In this episode, Dilpreet Sahota, Co-founder and CEO of Trek Health, shares navigating payer negotiations with price transparency.
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Learn how to listen to The Hospital Finance Podcast® on your mobile device.Highlights of this episode include:
- How healthcare providers can use payer transparency data to better understand reimbursement trends.
- Key insights from the release of payer transparency data.
- What roles third-party platforms and data aggregators play in making payer transparency data more accessible and actionable for providers.
- How transparency can affect long-term healthcare costs and what the potential risks are.
- How transparency requirements impact the relationship between payers, providers, and patients.
- What challenges insurers are facing in collecting, organizing, and presenting payer transparency data to meet these regulatory standards.
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome Dilpreet Sahota. Dilpreet is the co-founder and CEO of Trek Health, a trailblazing company in pricing transparency. Trek Health empowers healthcare providers with tools to optimize, payer contracts, and enhance revenue. Its innovative solutions automate billing processes and offer clear financial insights, enabling providers to work more efficiently while maximizing returns. A graduate of Stanford and UC Berkeley, Dilpreet has extensive experience in the health tech space. Before founding Trek Health, he led strategy and analytics at high growth startups like Health IQ and Big Health. Trek Health has already raised over $5 million and is making significant waves in the industry. In this episode, we’re discussing Navigating Payer Negotiations with Price Transparency. Welcome and thank you for joining us, Dilpreet.
Dilpreet Sahota: Of course. Thanks for having me, Kelly. Excited to chat today.
Kelly: Yes, me too. Well, let’s go ahead and jump in then. So how can healthcare providers use payer transparency data to better understand reimbursement trends and optimize their revenue cycle management?
Dilpreet: Yes, it’s a great place for us to start. And maybe just for the benefit of our listeners here, I’m going to spend a moment just to highlight what really is pricing transparency in 2024. So as many of the listeners may be aware, back in 2020, there was an executive order that was put into motion that eventually led to HHS and CMS putting together the Transparency in Coverage ruling. And there were really two main components to that. The first was that it was a requirement for every hospital to start to publish effectively their chargemaster sheet across the board for 500 common shoppable services so that patients can go into their services with an idea of what reimbursement and what costs would look like. But there was also a separate ruling that not many folks actually know about, which was specifically tied to health plans. Across the country, we’re living through really the first time in the history of America where every commercial health insurance network that has historically had this opaque, unclear pricing matrix with a lot of ambiguity in terms of what a fair price was. And we’re living in a world where physician X really never knew what physician Y was getting paid or a lab facility in a certain area was no idea if what they were getting offered from the regional Blues plan was fair. Now every one of these payers from Aetna, Cigna, UHC, all the way down to regional BCBS plans and other local health plans have to actually publish all reimbursement data at the level of the NPI number, tax ID, and billing code for every service that’s relevant for medical reimbursement.
So, what this really means is that we’re living in a moment in time which would allow for the first time providers– whether you’re a large regional health system down to a small private practice, you could, for the first time, actually benchmark reimbursement rates to allow providers to compare their rates versus others within their region against national averages. It’s a really strong way to identify disparities and opportunities for negotiation with payers. But beyond that, there are a few other key areas, including things like optimizing your service picks. You, as a behavioral health provider, let’s say, where you have maybe one line of service that’s outpatient behavioral health, might actually realize that it could be more profitable, or maybe you’re getting under reimbursed because you’re only delivering outpatient levels of care and maybe leveling up and introducing an IOP or a PHP or inpatient level of care could help really maximize profitability and more total services rendered for you as a facility and a lot of other things. I would say the main use case today with the data is really contract negotiations. On the one to three-year cycle when the hospital or the provider has to go back and renew their in-network agreement with a regional payer or a national payer, most of our clients today, and we work with over 120 health systems and provider groups across the country, including large national health systems as well as small local groups as well. The main poll really today is let’s figure out where we are in the market compared to what fare looks like and use this to really increase our top line by getting paid fairly. And there’s a lot more that I can go into, but at a high level, I think this is really the key thing that providers should take away. This is the first time where all of this data that maybe we’ve heard about in the news is actually available and payers are doing a lot to try to make it impossible to access, but folks like ourselves and others in the market can really help you quickly gain visibility into this historically opaque nature of data.
