There has been a flurry of activity around price transparency data and analytics this year as several key regulatory milestones went into effect. These include requiring U.S. health insurers to post the prices for all procedures for which they have negotiated rates (formerly they had to post just a subset of 500 procedures.) Hospitals were required to publish prices for their full set of services, too, and as of July 1st they had to post them in the new standardized Version 2.0 file format.

As a result, a whopping amount of new price data became available this year, and researchers and healthcare analytics companies are just now beginning to ingest, digest, and make sense of all that information.

I have been asked multiple times recently about the long-term prospects for these Federally-mandated price transparency initiatives. Will they prove to have legs, or might a future administration decide to shut down the effort? Will the data really help us understand healthcare prices? More important, will it have a meaningful impact on a healthcare market that moves slowly and is very resistant to change?

Here are six thoughts on the future of healthcare price transparency.

#1. It’s Already a Long-Term Thing

Price transparency is getting a lot of buzz these days, but it’s not just some short-term initiative. After all, the authority of the Department of Health and Human Services (HHS) to require price reporting was granted by the Affordable Care Act back in 2010. The current transparency initiatives were launched by an executive order in 2019. The Centers for Medicare & Medicaid Services (CMS) published its Final Rule implementing the current price transparency requirements in November 2019, and the first of those requirements took effect on January 1, 2021.

Depending upon how you count it, we are at least five years and maybe even fourteen into this journey.

#2. There’s More to Come

The journey isn’t over yet, either. The latest hospital requirement (posting the version 2.0 formatted files) has been in effect for only three months. A majority of hospitals still haven’t gotten their v2 files posted, and CMS has not yet begun enforcement actions.

On top of that, there are still more provisions in the Final Rule that haven’t taken effect yet. Starting January 1, 2025, hospitals will have to post additional data elements in their price files, including estimated allowed amounts, types and units of drug measurements, and the modifiers for billing codes. Somewhere out on the horizon, payers will have to start reporting their negotiated rates and historical prices for prescription drugs, too. CMS has deferred enforcement of that rule until an unspecified future date.

#3. It’s Not a Partisan Thing

Unlike most things, price transparency doesn’t seem to have a partisan political valence these days. The reporting authority was established during the Obama administration in the Affordable Care Act, and the regulations were written and put in place during the Trump administration. Since Joe Biden took office in 2021, CMS has continued right along implementing the requirements without significant changes or delays. The future of price transparency doesn’t appear to hinge on who wins office in the upcoming elections.

#4. There’s Even More to Come

So far we’ve been talking about legislation and regulations that have already been enacted, but there likely will be more rules on the way. The Health Care PRICE Transparency Act (S.3548), which was introduced last December by Senator Mike Braun (R-Indiana), would expand the reporting requirements to clinical diagnostic labs, imaging centers, and ambulatory surgical centers. A similar act, The Lower Costs, More Transparency Act (H.R.5378), was passed in the House last year, too.

As a note, the co-sponsors of the Health Care PRICE Transparency Act include four Republicans, seven Democrats, and Senator Bernie Sanders of Vermont. (See “It’s Not a Partisan Thing” above.)

#5. It’s Not Our First Rodeo

Another way to gauge the future of price transparency is to compare it to the rollout and evolution of similar mandates such as risk adjustment, encounter reporting, and health information exchanges (HIEs). These initiatives share several common themes: staged rollouts over time, evolving rules and requirements, and the creation of entirely new business processes and vendor ecosystems to support them.

Take encounter reporting as an example. The Balanced Budget Act of 1997 authorized CMS to collect encounter (claims) data from Medicare Advantage (MA) organizations, and the agency began collecting a very limited set of encounter data the following year via the Risk Adjustment Processing System (RAPS). Almost a decade later, CMS greatly expanded the required data set, and in 2012 it began collecting those larger sets via the new Encounter Data System (EDS). Along the way, similar reporting requirements were extended to the states and their Medicaid managed care plans.

The end result for MA payers and Medicaid MCOs—and for their administrative partners like pharmacy benefit and behavioral health managers—was the creation of new business processes and even entire new departments to manage the generation, transmission, and error resolution for their monthly encounter submissions. It also spurred commercial software vendors to launch specialized technology solutions to be used for managing the process, creating new software markets and even launching brand new software and services companies.

These analogues suggest not only that price transparency is just getting started but that we can expect it to drive the creation of new business operations, the emergence of specialized consultants and SMEs, and the incubation of new markets for software applications and vendors.

#6. Yes, the Data Is Messy—For Now.

Here in the early days, many of those involved in the production and consumption of price transparency data are focused on the many challenges and shortcomings of the reporting formats and the way various payers and hospitals have executed them. The team here at Lime Tree Health well gladly talk your ear off on that subject.

Here again, though, history tells us that data formats and standards are almost never complete or fully effective right out of the gate. Even if they never reach perfection, over the long run they do get refined and expanded enough to serve their intended purpose. Consider the transition from ICD-9 to ICD-10, from HIPAA 4010 to 5010, and the in-progress transition from HL7 to the FHIR standards.

Adding It All Up

Roll these six thoughts together, and they point to a single conclusion. Yes, the implementation and rollout of payer and provider price transparency is causing plenty of bumps and bruises. The inevitable refinements and adjustments that lie ahead will likely require even more effort and cause even more disruption. But this is to be expected.

In our view, the price transparency journey is just getting starting. Down the road, after all the twists and turns, we believe it will be well worth the effort, too.

Want to begin analyzing the prices that hospitals and payers in your area are posting? Need help creating compliant Version 2 price transparency files or defining a repeatable process for posting them year after year? Give the team at Lime Tree Health a shout.