re giving everybody now is think creatively. Find a partner that can help you if you need it, find some creative folks in your organization that can use the data, but as you open up the data and what it can do to your whole organization, really start to get those creative juices flowing to say, wow, this is something we’ve never had before. It’s information that we can use to analyze ourselves. It’s information we can use to benchmark ourselves against ourselves, payer to payer, that type of thing, but also all of our peers, competitors, friends in the market, those that have been successful—now you can try to start to understand why. And think of uses beyond those that I said, business development, marketing, M&A—they’re out there.
I’m excited to see where price transparency is going to take some of the leaders in this industry. I think we’re going to be amazed when we look back a few years from now that, you know, in 2024, we’re worried about just getting compliant. Can you imagine a few years from now we’re going to look back and say, well, I can’t believe that that was what we were worried about given everything we’re doing with the data now. So, it’s exciting times ahead and I’m really looking forward to seeing what everybody can do. I’m excited about what we’re doing at Panacea, but we’re just one player in a growing market of both hospitals and vendors that are out really trying to empower people with this data.
Grace: Yeah. Lots of potential. Well, I think we’re about at time. Thank you so much for that well-rounded account of where we are at with price transparency. It was great to talk to you.
Kevin: Yeah, Grace. Thanks so much. We’re passionate about this subject matter. We love it, we’re immersed in it. It’s exciting times, and so look forward to our next conversation.
Grace: Likewise. And to our listeners, thank you for tuning in to 1st Talk Compliance. I hope you learned something new today. If you’re interested in learning more about this topic, head on over to Panacea Insights to explore our complimentary content library of articles, podcasts, and webinars.
Until next time, take care and stay informed.
