The Complexity of Healthcare Price Transparency

In a video interview with Pharma Commerce, Chris O’Dell, Turquoise Health’s SVP of market solutions, describes how the recent executive order on healthcare price transparency aims to make pricing in the healthcare industry more accessible and understandable for patients. This initiative is a continuation of efforts by both the Trump and Biden administrations, with the goal of improving transparency around hospital and payer reimbursement rates. The central idea is to require all hospitals and insurance companies to publicly disclose their contractual reimbursement rates, meaning patients will have clearer insights into what insurers pay hospitals for services.

Historically, these prices were not transparent, making it difficult for patients to understand the actual costs of healthcare. While earlier laws introduced in 2019 improved pricing transparency, there have been enforcement challenges. The new executive order seeks to address these issues by ensuring hospitals and payers comply with transparency requirements. A key update in the order is the inclusion of prescription drug prices, which had previously been excluded from transparency rules.

The broader impact of this order is to make healthcare pricing as transparent and predictable as other consumer services, like booking a flight or a haircut. Although the system is not fully realized yet, this executive order lays the foundation for a future where patients can easily access upfront pricing before seeking healthcare services. This transparency is expected to simplify the decision-making process for patients, ultimately fostering a more informed and competitive healthcare environment.

O’Dell also comments on the biggest challenges healthcare organizations currently face in terms of price transparency; where the healthcare industry currently stand in terms of compliance with price transparency regulations; specific strategies Turquoise Health provides in order to help healthcare providers navigate and meet the new price transparency requirements; and much more.

A transcript of his conversation with PC can be found below.

PC: What are the biggest challenges healthcare organizations currently face in terms of price transparency?

O’Dell: The biggest challenges I think healthcare organizations and payers face is just that the data that's required to be published is absolutely massive. The company I work for, Turquoise Health, is a price transparency company. We ingest a petabyte of data every single month, which is a massive amount of data to bring in. That means we're going out to 11,000 different sources and grabbing it from all the payers and all the hospitals, and trying to bring all that data in and standardize it. I think just the size is a very difficult part.

Perhaps even more important than that is the word that I just said, which is “standards.” In order for it to be useful, everyone's got to do it in the exact same way. It's kind of like, everyone's got to drive on the same railroad track size if you want the trains to be able to integrate and go across state lines. Same is true for these data flows. We're getting there, but we're not quite there yet, meaning that hospitals’ contracts are highly variable, so the way one hospital might contract for a service is very different, compared how the next one does. When they publish the data, now you have to find a way to make it apples to apples so that a consumer can compare. That is the absolute hardest part of price transparency—they can show you the price, but you as a consumer might not know what to make of that unless someone standardizes it.