Don't let payers use transparency data against you

Price transparency data can be a useful tool in payer contract negotiations, but practices need to understand its limits before walking into the room; and recognize that payers are already using that data as a hammer against them.

Doral Jacobsen, CEO of Prosper Beyond VBC, says the smarter move is to reframe the conversation around total cost of care rather than getting drawn into a rate-by-rate comparison.

Physicians Practice: How should a practice use price transparency data without getting trapped in a "here are our numbers" debate? What's the smart way to translate that data into actual leverage in negotiations?

Doral Jacobsen: Transparency data is interesting to use. Payers are using it; we see payers using it against practices all the time now. So you have to be educated.

What we like to do is look at the aggregate percentage of Medicare across your top codes, because one rate in and of itself is kind of meaningless. You need to look at it in the context of the larger practice, calculating it in terms of relative value units. You also want to look at what that means from a competitor perspective; take a look at your competitors, and then also take a look at all payers. If you're working with one payer, compare your top payers across the board. It's great to see how you're performing and how your competitors are performing. That gives you a landscape.

But here's the deal with transparency data: it doesn't tell the whole story, not by a long shot. All it does is give you a snapshot of a rate at a point in time. It doesn't give you good information about edits and how they're eroding revenue for a practice. It also doesn't give you any information about administrative burden. You could be getting clobbered on the administrative burden side in ways that are increasing your expenses and eroding the profit from the contract. Payment policies can plague practices, too. We're seeing this right now with downcoding. Your rate might be $100 on an E&M code, but you're actually getting paid $75; and it's not going to show up in the transparency data. Value-based revenue doesn't show up there either. Neither do denials.

So transparency data is super limited. We don't really think it's that useful, but it is being used as a big hammer on the payer side. And here's the real kicker: it's kind of meaningless. Who are we comparing ourselves to? Other practices that probably aren't doing a great job negotiating either. Is that our bar? No.

Here's what we really want to look at: who could acquire your practice? If your practice were acquired, what would the expense be to the payer? A small increase for a practice, say, 10%, is nothing if they're saving 30% in total cost of care downstream. That's really the argument. This data can be useful if you use it that way.

The key takeaway is that you've got to know your worth. What are you doing, when you zoom out, from a total cost of care perspective? That's what this data can help you check.