The Stretch – Price Transparency In Healthcare Is Finally Here

Kevin Fyock:
For years, employers have been highly frustrated by the lack of transparency in both cost and quality in healthcare, especially on the cost side, where imaging and procedures can vary by hundreds or even thousands of percentage points between neighboring providers. But for now, employers have access to better information that they can use to better understand the prices they're paying and take action to steer members towards more cost, cost-effective quality care. So, at the risk of being a bit Pollyanna, we've titled today's episode, Price Transparency in Healthcare is Finally Here. And here to unpack this change as Chris Severn, co-founder and CEO of Turquoise Health. Welcome, Chris. We're so excited to have you.

Chris Severn:
Thanks for having me. Good to be here.

Kevin Fyock:
So, Chris, tell our listeners a little bit about yourself, what you do, how you got to where you are today.

Chris Severn:
Yeah, so my background is in hospital revenue cycle. I spent years at a consulting firm learning every way that a healthcare claim could be paid. And then the price transparency laws came out in 2020 and we prepared all that year. And I went from thinking about revenue cycle as a means of claims payment to thinking about giving patients prices ahead of time. And that's how I find myself here today.

Kevin Fyock:
Wow. So, you thought about every which way claims were paid. I bet you are a ton of fun at a party.

Chris Severn:
[inaudible 00:01:46] I specifically focused on revenue cycle, I would do well.

Kevin Fyock:
Nice. That's great. Okay, cool. I look forward to digging into that, Chris. So, hey, why don't you walk our listeners through what's been changing in the wild world of healthcare pricing?

Chris Severn:
Yep. So, first of all, we say before January 1st, 2021 were the Dark Ages. If you wanted to know the price of healthcare, if you were an employer or any stakeholder in the transaction, you really didn't have much. You had claims data, you had hearsay, you had EOBs. Then the price Transparency executive orders came out in June of 2019 and they went effective January 1st of 2021, was the first law that went into effect the hospital price transparency rule. And since January 1st, 2021, we've had more data. And then over the past four and a half years, we've seen intermittent rollouts of more data, cleaner data. And as the title of the podcast, it's finally here where we have more pervasive robust coverage of price transparency data. So, that's a little bit of the history lesson without going into every last release.

Kevin Fyock:
So, Chris, could you opine a little bit on what's coming down the pike? There's so much movement from executive orders for this current administration. Are there items related to transparency that have recently happened or you think might come down the pike in a matter of weeks, months, years?

Chris Severn:
Yeah, so during the Biden administration, we've seen this bipartisan push for price transparency, started during Trump, continued during Biden. But during the Biden administration we saw iteration, but it was pretty slow, so there wasn't much enforcement of the payer price disclosures. There was slow enforcement of the hospital price disclosures. When the Trump admin came in February, they released an executive order that said, "Hey, we're essentially doubling down on our prior executive order from 2019. We're accelerating the efforts. You'll see some things coming." The main things they pointed out, we'll see accelerated enforcement on both sides. We'll see the inclusion of prescription drug data coming out soon, and then we'll see new iterations of the specificity of the existing disclosures as soon as February of 2026.

Kevin Fyock:
Okay, that's fascinating. So, Chris, you mentioned prior to these laws, patients and consumers really had very little access to data regarding pricing. And I think we've observed that this lack of information has really driven a lot of frustration in the system, especially from a consumer perspective. And patients, as I mentioned earlier in my opening, patients don't know, let's take an MRI for example, whether it's going to cost $15 or $500. And price continues to be a huge question mark for consumers and one that adds to existing frustrations with affordability, which we've talked a lot about on the podcast, and actually causes many to forego unnecessary care. So, I'd love your thoughts on that.

Chris Severn:
Yeah, if you're a consumer in the past, you'd have a copay if you went to primary care, or a specialist or maybe some low-acuity services. And then you would hit co-insurance or deductible. And when you get into services that are based on co-insurance or deductible, you're really looking at the negotiated rate between the payer and the provider, and you're totally in the dark. And so, over the last four years, I think folks in the industry have seen the writing on the wall that consumerism and healthcare is coming. They felt pressure from new cash pay elected services. You have function health, you have Prenuvo, you have the like, you feel pressure there. You also see innovation around variable copays and more copay-based plans like we see proliferating in the market. And then finally, you have transparency data, which makes it easier to actually predict the all-inclusive cost of care even for those co-insurance and deductible-based services. And so, you're really seeing more transparency from the consumer side on all sides, and I'm interested to see where it's all going to converge.

