But They Still Need Data Scientists to Help Them Look Inside
Until recently, prices for healthcare services were generally unknown. But this is now changing due to new requirements for both hospitals and insurers to publish prices. Healthcare providers are starting to see how big the discrepancies are among prices across providers and payers.
However, only the digitally astute providers can make sense of the deluge of healthcare price data that has been dumped on the internet. Consumers continue to struggle to understand healthcare prices, even though they now have access to price information – in theory. The price data that has been published is not practically organized well for people in general to make price comparisons.
To describe the price transparency situation in a nutshell, there are relatively new requirements (see Price Transparency Regulations Overview section below) for publishing prices for every type of medical procedure, but what is being published is extremely difficult to understand (see Price Transparency Reality section below). For those that are figuring out how to understand it, they are surprised by what they see (see Insights Into Price Differences section below).
Price Transparency Regulations Overview
Objectives of recent federal regulations are to enhance price transparency through two primary policies: requiring hospitals to disclose charges and requiring insurers to disclose all negotiated rates.
Hospital Price Transparency
Hospitals are required to make publicly available the prices that they charge for all treatment procedures through a single online machine-readable file that is updated at least once annually. Prices need to be shown for every health insurance company for which they have a contract.
For example when looking at the price file published by Mount Sinai in NYC and analyzing prices for a hip replacement with procedure code 27130, their negotiated price with United’s commercial plan is $10,701 per hip replacement vs. the Cigna HMO/PPO price that is $36,487.
In other words, if a patient has the United plan the provider gets paid $10,701 for a hip replacement, but if the patient has Cigna the provider is paid more than three times that. For NYU Langone Health, their 27130 rates with United and Cigna are $9,166 and $40,625, respectively.
Health Insurance Price Transparency
Health insurance companies are subject to the new TiC rules. These regulations require that plans and issuers disclose in-network provider negotiated rates, historical out-of-network allowed amounts, and drug pricing information through three machine-readable files posted on an internet website.
The objectives of this are to allow the public to have access to health coverage information that can be used to understand health care pricing and potentially dampen the rise in health care spending. However, that doesn’t seem to be really happening yet. The amount of information that has been published by insurance companies is overwhelmingly large and requires highly advanced technology sophistication to just be able to look at all of it.
Price Transparency Reality
It takes extraordinary time and effort (along with strong data science expertise) to be able to evaluate and compare prices now that there is “transparency.”
To evaluate prices across hospitals, it requires searching online for each hospital system and the prices that they have published. It then requires merging all these collected files (a few thousand) together so that they can be compared and analyzed. This requires making all this data consistent, and each hospital file (thousands of them) are different.
CenturyGoal has done all this and provides a search tool for anyone that wishes to look at this data! Please visit the Healthcare Pricing Transparency Tool page.
Evaluating prices across insurers is way, way more difficult. The amount of data published by insurers are literally petabytes of information, which, if don’t have a sense for what that means, requires high-priced excellent talent and significant computing capabilities. CenturyGoal has first-hand knowledge about this data and relationships that help with accessing/analyzing the data.
The compounding problem is that there are no price standards in the healthcare industry. There could be a trillion different prices. The number of different prices for US healthcare providers’ services is incredibly vast due to the complexities of the US healthcare system.
If we wanted to calculate the number of different prices, we would theoretically need to consider several factors:
- Number of Healthcare Providers: In the US, there are thousands of healthcare provider organizations, including hospitals, clinics, and private practices – a total of about 1 million doctors in the US.
- Number of Insurance Companies: There are numerous of health insurance companies in the US, each with multiple plans.
- Number of Medical Procedures: There are thousands of different medical procedures, tests, and services, each with its own billing code.
Since every healthcare provider generally has a different price for every procedure with each insurance provider, the total number of different prices would be:
Number of Healthcare Providers
Number of Health Insurers
Number of Medical Procedures
Last but not least, the magnitude of the prices vary greatly across providers, insurance, and procedures.
Insights Into Price Differences
There is a great deal of surprise in how different healthcare prices are now that there is beginning to be some insight into prices. Healthcare Dive starts one of its articles on this topic with the following quote…
The eye-popping variations just demonstrate “the total insanity of American healthcare pricing,” Niall Brennan, CEO of the payer-backed Health Care Cost Institute, said.
This same article gave several examples such as how a Healthcare Dive data analysis found that the cost of a joint replacement at the same hospital varied from about $23,000 to more than $100,000 depending on the person’s plan.
Another issue is the quality of data and how it can be misleading. Mathematica has been collecting Transparency in Coverage (TiC) data and analyzing it. They comment that a major limitation of current plan price data is that providers can have different rates for the same plans and services.
Better Understand Healthcare Prices with CenturyGoal
CenturyGoal is determined to help the market better understand healthcare prices. Although we are still trying to understand it ourselves, we are making good progress and discussing it with different types of organizations in the healthcare industry such as providers, payers, and service companies.
The purpose of CenturyGoal making a hospital price tool freely available to the public is to advance these conversations and work collaboratively with others to better understand healthcare prices. Our discussions have led to excellent sources for data and support including where healthcare providers can obtain more and better price information along with getting support for how to seek better prices.
Please contact us at email@example.com. We look forward to more conversations.
For more information on healthcare prices, see CenturyGoal’s blog: