We’ve all recognized the wide variation in prices paid by employers in the commercial market relative to public programs. Over the past year, the push towards greater pricing transparency has resulted in the public release of large tranches of hospital and insurer pricing data, also known as machine readable files (MRFs). In a groundbreaking story based on the initial release of hospital data files, New York Times
reporters Sarah Kliff and Josh Katz, along with producer Rumsey Taylor, illustrated the full extent of the flawed pricing dynamics and how consumers may pay significantly higher out-of-pocket costs – hundreds to thousands dollars more – than they would without insurance for the same services, from the same hospitals and providers.

As part of our initial internal review of insurers’ and hospitals’ public data files, our colleagues across JPMorgan Chase’s
Benefits team and AI Research have identified deeper insights on pricing discrepancy trends, particularly related to prevalent services, like colonoscopies, emergency room visits and MRIs. For example, our analysis of the MRFs found that hospitals in New York City were nearly four times more expensive than other clinics for colonoscopies. Yet, a significant volume of JPMC health care spend on specific colonoscopy procedure was incurred for care at higher priced hospitals and facilities, as opposed to more affordable options.

These early insights reinforce a number of disturbing cost trends, and further, raise a number of questions and considerations for employers. Are employers really getting the best unit cost from hospitals and insurers? Are employers in a better position to negotiate and develop direct contracting relationships with preferred providers in key markets? Will hospitals heed the call to action to adjust down outlier pricing? Will pricing transparency finally help accelerate the adoption of accountable care strategies in the commercial market? How should employers evaluate quality alongside MRF data to assess the value of their medical networks? To what extent can employers adopt more patient-centric benefit design to counter some of these cost pressures?

The final question might be the most important. Widespread reliance on high-deductible plans was embraced by the Fortune 500 as a way to encourage price-sensitive consumers to seek out the most affordable hospital or provider. But the pervasive pricing disparities suggest that years later, selected facilities continue to increase costs for consumers. And if a consumer cannot clearly see the price, judge it relative to quality, and discuss alternatives with a care navigator or physician, a high deductible may be serving as a deterrent to getting care as opposed to an incentive for cost-effective management.

This should be one of the many reasons that employers should expect more from the health system, and importantly, take action. Insights from the latest MRFs provide meaningful data for employers to leverage at the negotiating table. For example, employers have a real opportunity to address the unit cost of services – which is one driver of higher spending in geographic markets – by leveraging direct-to-provider opportunities and accountable care partnerships with high-performing doctors and specialists.

Combining these insights with quality data tied to provider performance – data that is core to the Embold Health and Castlight platforms, two Morgan Health portfolio companies – has the potential to significantly enhance and improve benefit design as well as the information available to consumers when selecting a doctor.

CMS should be applauded for its years of work in bringing this data to light. Yet, we still know there is more work to be done. For all stakeholders to ultimately benefit from pricing transparency requires policymakers, including federal agencies, to be actively engaged on making sure future MRF data releases are accurate, complete and truly reflective of the market pricing in each geographic region. Such data will accelerate much of the important early work that employers like Wal-Mart, Boeing
and others have done to provide employees with meaningful and transparent choices around their care – whether through Centers of Excellence partnerships, value-based insurance, care navigation and other transparency tools. Ultimately, it’s time to hold every player in the health system accountable for delivering better value and better care to employees and millions of Americans.

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