Kevin Fyock:
It's interesting, Chris, that you bring up some of these plans that are innovating in the market. And if I'm hearing you correctly, that a lot of that innovation is because of the increased level of transparency. Is that a fair characterization?

Chris Severn:
I think we've thought about what kind of business we are. We think of ourselves as a price transparency business. And really we are starting to think we're just a transparency business. How do you make consuming healthcare, paying for healthcare as transparent as possible across price, quality, access? And I think that's what the industry has taken to heart is this general theme of transparency, whether it's price or coverage or access or quality. And you're seeing that coming from all sides.

Kevin Fyock:
So, it sounds like these forthcoming laws and even what you've discussed around the Biden administration and Trump administration, that the efforts that they moved in the arena of transparency will sort of equip consumers with the information that they need to anticipate cost of care. But what about employers? Can they use data in these new transparency laws for their own benefit?

Chris Severn:
There's three places where we see this proliferating in the employer market. We talked about one already, which is like consumer care navigation. A little further upstream is which plan a consumer chooses when it comes time for open enrollment. On the employer side, the third big one is network selection. And this notion that in the past to reprice all of your claims and to hit UDS, it's a really tough process and there's a lot of guessing with some of the information out there. And I think the industry was doing the best with the available data sources. And now when it comes time to select which plans to offer, you can be way more specific. You have way more coverage across data sets for all sites of care. And so, I think that's the biggest green light for employers in the last year, is the new use cases for repricing and network selection.

Kevin Fyock:
Chris, when we talk about this notion of transparency, maybe we can take a click down one or two levels with a little more specificity. The data that's available, just to help our listeners understand, are you talking about the machine-readable files that we keep hearing about over and over again in the media?

Chris Severn:
Exactly. So, these machine-readable files, it's important to note if you're listening to this podcast and you're like, "I keep hearing about these, it's been a nothing burger so far, why should I hear about them again?" These machine-readable files were exactly that. They were these big, monolithic, you can think of them as CSV files or big excels. They came out with a decent amount of accuracy, but I'd call it missing fields. And so, you have this notion of the precision of the data, the completeness of the data across all the disclosures. Not all payers came out with complete data. On July 1st, 2022 when this started, not all hospitals came out with complete data. And so, you take these nuanced improvements to the files combined with just generally more coverage and even these most recent announcements where the administration plans to iterate even further with the files in February of next year, and you just get better data, more precise data for use cases like repricing, consumer navigation.

Kevin Fyock:
If you were to guess or estimate, because you mentioned there were issues with completeness of these files, how complete would you say they are? Are we endeavoring towards a 100% completeness and accurateness? Or is there a source some sort of margin of error that we think is acceptable?

Chris Severn:
Yeah, we'll be releasing pretty soon a big old dashboard of all the disclosures and our read on completeness across a few dimensions. So, I don't yet have the exact numbers for you. We're hovering in between the 50% and 80% range for these files at scale. The important thing to note, just getting a little specific for a second, is we didn't even know things like on the hospital side until recently. How is this encounter paid? Is it paid at a percent of charge? Is it paid at a per diem? Was it paid at a case rate?

We had this mixture of payment methodologies coming out in the files. The data just felt a bit fuzzy. And so, if you wanted to use the hospital disclosures to say, "Hey, patient, this is the price of a colonoscopy," or, "Hey, employer with high musculoskeletal costs, this health system in your area, when folks come in for knees, and hips and all that, the implants are paid separately from the core case rate". And so, completeness is both complete to the law as required at that time. And finally, the requirements are robust enough that we're getting useful data.

