16 minutes News

16 Minutes #47: Transparency in Pricing, Ruling Healthcare

Julie Yoo, Justin Larkin, and Sonal Chokshi

Posted November 20, 2020

The Centers for Medicare & Medicaid Services (CMS) issued the latest in a series ofhistoric” rules a few weeks ago; the controversial rules — which have been in the works for a while, but are now final — are intended to increase price transparency in (what’s been described by the U.S. Department of Health and Human Services’ secretary as) a “shadowy system where prices are hidden”. Specifically, the two rules will require hospitals, group health plans, and health insurance issuers to disclose price and cost-sharing information to participants, beneficiaries, and enrollees up front; give patients accurate estimates of the costs that they are responsible for, including making previously unavailable price information accessible to them and other stakeholders; and doing so in a standardized, machine-readable way that allows for easy comparisons (and therefore more choice and competition).

So in this episode of 16 Minutes, a16z bio experts Justin Larkin and general partner Julie Yoo (who also interviewed Dr. Marty Makary, author of The Price We Pay, on a previous episode) join Sonal Chokshi to discuss the specifics of, and the impact of, the rules on consumers and on various industry players. As is the premise of the show, they also break down the gap between what’s hype/ what’s real when it comes to mandates and implementation; while the rules go into effect January 2021, the deadlines roll out through 2024.

What are the tensions (and paradoxes!) between hospitals and insurers, between efficient markets and top-down policy, between price vs. cost, between planned vs. surprise costs, between shoppable and non-shoppable services, between price and quality, price and value? Where do incentives align (or not)? And what are the challenges, and opportunities, for builders?