Understanding the Evolution of Healthcare Price Transparency: From Schema 1.0 to Schema 2.0

What is Schema 1.0 and What Were Its Challenges?

Schema 1.0 came out when the Transparency in Coverage (TiC) rule first went into effect in March 2022, with enforcement starting in July 2022. It aimed to structure how payers report contracted rates using a standardized format. However, the implementation was messy.

Hospitals and payers had different schema versions. The Hospital Price Transparency regulations had already been in effect for nearly two years. For payers, the challenge was to represent their contract data in a structured way, specifically in-network rates and out-of-network allowed amounts. One significant issue was how providers were grouped together. The guidance on defining or using provider groups was unclear, leading to various interpretations by payers.

This guidance was intended to help payers reduce file sizes. However, they often combined unrelated providers with the same rates in ways that didn’t reflect real-world relationships. In many cases, this reduced the size of provider references. In others, it inflated them, resulting in over 12 billion records in a single provider section. This wasn’t malicious behavior—just unclear guidance and no precedent, as everyone was interpreting the rules for the first time.

Consequences of Schema 1.0 in Healthcare Price Transparency

The consequences were significant. We ended up with bloated files, inconsistent groupings, and a lot of duplicated or conflicting data. The file sizes required enormous amounts of compute power and advanced data engineering capabilities to process, which was not the original intent. This made the data challenging to validate at scale.

As a side note, we update the details about each payer and consolidate the links to each payer's specific MRFs here upon every data refresh as a free resource for the community.

What’s Different with Schema 2.0?

Now that the new Transparency in Coverage schema is out, there are several important differences. One of the most significant changes is that Schema 2.0 provides much clearer direction on provider groupings. For a single plan, there should now be one provider group referenced throughout the entire file. This change should significantly reduce redundancy for provider-heavy payers (e.g., the Blues) and streamline provider sprawl within each file. Going forward, we hope this consistency is applied across files as well, rather than only within each file.

Example of Data Changes in Schema 2.0

Let’s illustrate this with an example. When a group of providers shares the same rate for a given billing code, that group might be referenced with an ID, say 123. If they also share the same rate for another billing code, instead of creating a new provider group with ID 124, they should use the existing group with ID 123. Currently, there is no requirement for provider groups to be consistently identified across a given file, which can lead to massive file sizes.

Unfortunately, this still does not address a core issue of semantically grouping providers together in a more relevant way. For instance, grouping all NPIs for a given health system under a single provider group is still a challenge. However, this is some guidance we are providing to CMS to be reflected in upcoming schema updates.

Additional Improvements in Schema 2.0

Yes, there are other improvements beyond provider groupings. Schema 2.0 tightens how elements like place of service and service codes are reported. Specifically, when a place of service is stipulated in the contract, it should be clearly identified. If it is not stipulated (i.e., it is a generic rate applicable to all places of service), payers should indicate CSTM-ALL instead of listing each possible place of service.

Other updates include requiring a table of contents and including more logical network-based groupings of reporting plans that share the same rates. This is a significant shift from publishing thousands or millions of plans.

We are also collaborating with CMS to scope and build a new validation tool. This tool will validate the content of data rather than just the provided structural format. It will help identify duplicated data and multiple rates for the same providers and billing codes without providing appropriate context for those differences.

Payerset's Collaboration with CMS

We are actively involved with government officials and healthcare leaders to help shape legislation and enforcement through our recommendations. One avenue is through a group coordinated by Patient Rights Advocate. About a year and a half ago, they organized a working group made up of people who work with this data daily.

A significant portion of Schema 2.0 is based on what came out of that group. Initially, we weren’t asked for input, but we proactively submitted a recommendation package, which CMS used to shape the new schema. Now, they’ve started issuing formal RFIs, realizing there’s a community willing and able to help them.

Changes in Price Transparency Enforcement

Yes, there have been improvements in enforcement. One important point to note is that hospital transparency is enforced by the federal government, while payer transparency is enforced at the state level. This dual enforcement made it tricky for payers, especially since many states lack the tools to open or audit these large files.

However, things are improving. For hospitals, compliance picked up quickly once fines were imposed. Recently, there’s been movement toward more centralized oversight, even for payer data, which could help bring consistency across the board.

Excitement for the Future of Price Transparency

As someone who has worked with this data daily for the past few years, I am most excited about the network consolidation and clarity around provider groupings. We are hopeful that we will also see some cleanup around external locations for provider reference data. Additionally, using inline provider references for each rate can make files unnecessarily large and requires a separate schema parser to manage. Cleaning these elements up is the first step toward achieving a single, correct rate for every service, for every provider, for every carrier across the country. Next up will be outliers, incentives, and carve-outs, but that will likely be addressed in schema 3.0 or later.

Final Thoughts

These are all positive steps in the right direction. At its best, healthcare price transparency should lead to less regulation, not more. We want to reach a point where payers and providers consistently publish clean, usable data based on clear and open standards that are not overly burdensome. An open, competitive, fair market is the goal, and we must keep that end in mind as we navigate these challenges.

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