On the Road to Price Transparency with APCDs

By Inga Shugalo

There’s still no consistent or uniform data on costs available to patients when they shop for an insurance plan. This lack of price transparency in healthcare leaves patients unable to make informed decisions about their care options.

To add insult to injury, the deductibles go up each year. While the idea behind high deductibles was to trim the waste by making patients go only for those care services that they really need, it didn’t work well. On the contrary, care consumers started to cut even on the care they needed. And when patients don’t get regular screenings, vaccinations, or lab tests, it increases the risk of unplanned admissions, complications, and readmissions. These occurrences hit the whole healthcare system, driving costs up in a vicious circle.

However, there might be a solution to break the circle and demystify costs to balance out insurance programs. We are talking about all-payer claims databases, or APCDs, one of the major trends in healthcare software development right now.

Dissecting the basics of APCDs

APCDs are large-scale databases with continuously aggregated information on medical, dental and pharmacy claims as well as eligibility and provider files across all care settings, reported directly by insurers. APCDs can also comprise information on actual transaction prices, patient payments, and health plan payments.

There are three distinct features of APCD data, which differentiate it from other datasets and make it more possible for APCDs to become the next standard for care price, resource utilization, and performance reporting:

1. APCDs provide information on private payers and health plans.
2. APCDs collect data on most or all payers in a specific state, creating a comprehensive picture.
3. APCDs extend care delivery information with large sample sizes, geographic representation, and individual patients’ longitudinal tracks across different care settings beyond admissions, ER visits, and discharges.

As of 2020, 21 states enabled or began implementing all-payer claims databases, and more changes aimed at improved cost transparency are going to be introduced across the US by 2021. 

If the current adoption trends are to continue, we anticipate more than half of all the states enabling an APCD or APCD-like data storage by 2022.

APCD applications in healthcare

By providing extended access to significant care delivery and cost data points, APCDs can ensure that policy makers, payers, employers, and care consumers have a unified and shared understanding of the healthcare market with specific rates varying by providers, procedures, and health plans across states. Each party taps into its own fair share of benefits.

How employers and private payers can benefit from APCDs

All-payer claims databases can provide insights to help employers cut unneeded spending for their health plans. For instance, the Oregon APCD publishes detailed reports on monthly costs per each patient for commercial and public health plans in the state, allowing employers to see the pricing variations and identify where they’re currently at. The Colorado APCD also discloses data on cost ranges for common procedures and tests in care delivery setting within the state.

Given the fact that premiums for healthcare services only are growing, employers and employees can’t stay in the dark about the actual cost of care—especially with sometimes ridiculous price variations across different states and hospitals. For example, a limb MRI in Alaska can cost up to $3.2K more when taken in a hospital instead of a freestanding imaging center.

Therefore, having access to this type of information and understanding it is particularly valuable to employers and employees, as premiums and employees’ shared costs for healthcare services continue to increase.

The open and transparent access to pricing information along with the identified issues with current employer spending patterns will help companies make both cost-effective and health-beneficial decisions about when, where, and how their employees can receive medical assistance.

How states and public payers can harness APCDs

Data within APCDs can also help public payers, state authorities, and policy makers introduce more knowledge-based activities regarding the current and upcoming programs.

According to the study published on JAMA, overtreatment and low-value care caused up to $101.2 billion in waste in the US healthcare system from January 2012 to May 2019. Many reports state that the most wasteful spending services are preventable lab tests, EKGs for low-risk and asymptomatic patients, and unnecessary vitamin D screenings.

APCD case studies

While all-payer claims databases are a quite recent addition to the healthcare ecosystem, there are already many successful cases proving their value. Here are some of them.

Minnesota’s cost-saving opportunities

In 2015, the state of Minnesota used APCD data on ER utilization, admissions, and preventable readmissions to identify 1.3 million avoidable ER visits and hospitalizations, which translated into $2 billion of potential savings. The top conditions for preventable admissions comprised COPD, pneumonia, and heart failure.

These potentially preventable acute events could be avoided with such measures as primary care activities, therapeutic education, remote patient health monitoring, established care coordination, and improved medication adherence, among others.

For example, a urinary tract infection can be treated in primary care settings instead of an ER visit if a patient is more aware of how they should act when experiencing certain symptoms. Likewise, a COPD‑related readmission stemming from the lack of continuous follow-up care can be avoided with more thorough patient consultations and supervised post-discharge periods.

Massachusetts’s CompareCare

CompareCare is a consumer-facing web tool based on an APCD and targeting patients located in Massachusetts. Its goal is to help care consumers navigate care costs and make informed decisions about particular medical procedures and clinical facilities in their vicinity.

In particular, the resource provides a number of educational and referential information, including:

1. Conversation Guides with basic information about procedures and a list of questions to discuss with the provider before deciding on a health plan.
2. Compare Treatment Cost offers pricing estimations for a particular procedure in a particular city and according to a chosen insurer.
3. Get Quality Care allows patients to compare specific providers according to their care quality and performance.

Let’s start walking the road

APCDs hold great potential to introduce price transparency to healthcare because they allow for an unbiased and multifaceted picture of current healthcare costs, price variation, care quality, and utilization aspects. If an equal access to them is granted to all the parties, this will create a common ground for better healthcare regulation.

Still, there’s plenty of work to be done to achieve nation-wide results. First, the majority of states need to enable APCDs or APCD-like data storages. Then, there also should be a standard procedure for providers to report on procedure- and patient-specific pricing, since it can be a massive administrative burden, and there’s currently no one-size-fits-all solution for this process.

We also should not forget about persistent PHI data privacy and protection issues. While these are all addressable, they still require consolidated effort to establish positive patterns.

Inga Shugalo is a Healthcare Industry Analyst at Itransition, a custom software development company headquartered in Denver, Colorado. She focuses on Healthcare IT, highlighting the industry challenges and technology solutions that tackle them. Inga’s articles explore diagnostic potential of healthcare IoT, opportunities of precision medicine, robotics and VR in healthcare and more.