Commentary

Article

AJPB® Translating Evidence-Based Research Into Value-Based Decisions®

AJPB® The American Journal of Pharmacy Benefits® November 2024
Volume

What Drug Rates Are Reported in Price Transparency Data?

Author(s):

It is valuable for pharmacists to understand exactly how price transparency data are sourced, what information can be found, antitrust concerns, and implications for the pharmaceutical industry.

Price transparency legislation has taken health care costs from a best guesser’s arena to a transparent, free-market economy in 3 short years. If this is news to you, you’re not alone. Rolling effective dates have made it so those subject to price transparency mandates (ie, payers, self-funded employers, and hospitals) also happen to be those most in the know regarding this unprecedented price data; however, this is no longer the case. The pharmaceutical industry is beginning to discover what these data could mean for the commercial success of their pre-launch and in-line products by augmenting contracting, reimbursement and coding, value proposition, trade/distribution, and patient support strategies via data-driven approaches. In this article, the following will be outlined:

In this photo illustration, the Centers for Medicare and Medicaid Services (CMS) logo is displayed on a smartphone screen.

Image credit: © Rafael Henrique | stock.adobe.com

  • Exactly how price transparency data are sourced and what information can be found in it;
  • Publishing trends across therapeutic areas, payers, provider types, billing codes, and geographies;
  • And commentary on what all this data means for pharmacists.
Price Transparency Data Are Public Data

The Centers for Medicare and Medicaid Services have issued 3 final rules mandating price transparency compliance for hospitals and payers. In addition, the Consolidated Appropriations Act established federal requirements designed to protect and inform consumers. As a quick summary:

  • The Hospital Price Transparency Rule: Effective January 1, 2021, this final rule mandates hospitals publish standard charges via a machine-readable file (MRF) and prices for 300 Shoppable Services within a publicly accessible patient estimate tool.1
  • Calendar Year 2024 Outpatient Prospective Payment System Final Rule: Effective July 1, 2024, this final rule mandates hospitals and health systems to publish machine-readable files (MRFs) according to a standard format that includes new, more detailed data elements. The new required MRF format is coupled with additional measures designed to strengthen and automate enforcement efforts.2
  • Transparency in Coverage (TiC): Effective July 1, 2022, this final rule mandates payers publish standard charges via 3 separate MRFs and prices for 500 Shoppable Services within a publicly accessible patient estimate tool.3
  • The No Surprises Act (NSA): The only federal law influencing price transparency. Effective January 1, 2022, NSA prohibits balanced billing and introduces additional transparency requirements to help consumers know what costs to expect before receiving care.4

Pharmacy benefit products are included as a required file to be published per TiC, but the specific enforcement date for this file has been delayed.

Medical benefit drugs are included in hospital MRFs because hospital files must be built on all items and services within a hospital’s chargemaster.5 Additional drug data are gleaned from payer MRFs which include all contracted rates for items and services. Turquoise Health ingests, parses, cleans, and enriches this medical benefit drug's data for public use, surfacing it in a platform for easy search, analysis, and benchmarking.

What Therapeutic Areas Are Reported in the Data?

Drug reimbursement data is well-represented across many therapeutic areas, including oncology (eg, gene therapy), immunology, multiple sclerosis, ophthalmology, vaccines, respiratory, hemophilia, dermatology, the associated biosimilars across therapeutic areas, and more. Within those therapeutic areas, there are over 500 distinct Healthcare Common Procedure Coding System billing codes reflective of Status Indicator G (ie, pass-through Drugs and Biologicals) and Status Indicator K (ie, non–pass-through drugs and non-implantable biologicals, including therapeutic radio-pharmaceuticals).

As we look across different provider types, we see coverage span from ambulatory surgery centers to hospitals and infusion centers. We also see broad coverage in the data as we look to physician groups relevant to any given therapeutic area. For example, we see over 500 oncology groups with reported rates for top cancer drugs. Furthermore, this set of codes is represented and available across all 50 states.

Coverage does vary as you review specific payer, provider, and billing code combinations within the data. However, across rates posted by hospitals and payers, an expansive data set emerges to better understand drug reimbursement across a wide array of provider types, geographies, payers, and therapeutic areas.

About the Author

Chris O'Dell serves as senior vice president of market solutions at Turquoise Health, a leading SaaS platform focused on health care price transparency. Chris holds a Bachelor’s degree in International Development Studies from UCLA and completed the LEAD Program at Stanford University Graduate School of Business.

What Does This Mean?

Price transparency data allows you to understand reimbursement trends at scale while also offering the granularity of a single billing code for a given payer and provider with NPI-level specificity. The intention of price transparency regulations as they are outlined in TiC is “to empower consumers by helping them understand how their plan or coverage pays for health care and to shop for health care items and services based on price, which is a fundamental factor in any purchasing decision."1 Based on evidence and research conducted by the HHS, the Department of Labor, and the Department of the Treasury (The Departments), price transparency is “likely to improve competition and lower costs to consumers. The Departments also are of the view that the statute and the final rules do not constitute an abrogation of antitrust law… To the contrary, antitrust law enforcement remains an important tool to protect these markets from anti-competitive behavior.”3 Furthermore, Food and Drug Administration Modernization Act 114 supports the use of truthful economic data to enhance discussions with health care stakeholders.

This is a new and novel dataset that is publicly available and may be utilized in ways that do not violate antitrust law, making it uniquely suitable for pharmacy research for insights into trends in the field. Health care is now definitively moving toward a transparent, free-market economy. We’re measuring it like we might any other market—looking at inflation, trends, and growth.

The Potential for Pharmacy Benefit Manager Rate Reporting

Prescription drug reporting for pharmacy benefits could come into play if the Lower Costs, More Transparency Act is passed. This would specifically require pharmacy benefit managers (PBM) to semi-annually report on many additional data elements for a claim submitted, including the brand name, dispense channel, total prescription claims, and the total amount received. They’ll also need to report rates expected to be received by the plan or issuer, from drug manufacturers in rebates, fees, alternative discounts, or other remuneration to amounts paid directly or indirectly in rebates, fees (ie, payer’s net price). The bill passed a House vote in December 2023; however, no Senate vote has been scheduled. If the bill passes with the PBM reporting requirements exactly as they are written in the draft version, its potential effect on pharmacy will be notable.

The health care industry has never had full, easy access to price transparency data before. We are still discovering how these data can be leveraged and their potential impact. It’s largely an untapped wealth of knowledge that everyone from the health economics and outcomes research field to market access teams can utilize.

REFERENCES
1. Hospital Price Transparency Final Rule. Turquoise Health. January 1, 2024. https://turquoise.health/tqu/hospital-price-transparency-final-rule/
2. A Rule by the Centers for Medicare & Medicaid Services. Federal Register. November 22, 2023. https://www.federalregister.gov/documents/2023/11/22/2023-24293/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment
3. Transparency In Coverage Final Rule (TiC). Turquoise Health. January 1, 2024. https://turquoise.health/tqu/what-is-the-transparency-in-coverage-final-rule/
4. No Surprises Act. Turquoise Health. January 1, 2024. https://turquoise.health/tqu/categories/no-surprises-act/
5. What Is a Chargemaster and What Do Hospital Administrators Need to Know About It? The George Washington University School of Business. April 11, 2024 https://healthcaremba.gwu.edu/blog/chargemaster-hospital-administrators-need-know
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