Kelly: Yeah, these are interesting times for sure. So, what key insights have been gleaned from the release of payer transparency data?
Dilpreet: Yeah, it’s a great question. So, I’ll highlight first just significant price variability. We often see that for the same service across different payers and even amongst a single payer, providers can be getting reimbursed really night and day in terms of how big the differences could be between a specific health system and its competitive entity. And when I say night and day, what I’m really talking about is 3 to 500 percent-plus variation in rates for the same billing code, the same provider, type, the same specialty, the same service, just a different site of care or a different rendering provider, which is really an outcome of a lot of things. There’s a lot that goes into when a commercial health insurance network is actually doing their actuarial analysis to figure out what they’re going to price. But this level of variance is very, very strong. And we often find that the key determinants of that variance will really be things like the size of a provider’s workforce. It could be the specific specialties that are served based on the needs within a given market and a whole host of other things. But the first insight is really price variability. And the second insight is power dynamics. So, what I mean by that is, when you’re going into a negotiation with a payer today as a hospital or a provider entity, up until this ruling and this data being made available, you really were never allowed as a provider or as a hospital, to reference reimbursement rates as a legitimate tactic to negotiate. Historically, payers would push back and say, “Well, actually, these contracts are obliged to confidentiality based on how they’re set up.” And so, you can’t mention these other rates that you’ve heard about, even though historically, maybe folks have heard from their provider workforce or seen some EOB data or claim data, and maybe somebody had a sense of them knowing that they were getting underpaid. The big insight here is that the power dynamics have changed. It’s actually now a legitimate use case for you to actually go into this negotiation with data in hand and use that as a reference point. Obviously not the only reference point, but a significant reference point to put out a real ask in terms of what fare looks like from a reimbursement perspective and justify why you deserve a rate hike with the relevant insurance network.
And this is something that we’ve seen some of our customers actually successfully negotiating $100 million plus increases in top-line revenue for certain markets, just on the basis of figuring out that they were underpaid and they’re going to render the same services, but they’re now going to just write price their reimbursement for the first time. The second insight I’d really say is that negotiation power dynamics are changing and this will be sustained really for a long time. The final thing that I would highlight is that I really do think that this is going to allow for total cost of care to come down. And that might seem a bit odd because there’s an argument to be made that now that all this data is available, every hospital and every provider is going to go try to get higher reimbursement rates. That’s fair. But in reality, what we’re seeing is that the most successful users of our data are actually able to create a win-win-win situation across the three stakeholders of interest. The hospital or the provider being the first stakeholder, the second stakeholder being the payer, and the third being the patient. And an example of that would be a large chunk of our client base, as an example, are either ambulatory surgery centers or health systems that own ambulatory surgery centers. And historically, folks that have done inpatient surgery are billing for DRG codes, and now a lot of the groups that we’re working with are realizing that since they’re doing outpatient surgery, the CPT codes that they’re billing for are actually paid for, in some cases, less than half what the regional inpatient hospital might be getting paid. So, what’s going to happen in this situation is even if that ASC, let’s say, gets a 20% increase in reimbursement from the payer, that’s actually in the service of winning for these three stakeholders that I mentioned. As an outcome of that, the payer is actually going to end up paying less out of pocket, even though this specific entity is getting more, because the only real alternative that that patient had was a much more expensive hospital. The provider’s really happy because now they’re getting paid more and they’re going to get more utilization, more services that they can render for their patient population. And the patient really at the end of the journey is also happier because in this new world of high deductible health plans where there’s massive out-of-pocket expenditure that’s required from a patient, at the end of the day, if the total cost of care was less, that also means that there’s a high probability that the patient’s going to have to pay less out of pocket as well. So, I would really say that my sort of key insights here would be first, there’s really significant price variability within the market. Second, we’re living in a new world in terms of negotiation power dynamics from a provider payer perspective. Thirdly, being that I do think that really the outcome of this over time will be more competition and lower total cost, all things considered.
Kelly: Wow, thank you for sharing those insights with us. So, what roles do third-party platforms and data aggregators play in making payer transparency data more accessible and actionable for providers?