Kevin Fyock:
Well, that's great. I do want to ask you in just a little bit just around what you're doing at Turquoise, and I have a feeling it has to do with taking a look at those files and how you can interpret them. So, maybe to go back to my question around employers using this data, it almost seems to me that from a supplementary perspective, I think the benefit of this that employers can really start to earnestly start leveraging this data now, not waiting for additional completeness, but now. And that could be from selecting a payer, as you mentioned, Chris, rather than UDS and broad national discounts, getting more granular, again, to supplement that conversation to the provider, the facility level to understand what network is best. Or even building the plan design around members to lower cost or provide meaningful access from a consumer tools perspective. So, it sounds like there's a lot for the employer to benefit, but then by extension, there's a lot that the employee can benefit from just more information and better navigation.

Chris Severn:
Yeah, you nailed it. As a compliment to existing tools out there, price transparency data has the benefit of often being more real time because payers have to update these rates every month. It's often provider and network specific, which is really interesting to drill down at the exact provider. And then like we said, the geographic and service type coverage is getting pretty good. But the trade-off is there's still some messiness to it. There's not as much standardization as there is in UDS and methods that have been around for a while. And so, it's a perfect compliment. But this is a huge improvement from two years ago where it was really hard to tell the employer market that this is ready for them because of the gaps and the messiness in the data.

Kevin Fyock:
Yeah, compliment, supplement, I think most employers and certainly in the role that I sit in ,more data oftentimes just to round out the story. So, as I mentioned before, I would love to hear, Chris, a little bit more about what you're doing at Turquoise and how are you tackling specifically healthcare pricing.

Chris Severn:
So, we're in the business of transparency, like I said, and our big focus right now is pricing. And what we think is that there's always value in having the most accurate and complete prices. And so, there's a value on the B2B level we've talked about with the employer use case and the consumer level as well. And so, really if we work backwards from our goal, which is guaranteed upfront prices for consumers for elective services at scale, all across the United States healthcare system, and not just for cash pay, but also for insured patients, that's our goal. And so, if that's your goal, then you really have to clean up the pricing data to essentially come up with a precise enough data point that you could bank on the estimate at the time of care.

And so, we at Turquoise bring together a handful of pricing data sources to really get at the provider, service code, payer and plan level, what is the discernible, knowable, most precise rate. And you get into all these questions that are really important for consumers, like do you want to know the price just for the colonoscopy surgeon fee, or the facility fee or the whole encounter? Do you want to estimate the total cost of care for a colon cancer episode? There are all these dimensions and complexities to the pricing data, all the different use cases, and we live in that. That's what our whole team does.

Kevin Fyock:
That's very cool, Chris. So, I have to ask too, beyond Turquoise being a vibrant blue-green color, how did you land on Turquoise as the name for your organization?

Chris Severn:
Yeah, so that's so funny. I'm here in San Diego, I'm married now with a one-year-old. Back when we started Turquoise, I had just got engaged and my wife lived on Turquoise Street in San Diego. And so, I think we were incorporating the business and I was walking down Turquoise Street thinking, I need a name that's transparency and makes people feel good about healthcare. And then I looked up. And I think Turquoise works because we always thought about turquoise waters.

Kevin Fyock:
I love it. When you said San Diego, I thought you were going to go initially to the beauty of the water, but in fact it's a street.

Chris Severn:
Yeah, it's important to our business. Yep.

Kevin Fyock:
So, Chris, you've spoken a lot about data emerging with the enactment of these different transparency laws. Can you maybe go a level deeper and tell us how is Turquoise leveraging this data for the benefit of your business?

Chris Severn:
So, we sell the data set to all stakeholders in healthcare. We think creating healthy competition is good for the US healthcare system. And some of our emerging use cases, like I said, the data is really starting to clean up for the consumer use case. So, we white label our consumer website, turquoise.health, for any consumer use case. We're excited to announce that now has real-time cost share built in. So, one of the big problems in the past has been, "Hey, it's great that you know the negotiated rate, but that's not what I pay as a consumer. I've got my deductible, my accumulators." So, that's a big update recently, is more precise pricing to the consumer's real-time accumulators. And so, that's really how the business runs. The big leap for us is can we get from estimates to binding prices? That also is between the provider and payer as well. How can we create a transaction harmony between the group purchaser and the provider? Because we think there's a lot of administrative waste in that transaction as well.

