Providers have a narrow window to anticipate the same wave of consumerism that struck the airline, retail and restaurant industries. Will they take it?

It’s 2020 and hospital price transparency is now daily headline fodder for national news. There’s a mega lawsuit going on between the hospitals of America and the government over who should see the negotiated rates shared between a provider and an insurer: just those two parties, or everyone?

This all follows from HHS’s November 2019 Final Rule requiring hospitals to disclose negotiated rates for 300 shoppable services, a move that could bring consumerism in healthcare more in line with other industries like retail, restaurant and airline.

But there is one uncertainty - fueled by a bit of naiveté for this veiled industry - surrounding much of the press on price transparency: what actually happens when we make negotiated rates machine-readable and available to everyone?

There is one axiom that holds true for all industries on the internet: when valuable data is public, programmers will find it.

As restaurants, airlines and retailers have learned over the past decade, third parties might add to the data and package in such a way that it takes on a life of its own. At some point, restaurants might have provided contact information to the Yellow Pages. Many of these same restaurants then received bad reviews on Yelp before they even knew what Yelp was.

Hospitals have a chance to get ahead of data aggregation in a way that these industries never saw coming, but the window is slipping away at the pace of legislation.

Let’s look into the approaches hospitals may take to respond to this legislation.

Approach 1: Do Nothing. (Regardless of Whether the Law is Upheld or Struck Down)

Let’s call this approach the “status quo.”

Until now, negotiated rates between hospitals and insurers have been totally private by choice. This allows both parties to keep their strategies close to the chest. And even if one party wanted to publish rates in public, this party will usually face a gag clause in the contract that prohibits it from doing so.

There is a very real possibility that the CMS Final Rule on price transparency is struck down in the DC District Court and that this popular push for hospital price transparency takes a legislative backseat to prescription drug and surprise billing transparency.

Hospitals that choose to do nothing may be able to maintain the status quo for many more years. If the law passes, these hospitals will owe a $300 daily penalty, a sum just north of $100,000 per year as the cost of resistance.

However, many large providers - such as St. Luke’s or Sutter Health or Washington Hospital - are already starting to provide price estimators that include the insurer-negotiated rates in the estimate.

Will hospitals that do nothing eventually feel economic and patient pressure to join the transparency game, even if the law doesn’t pass?

Approach 2: Comply by posting Excel/CSV/JSON files on the hospital website

If we can learn anything from the hospital response to the 2019 Price Transparency Final Rule, which required hospitals to publish their chargemasters and average DRG prices online, it’s that hospitals love excel files.

Take it from us - we went and got over 4,000 of these files in their raw formats from hospital websites. And just like a snowflake, no two excel files are alike.

We saw an overwhelming amount of compliance, especially for a Final Rule that imposed no sanctions on non-compliance. Over 98% of hospitals we searched posted a price transparency file in some form. However, the caveat is the term “in some form.”

We assume from past actions that compliant hospitals might try to make the new price transparency data public in an excel format. CMS examples on how to comply even include screenshots of spreadsheet-formatted data. And the hospital lawsuit on the issue assumes the same: “The Final Rule would also require hundreds to thousands of columns. In addition to descriptions, codes, and gross charges, the spreadsheet would need to include separate columns for each health plan issuer contract.” (AHA complaint, page 23).

What will these spreadsheets do for patients? Very little, just as the prior rule. HHS is exploring standard templates for the machine-readable files, as well as finalizing usability and access requirements for the shoppable service tool, but for now, it says “we believe hospitals should retain flexibility to determine a format that displays charges for their shoppable services in a consumer-friendly manner.” (Final Rule, page 225)

Remember the axiom from earlier? If valuable data is public, programmers will find it? This little wrinkle in CMS’s plan just means programmers will have to spend a few extra nights awake to massage this data into a standard format, as we have for the chargemaster data.

No government agency meaningfully regulated how Amazon should display items for sale, or how Google Flights should display flights costs, or how Yelp should display restaurant menus, yet these companies still aggregated the data, cleaned it up and presented to consumers in a shopper-friendly way. Tech companies will always know how to do this better than individual hospitals. Which leads us to this point:

Patients will not use spreadsheets. Third parties will aggregate hospital pricing data from spreadsheets and control the narrative of how it displayed.

And this will ultimately allow smooth browsing across providers and insurance plans, which means hospitals will want to control how they measure up to the Joneses.

There is one final point to make: as long as HHS maintains that this data has to be public and not hidden behind a sign-in, there is no file format that programmers can’t ingest. XML, JSON and CSV will be easiest, but Excel, PDF and even API calls are fair game.  

Approach 3: Hospitals proactively partner with third parties and control their price transparency narrative

Assuming a future where either of the HHS rules become law, or where consumer pressure ultimately drives hospitals to publish negotiated rates, hospitals will need to consider how they align with third party shopping platforms.

The same pressure swept through the restaurant industry over a decade ago, as this evergreen “Managing an Online Reputation” New York Times article from 2009 points out: “...managing your online reputation requires a whole new skill set, including monitoring the online conversation and engaging with customers and the tech-savvy to promote yourself in the best channels.”

The only difference is that now, it’s not only the tech-savvy that pay attention to online shopping research.

Third party price transparency tools will incorporate hospital quality scores, price comparisons and reviews. What happens when a hospital updates its chargemaster mid-year, or when it strikes a new deal with Blue Cross, and the information displayed on a high traffic third party price tool is out of date?

To the extent that consumers and employer groups will use these tools to seek care, providers will want to have real-time access to the data that goes into them.

If Delta updates the price of a flight from Atlanta to San Diego, that price is nearly immediately updated on Google Flights. Google is so confident about this that they guarantee a refund for any discrepancy if the price drops.

Providers that do not directly manage their prices online (as our price transparency portal allows providers to do in real-time) will have too much data mismatch out there for patients to rely on an estimate.

Providers that make pricing data difficult to obtain risk non-participation in these tools. What happens when a patient or employer searches “pacemaker insertion” and the only results that appear in town are the competitor hospital and the ASC down the road? It will look as if certain providers don’t exist, because those provider websites and corresponding price transparency data will not be optimized enough for patients to discover.

There is a strategy in non-participation, however. Certain hospitals may be able to rely on brand loyalty and market clout to drive the price search directly to their websites.

Take Southwest Airlines, for example, which historically has never shared its prices with flight aggregation engines:

“Southwest sells to consumers in one place: That should be a handicap, since travelers can’t comparison shop and some consumers who use traditional search engines may never visit the airline’s website. But it works for Southwest, partly because it has loyalists who got used to it over the years and they might search its website and never bother to look at the competition.”

While certain large health systems will have the money and market clout to drive the shopping process to their websites, this will not be the case for smaller health systems, ASCs and independent hospitals in regions with fragmented competition.

The Takeaway: Wait, Participate or Bow Out (But Listen to History)

Any one of the approaches presented may be a valid course for a health system to take. In the end, many hospitals will opt for the path of least resistance: how can I just get this price transparency to-do off our plate? These hospitals can let the market take it from there.

History from other industries tells hospitals it’s prudent to take ownership of the data presented to customers. For providers interested in complying quickly and easily with the CMS Final Rule while controlling their downstream data from one central place, Arcosta provides a standardized, hospital-managed price transparency engine. Visit our demo and feel free to continue the conversation by emailing