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Transparent Executive Summary

Consumers demand easier to understand pric-

Pricing: The Future

ing data for their healthcare needs, whether to
manage deductibles, understand their share of
costs or choose a provider. Transparent pricing

for Healthcare continues to elude the industry due to a wide

range of variables, from complex payer-provider
contracts and multiple health insurance prod-
Providers ucts, to prevalent geographic and demographic
health trends.

Moreover, state and federal regulatory bodies

require greater transparency, and vendors
Executing a strategy to provide are emerging to meet employer and consumer
pricing clarity is critical for demands for price clarity. Yet these third parties
may not accurately reflect a healthcare pro-
provider efforts to increase patient
viders pricing position because they have only
engagement, control brand a partial view of the data required. As a result,
image and optimize revenue in an providers must engage patients directly with
increasingly consumer- and market- pricing information created as part of a broader
competitive pricing strategy.
driven health ecosystem that is
wrought with financial constraints.

Cognizant 20-20 Insights | April 2017

Cognizant 20-20 Insights

Regulators and vendors are

rushing to fill the clarity vacuum,
and pricing transparency is quickly
becoming another regulatory
compliance imperative.
THE PRICING CONUNDRUM Act (ACA)-compliant plans have high deductibles
(limited to $13,700 for a family in 2017).
How much? Thats a basic question customers
ask any business. Its one that healthcare provid- The high deductibles, in particular, are meant to
ers struggle to answer. The reasons are legion: increase consumers cost sensitivity and drive
complex payer contracts; lack of up-to-date infor- providers to compete on cost and value. Yet its
mation from payers; competitive concerns about virtually impossible for consumers to comparison
releasing prices; inability to calculate consum- shop when they cant get a clear answer to their
ers varying deductible, co-pay and co-insurance basic price inquiries for services and the associ-
amounts in real-time; failure to recognize local ated quality of care.
market conditions, etc.
Yet more consumers are not just asking how
much? but are also comparing the answers they Regulators and vendors are rushing to fill the
get from different providers. Almost 60% of clarity vacuum, and pricing transparency is
healthcare consumers have tried to get pricing quickly becoming another regulatory compli-
data, and more than 80% who have compared ance imperative. Nineteen states either have or
prices say theyll do so again. Nearly 70% want are implementing All Payer Claims Databases
to know the details of out-of-pocket costs and say designed to make it easy to search for pric-
previous bills and costs are a factor when decid- ing trends. Some states prohibit gag clauses
ing on a healthcare provider. that keep pricing information private between
two parties. Florida has a provider comparison
The consumer focus on price should not be a sur- website and recently enacted a law designed to
prise because individuals are paying more of their safeguard consumers from so-called balance
own dollars for healthcare due to higher co-pays, billing, in which patients receive bills from out-of-
co-insurance, deductibles and out-of-pocket limits. network clinicians who practice in an in-network
Employer-sponsored plans with high deductibles 8
hospital. New Mexico and North Carolina require
have increased almost 70% since 2010, and hospitals to release pricing information on spec-
more than 90% of enrollees in Affordable Care ified procedures.
Cognizant 20-20 Insights

Empowering Customers with Pricing Tools

Tools leverage real-world claims data, plan benefit details and provider contract information
to provide accurate cost estimates.

> Consumers can search for a > Consumers can see out-of-pocket > Users can view network information.
Consumers need help doctor/procedure/medical cost estimates. > Appointments can be scheduled.
eliminating the confusion condition. > Users can track amount paid by > Patient financial responsibility can be
surrounding healthcare > Users can also fill out a form plan vs. amount paid by customer assessed.
options. describing their medical needs to the provider.
that can be shared with providers. > Auto-triggers inform provider of

Access Web/ Enter Search Explanation of Treatment Locate and Quick

Mobile App Parameters View Results Cost Timelines Book Appointment Payment

> The user can access either the > Consumers can find healthcare > The user can access information on > Payment options are
Web or a mobile app. providers in their area/network. treatment plan timelines (i.e., clarified.
> They also have an option to call > Price and quality ratings of evaluation, surgery, post surgery). > Convenient bill payment is
the provider helpline. different providers are also > E-consults are available with offered.
given. physicians for initial assessments. > Providers can track patient