Dilpreet: Absolutely. So, the payers just– as one real-life example, any hospital exec or provider that’s listening to this today can actually just go to Google and try to do a Google search and search for, as an example, UnitedHealthcare payer transparency files. And you might actually even land on the actual site where these payers have to publish this data. The first thing that you’ll notice is that right at the top, UnitedHealthcare mentions that each of these files can be a terabyte-plus in size. And if you’re trying to go through the list of files that a payer like UnitedHealthcare is publishing, there’s well over 50,000 files. So just to level set, if anyone listening to this podcast today was going to attempt to try to open even just one of those 50,000 files, chances are that your computer or your laptop doesn’t even have enough data on the whole computer to actually open just even one single file. And then if you as an enterprise or as a hospital tried to go out and ingest all of these 50,000 files that UnitedHealthcare is putting out, we’re talking about millions of dollars of just data warehouse and expenditure around data processing that would be required for somebody to go independently do this themselves. Then once you’re done with the UnitedHealthcare, you’d have to go figure out how to do that for every other insurance network across the country. So, it’s really burdensome. What the payers are doing is they’re doing what a lawyer would do during a deposition. They’re complying with the law. They’re putting out all this information, but that real insight that you’re looking for; it’s a needle in a haystack. And so, what a company like Trek Health or others within the market are able to do is really first consolidate this data at scale.
Here at Trek Health, we have over 150 payers across the country that we actually ingest data for into our systems and we ingest it on an ongoing basis so you have the latest, greatest view. By the way, these payers are forced to publish this data every month. So that 50,000 terabytes that I was talking about, that’s something that UnitedHealthcare is refreshing literally every month. And beyond that, we also have created a series of tools to allow non-sophisticated data users to go in and do really quite insightful, advanced analytics related things within our tool, like pulling up benchmark reports, identifying where you are versus competitors, doing competitive research on a specific entity, all of these things that we’ve been talking about in a self-serve way. And our platform really can allow users through our interface to do anything from high-level reporting within the tool itself, really all the way to somebody who might be a data scientist or an analyst that wants to even just work with the billions and billions of records of raw data. That’s something that our platform allows you to support as well by downloading and exporting the information out if you’d like. At a high level, I think the role of folks like ourselves and other aggregators across the country will be to really fast forward accessing this information by getting around these crazy payer tactics that are really slowing the industry down.
Kelly: Yeah, I know. For sure. Your tool sounds very cool. So how might pay or transparency affect long-term healthcare costs and what potential risks or unintended consequences could arise from this increased visibility?
Dilpreet: Yeah, it’s a great question. And as I mentioned earlier, there’s a real argument to be made from a health economic standpoint that, well, if everybody now has this information, prices might go up because now everybody’s going to try to negotiate. But I think that if we were to look at really any industry across not just the US, but the world, generally transparency and free markets and negotiation of goods has only ever really brought down cost for those that matter. And I think the same is going to be true here. But from an impact perspective, I think really the first thing that I would highlight outside of the risks would be that this is going to lead to informed consumer choices. As this information and this data continues to get more and more robust, patients with access to pricing information can make more cost-effective healthcare decisions, which would pressure providers to really lower prices and improve quality to attract and retain their patients. I also think that this is going to lead to significant policy and system reforms. I think the insights from transparency data can inform policymakers and designing interventions to control these escalating healthcare costs, promote things like value-based care or other packaged initiatives to help standardize quality and costs for care and a lot of other interesting things. I think net-net, my goal with the platform that we’re developing is to do what really happened in other markets many decades ago. As an example, today, if somebody was in the United States trying to purchase a home, chances are we can actually go to the internet and go to websites like Zillow or other MLS listing services that actually will allow you to see all of the options and compare options and figure out what fair looks like. Healthcare has been really left behind. And I think this initiative is going to allow for us to fast forward and move healthcare into the 21st century really for the first time.
Kelly: Completely agree. We do tend to be laggard when it comes to technology and staying on trend. So, sounds like we’re making good progress. So how do transparency requirements impact the relationship between payers, providers, and patients in terms of cost negotiations and decision-making?
