Payer Implications on Reforms to Price Transparency

Amid recent reforms on price transparency by CMS and the Trump administration, payers' workloads will substantially increase with notable challenges that include having to maintain accurate prices and the impact of exposed negotiated rates.

Amid recent reforms on price transparency by CMS and the Trump administration, the workload of payers will substantially increase, with notable challenges including maintenance of accurate prices within the health care system and the impact of exposed negotiated rates, said Kellie Rademacher, PharmD, vice president of the Access Experience Team at PRECISIONvalue.


AJMC®: Hello, I'm Matthew Gavidia. Today on the MJH Life Sciences’ Medical World News, The American Journal of Managed Care® is pleased to welcome Dr Kellie Rademacher, vice president of the Access Experience Team at PRECISIONvalue.

Great to have you on, Kellie. Can you just introduce yourself and tell us a little bit about your work?

Dr Rademacher: Yeah, absolutely! Nice to meet you. My name is Kellie Rademacher, as you said. I am part of PRECISION’s Access Experience Team. What that really means for everybody is we are a group of former payer access decision-makers. I have sat within payer roles, making decisions on formulary access, utilization management, and those kinds of activities.

AJMC®: Recently, the Trump administration and CMS released a final rule that will require payers to post documents that include in-network and out-of-network provider rates and in-network drug prices starting in 2022. While promising, this move, as well as the requirement in 2023 for private insurers to provide negotiated provider cost-sharing estimates and up-front prices to members, will substantially increase the workload for a majority of payers. Can you discuss the benefits and challenges brought by this move?

Dr Rademacher: Absolutely. Costs within our health care system vary wildly from procedure to procedure, from system to system, and even within systems. As with other industries, whenever there are requirements to post actual costs, you start to see that variation in price narrow. From a benefits perspective, I believe that required transparency will mitigate some of that spread in pricing and there will be a positive outcome, certainly for patients.

Payers and providers have consistently argued that the mandates expose negotiated rates, which really severely impacts their ability to effectively negotiate discounts, which results, from their perspective, in overall increased costs when you think about how that impacts premiums and things like that, and the downstream impact of that.

There are definitely challenges, certainly, from a patient perspective, right? How is the patient going be able to interpret and understand the pricing parameters presented from providers and health systems being able to accurately supply pricing considerations before a patient has even been diagnosed and a treatment plan develops? So, that's going to be really challenging.

From an insurance organization perspective, where patients may have different carriers—they may have 1 carrier for their medical benefit, 1 for their pharmacy benefit—then there's differences in in-network pricing versus out-of-network pricing. So, when you think about all those variables, having to maintain a level of accuracy in that pricing is going to be super challenging, especially when the prices within the health care system change fairly frequently. So, the maintenance aspect is going to be concerning, I think, and hard to manage.

Currently, a lot of payers don't have the internal human capital. Potentially most of them don't even have an internal IT [information technology] infrastructure to support these kinds of things. And the amount of money that it's going to take for them to get up to speed for that 2020 mandate, it's going to be a real challenge for them.

But let's keep in mind that even if payers somehow manage to meet all the demands, the impact of these changes still really sits with the patients. Are they going to use the information? How do they apply the information to make cost-reduction choices? So, making sure that they still get the quality at a reduced cost.

At the end of the day, a lot needs to happen, not only from the stakeholders within the health care system, but certainly from an educational perspective of the patients themselves and understanding what the information is, how it applies to them, and the fact that they really truly need to use it for change to be meaningful.

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