Enabled by.. Advanced Analytics Big Data Mobility Rule Engines Cloud

Pre-Encounter Post Encounter

Figure 1

Vendors and health plans offer price estimation Accomplishing this requires a holistic competitive
tools to individuals and providers that range from pricing strategy. This strategy must align with the
entering a Zip code and a medical procedure into organizations mission; be integrated with overall
a website to see high- and low-cost providers in revenue cycle management operations; take into
the area, to solutions that provide employers and account local markets and competition; be built
employees with health cost data to help them on accurate data and insights; and use multiple
make more informed spending decisions (see channels and digital tools to help educate and
Figure 1). inform patients, regulatory agencies and third-
party data aggregators about the providers
Other providers publish prices for selected pricing and associated quality metrics.
services. The Surgery Center of Oklahoma, for
example, posts the price of more than 100 pro-
cedures it performs; members of the Wisconsin
Hospital Association make price information
available to patients; and the Geisinger Health Providers will benefit in the short and long term
System has created the Geisinger MyEstimate by developing a competitive pricing strategy that
tool to offer members more price transpar- helps them shape the story their prospective
ency. consumers see and hear when comparison shop-
ping (see Figure 2, page 4). These benefits and
Though limited, these efforts are a step in the opportunities include:
right direction. With the industry interacting
more directly with cost-conscious consumers, Overcoming limits of claims-derived price
providers must ensure they are their consum- data. Claims data alone cannot provide an
ers best and primary source of pricing data and accurate picture of cost and value because it
value delivery. doesnt clearly distinguish between the costs

Transparent Pricing: The Future for Healthcare Providers | 3

Claims data alone cannot provide an
accurate picture of cost and value because it
doesnt clearly distinguish between the costs
and value of a procedure compared with an
episode of care.

and value of a procedure compared with an Consumer loyalty could be encouraged by

episode of care. One providers per-unit price, offering digital tools and information that
such as the cost of a surgeon performing help explain choices, as well as provide qual-
arthroscopic ACL surgery, could seem the ity data to help individuals make informed
less expensive option. However, when all the decisions. These tools can also become a
required ancillary services are added in, the gateway to offering additional consumer
total costs may be much higher than what services, such as virtual follow-up after a
another institution bills for a complete epi- procedure, leading to a more engaged con-
sode of care. sumer and better clinical outcomes.

Quality ratings add another useful dimension Understanding the local/regional competi-
for price comparisons. A higher-cost provider tive marketplace for price optimization. Just
may in fact also deliver better outcomes, such as retailers jockey to price competitively, pro-
as when its greater per-unit cost for a surgical viders will find themselves in a similar position.
procedure is shown to result in fewer readmis- It will be critical to understand historic trends
sions and faster recovery for greater patient in local/regional utilization, demographics,
satisfaction. A provider must take the lead in health issues and consumer sentiment, and be
educating and informing consumers about up to date on competitive offerings. This data
such cost vs. value differences. is necessary to develop a defensible and sus-
tainable pricing model and forces providers
Owning consumer engagement. The ability to conduct strategic pricing exercises to con-
to provide consumers with accurate, timely sider the financial implications of short-term
pricing and quality information is a power- revenue optimization strategies, as well as the
ful first step in creating a great experience. impact on patient volumes.

Consumer loyalty could be encouraged by

offering digital tools and information that
help explain choices, as well as provide
quality data to help individuals make
informed decisions.

Transparent Pricing: The Future for Healthcare Providers | 4 1

Cognizant 20-20 Insights

The Data Behind Pricing Transparency

Analytics, algorithms, automation and even artificial intelligence must work in tandem to turn a variety of data sources into
clear, accurate real-time data that shows the consumer the full price of the service, their out-of-pocket responsibility and
how each of these compares with other providers. Tools leverage real-world claims data, plan benefit details and provider
contract information to provide accurate cost estimates.
Influx of data Price Transparency Tool Results

Total Estimated Price of the Service

> Amount for which the patient is responsible plus the
Sources of Cost Data amount that will be paid by the health plan.
Analysis of previously adjudicated claims > Detailed cost breakdown.
to identify cost of a service/procedure
and variances based on level of Network Status
complexity. > Whether a particular provider is in network.
> Locate an in-network provider.