Kevin Fyock:
Yeah, Chris, I love this and I think there's just such ripe potential and opportunity for you in many ways to lead the charge in this discussion because we've talked about this for so long, but we think about all aspects of what we consume as human beings. If you're buying shoes, if you're buying groceries, if you're even shopping for a home, there's ripe transparency in each one of those, even by simply using a search engine. Healthcare is anything but. So, between the laws that we're seeing and the efforts and innovation, the tides clearly are shifting, I think in a positive way.

Chris Severn:
Yeah, I think people in our industry really mean well, I believe, in all sides of healthcare. You don't really get into this industry without a bit of a mission-driven spin. There have been real barriers to delivering on this notion of true binding transparency of the whole patient financial process and employer financial process. I think we're finally there, where some of those barriers through the federal laws, through technology. We've made it this far without talking about AI. But through AI where you just won't be able to get away with a black box patient consumer experience or a black box provider/payer experience. You'll just see more transparency for Liferay.

Kevin Fyock:
Thanks for pointing out. We didn't talk about AI and we didn't talk about GLP1s, and it's amazing that neither of those came up in a benefits-related conversation in 20 minutes. That's quite an achievement. So, Chris, I like to ask all of our guests, and I call it our crystal ball question. So, it's clear from this conversation. One, I've learned a lot and I think our listeners have as well, but the data clearly empowers employers to make far better decisions. More data allows them to act, I think, with a lot more certainty. In your view, how does the market respond with these changes over the next five to 10 years? And what are the compounding effects that will happen?

Chris Severn:
So, I think my perspective coming from revenue cycle, and seeing all these claims and all the negotiated rates, there's two things that folks need to know. Price variability, all other variables held constant is still immense. We're not compromising quality or access often when we look at price variability. And then administrative costs are unreasonably high. And I think those are main drivers of high cost of healthcare in the United States, and I think they're going away. I think everybody knows that now. And it's a bit of a race to who can get there and what solution leads, how much standardization, simplification AI, what's the right mix of all that? So, my crystal ball is the patient financial experience, the member, the employee financial experience is fundamentally transformed where you don't have this black box of how to navigate your health plan, we're already seeing that. But in five years it'll be a relic of the past. You'll see administrative costs significantly impacted in healthcare.

I don't think it's going to be provider and payer AI tug-of-war proliferating administrative costs. I think we'll see it eventually drive down relative to where they are now. So, then the question is, where is the overall cost of healthcare in the United States? And that is a little bit out of our control, I feel, with the GLP1 discussion and new therapies coming out. The thing that I don't have a pulse or control over is the proliferation of new therapies and how that drives cost for employers of what we're making sure is that there's a transparent financial experience, so folks can make those decisions. Administrative costs will get lower. But the really unknown variable for me is just how good will medical innovation be?

Kevin Fyock:
Well, we could turn this into a philosophical conversation, Chris, but I agree with everything you said. But I think for so long and so many folks have the point of view that the root of a lot of the problem is an administrative one. And so, if you're reducing the administrative costs, then there should be theoretically, a corresponding impact to total cost of care more broadly. And I think there is almost a positive view when therapeutics increase in costs. It should theoretically correlate to more money spent on R&D and therapeutics that impact longevity, and cure rates and so on and so forth. And I think we've seen willingness from the market that that's okay. But what we really need to fix is the administrative element and the cost there, that's borne oftentimes by the employer and certain by the employee as well. So, I appreciate you looking into your crystal ball.

Chris Severn:
I would say the real crystal ball, the specific crystal ball is I think the federal government will even have a clear impact on standardization, simplification of how we pay for healthcare. I think they'll come out with more of a universal chassis for payments in this administration would be my guess.

Kevin Fyock:
Interesting. Okay. We'll touch base in a matter of months and years, and we'll see what it plays out.

Chris Severn:
Yeah, we'll see if I'm right.

Kevin Fyock:
Well, Chris, thanks so much for joining. This was a ton of fun.

Chris Severn:
Yeah, thanks so much for having me. I appreciated it.

Kevin Fyock:
And to our listeners, thank you so much for tuning in. We hope you enjoyed Price Transparency and Healthcare is Finally Here. This is episode eight of season two of The Stretch, a podcast dedicated to the ideas that are revolutionizing the world of workplace health and benefits. If you've enjoyed this episode, we encourage you to check out previous episodes. And if you haven't already, please subscribe to the podcast so you can get our latest updates. Thanks so much and have a great day.