Dilpreet: Yeah, absolutely. I mean, from a patient perspective, as I just mentioned, I think empowerment through information is a really, really big thing. And patients are going to really gain greater insights into the cost of services and enable them to do proactive decision-making and bring consumerism back into healthcare. And beyond that, for providers and payers, as I mentioned earlier, there’s going to be a significant shift in negotiation dynamics. But more importantly, I do believe that this is going to allow for enhanced collaboration as well between providers and payers. At the end of the day, these relationships between providers and payers have historically been quite challenged because both stakeholders sort of understand that the other is important and necessary for them to be in business, but haven’t really played nice historically. And with this total complete transparency that is being forced on by the government, it can allow for a more open dialogue about cost and value, potentially leading to innovative payment models like value-based contracts and aligned incentives so that providers get paid more for what they deserve, while also payers in the back of their heads understanding that if something was to go wrong here and costs were to escalate as a consequence of a negotiation with a provider, that there are real stop gaps in place to protect the payer as well. So I think net-net, it’ll allow for more enhanced collaboration between providers and payers. And hopefully, as an outcome of that, an increased proliferation of unique payment systems and payment integration modules that historically have been lacking. And from a patient perspective, information is sort of the great equalizer in the same way that the internet brought information to everybody more quickly, and now AI is allowing for that information to turn into actionable insight. I think healthcare is going to be fundamentally changed as this transparency information gets pushed through the system.
Kelly: Completely agree with that. So what challenges are insurers facing in collecting, organizing, and presenting payer transparency data to meet these regulatory standards?
Dilpreet: Yeah, it’s a great question. Again, and there’s really a lot of things here that I can dive into. The first thing that I would call out is that really there is a bit of a lack of standardization in terms of data formats and coding practices between payer entities. As just one example for finance folks that are maybe listening to this call today and can relate to some of the specifics around billing, it could very well be the case that the hospital across the street has a DRG-based contract for a hip and knee joint surgery that is a total bundled arrangement. Whereas myself across the street as a hospital might have a contract with the same insurance network where I’m carving things out from that DRG code. That’s just one small example of what can really be lacking because of the lack of standardization that’s been put out in the CMS ruling. And so sometimes these small nuanced things can really be compounding. And given the complexity of healthcare, there’s still a long way for us to go for CMS to continue to really get more clear about what is required from the payers, because that’s the only way that we’re going to really force everyone to comply the right way in a way that is meaningful and makes sense. The next would really be data volume and complexity. I mean, we’re talking about sheer volumes of data across numerous plans and services and regions that is absolutely overwhelming. Ensuring that that data is accurate and up to date is a monumental task for payers. I mean, if we’re talking about just UnitedHealthcare like I had mentioned earlier, 50,000-plus plans, I mean, what they’re really doing is they’re publishing data for every employer plan, whether it’s a small plan or a large self-insured plan. They’re also publishing data for every marketplace, gold, bronze, and silver plan, as well as other marketplace plans and PPO plans and HMO plans. And really across the board, there’s just a lot of stuff that’s going on within payers. And as a compounding effect on top of this, often the payer itself is the outcome of a ton of mergers and acquisitions. And so there’s multiple brands that are publishing data in separate places, and these data sets live in separate places.
Just the sheer volume and complexity that’s involved in this can get quite overwhelming from a payer that is really even just trying to comply and do the right thing. Last thing that I would call out is also technological limitations. Although payers are really some of the first or earlier movers in terms of technological adoption, we do still to this day see situations where payers just forget to update their files after a month and can end up getting delayed by a few weeks. Some are unfortunately not able to fully comply because they don’t even really understand where there are gaps in their own data. And so I think technological limitations really do sometimes hold payers back as well. All in all, although I would say we’re 80 or 90% there in terms of what is getting published today, that 10-20%, we really do have a way to go still because it is really hard for even a payer that wants to fully comply to get it all together the right way.
Kelly: Yeah, it certainly sounds like it. Well, thank you so much for joining us today, Dilpreet, and for sharing your insights on price transparency. We truly appreciate all of that.
Dilpreet: Of course. Thank you so much, Kelly. Appreciate you having me.
Kelly: Yeah, and if a listener wants to learn more or contact you to discuss this topic further, how best can they do that?
Dilpreet: Yes, absolutely. So here at Trek Health, we support hospitals and provider entities across the country and accessing this information quickly and easily. And so to stay in touch, you can actually go to our website. It’s trekhealth.io. So that’s T-R-E-K health.io. And we have a forum on the website that allows customers to come in and just give us a little bit of information on what they’re looking for. And we are more than happy to, for free, present some example information to showcase just the capabilities of what we can do for you.
Kelly: Wonderful. Thank you for providing that. And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…
[music] This concludes today’s episode of The Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.com/podcasts. The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.
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