Out-of-Pocket Responsibility
Current Levels of Insurance Coverage > Statement of out-of-pocket payment
Price estimate based on the consumers responsibility.
current levels of insurance coverage > As close as possible to the amount to be
(deductibles, coinsurance copayment, paid.
Price Comparison
> Comparison between different providers on
price and quality.
Provider Master Data and Payer Contracts
Rules-based engines that automatically
query, retrieve and combine data from Other Relevant Information
payer portals with the providers master > Information related to the provider.
data and payer contracts. > Clinical outcomes, patient safety or satisfaction scores.

Provider Payer

Figure 2

Developing and protecting the brand. Con- Medicare and Medicare Advantage plans.
trolling the message and owning consumer Aligning prices with an overall strategy and
engagement on pricing will help providers competitive research will enable providers
develop and maintain a consumer-friendly to better justify pricing differences and help
brand. This will be a critical dimension to nur- regulators understand the unique factors
ture as the industry essentially sells direct influencing price in local markets.
to consumers.
Streamlining referrals. As providers build
Increasing point-of-service payment. The solutions that incorporate a better under-
ability to accurately calculate the amount a standing of consumers benefits plans, this
consumer will owe can motivate and stream- data can also be used to present choices for
line payment collection from the patient in-network specialists and ancillary care.
at the point of service, increasing revenue This adds another layer of value for the
opportunities. consumer while also helping integrated net-
works better coordinate care to keep down
Enhancing regulatory compliance. State costs for the consumer. Referral and care
and federal regulators are likely to con- coordination capabilities also enable an inte-
tinue efforts to make healthcare prices clear grated delivery system to deliver more value
and easy to understand to help the indus- to member physicians and ancillaries, espe-
try become price conscious and consumer cially by reducing out-of-network referrals
friendly. The current Centers for Medicare to clinicians with a history of over-utilization
and Medicaid Services (CMS) leadership also or poor outcomes. Patients treated at in-net-
favors pricing transparency to help consum- work facilities by in-network providers avoid
ers understand cost differences between balance billing situations.

Transparent Pricing: The Future for Healthcare Providers | 5

Cognizant 20-20 Insights

No single pricing transparency solution

exists. Providers must develop a digital
implementation strategy that encompasses
existing out-of-the-box partial solutions,
such as contract management systems, cost
estimators and comparative pricing tools.
Positioning for the future. We see health- customer service employees. Finally, the solu-
care ultimately becoming a customizable, tion must meet existing and emerging regulatory
on-demand service, driven by consumers, compliance requirements.
with in-network designations becoming
increasingly irrelevant as payers business The systems and tools required to execute the
models also change. By developing a clear digital strategy will help providers deliver the
rationale for pricing and internal and exter- features and functions necessary to create con-
nal processes, as well as tools for sharing and sumer-friendly capabilities, including:
explaining the data, providers can present a
A cost-estimation tool for calculating the
compelling story to consumers and empower
consumers out-of-pocket cost accountabil-
them to choose care from any provider.
ity. This should include other useful features,
such as plan information and appointment
A central office that provides real-time mon-
Its virtually impossible to provide accurate pric-
itoring and medical complication analysis for
ing in real-time without using digital technology
pricing updates.
to integrate data and manage the numerous pric-
ing variables and delivery channels. No single Prioritized and transparent pricing on
pricing transparency solution exists. Providers elective or non-critical procedures for which
must develop a digital implementation strategy cost-conscious consumers are more likely to
that encompasses existing out-of-the-box partial comparison shop.
solutions, such as contract management sys-
tems, cost estimators and comparative pricing Streamlined estimates with payer-specific
tools. bundling of episodes of care.

The strategy must also incorporate analytics A contact center to assist consumers pricing
for large data sets, and algorithms and rules complex cases.
engines to automate estimation calculations and
their delivery, whether direct to a consumer via
Feedback mechanisms to evaluate consumer
experience and customer satisfaction.
a portal or mobile app, or to patient navigators,
federal/state/employer data repositories and

Transparent Pricing: The Future for Healthcare Providers | 6

Cognizant 20-20 Insights

Providers that have put thought into

providing quick, clear answers when the
consumer asks, How much? will be in a
better position to thrive in a market-driven
health ecosystem.

LOOKING AHEAD TO STRATEGIC delivering specific services, leading to higher

PRICING AND TRANSPARENCY prices. This information can become the impe-
tus for process improvement, cost reduction
Consumers and regulators want clear, simple and innovation. These benefits are unlikely to be
pricing now. Transparency and clear delivery of realized by simply making a third-party cost esti-
information to patients should be an urgent ini- mation tool available.
tiative for any provider that wants to succeed in
an increasingly price-driven industry. Analytics Providers that have put thought into providing
and business intelligence can identify priority quick, clear answers when the consumer asks,
areas for pricing transparency, such as services How much? will be in a better position to thrive
in which local competition is increasing and the in a market-driven health ecosystem. They will
provider is experiencing diminishing volume. have a significant competitive advantage over
providers that are slow to accept the grow-
A total cost of care analysis and other exercises ing price sensitivity and increasing demand for
are also likely to reveal where and even why a choice from healthcare consumers.
provider is less efficient than a competitor in

Transparent Pricing: The Future for Healthcare Providers | 7

Cognizant 20-20 Insights


1 David Schleifer, Carolin Hagelskamp and Chloe Rinehart, How Much Will It Cost? How Americans Use Prices in Healthcare,-
Public Agenda, March 2015,
2 How Price Transparency Can Control the Cost of Health Care, Health Policy Snapshot Series, March 2016,
3 TransUnion Survey: Healthcare Cost Transparency Major Factor in Patients Choice of Providers, Health Plans During Open
Enrollment, TransUnion, Nov. 20, 2013,
4 High-Deductible Health Plans, HealthAffairs, Feb. 4, 2016,
5 Ibid.
6 Statistics gathered by APCD Council. For more, see interactive map, APCD Council,
7 Melinda Beck, How to Bring the Price of Health Care into the Open, The Wall Street Journal, Feb. 23, 2014, https://www.wsj.
com/articles/SB10001424052702303650204579375242842086688 .
8 Harris Meyer, New Price-Transparency Law Puts Florida in the Consumer Vanguard, Modern Healthcare, April 19, 2016, http://
9 Data and Transparency, New Mexico Hospital Association,, and Transparency in
Healthcare Costs, DHSR,
10 Gillian Mohney, Oklahoma Surgical Center Reveals Prices to Patients, ABC News, Aug. 27, 2013,
11 Transparency, Wisconsin Hospital Association,
12 How to Adopt a Retail Approach to Boost Healthcare Transparency, RevCycle Intelligence, Oct. 31, 2016, http://revcycleintelli-


Srivaths Srinivasan Srivaths Srinivasan is a Director with Cognizant Business Consult-

ing and leads the Revenue Cycle Management (RCM) Practice. He
Director, Cognizant Business
has 20 years of experience in healthcare operations and manage-
ment consulting, and expertise across the healthcare continuum in
provider and payer markets and RCM business operations. Srivaths
can be reached at

Shishir Kumar Shishir Kumar is a Director with Cognizant Business Consultings

Healthcare Practice. He has over 16 years of experience in health-
Director, Cognizant Business
care operations and management consulting across the payer
and provider markets. Shishir has significant experience in digital
strategy and operations for healthcare organizations, value-based
care and disease risk management. He can be reached at Shishir.

Keerthi Kumar Dr. Keerthi Kumar is a Senior Manager within Cognizant Business
Consultings Healthcare Practice. He has 15 years of management
Senior Manager, Cognizant
Business Consulting consulting experience across healthcare strategy and transforma-
tion. He is a physician by training and leads the population health
advisory practice. He has advised clients across population health,
value-based care and digital transformation. He can be reached at

Transparent Pricing: The Future for Healthcare Providers | 8

Cognizant (NASDAQ-100: CTSH) is one of the worlds leading professional services companies, transforming clients business, operating and
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