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FAIR Health and the Pricing Methodology

—June 02, 2017
FAIR Health and the Pricing Methodology

What it is and how it is determined

Michele Hibbert-Iacobacci, CCSP, OHCC
Vice President, Information Management & Support, Mitchell Casualty Solutions

Content Contributor:
Rachel Pfefferkorn,
Senior Regulatory Affairs Specialist, Mitchell Casualty Solutions


As an organization within the property and casualty (P&C) industry who's largely involved in the healthcare market, having access to a database with a transparent methodology for deriving provider market rates and insurance information serves as a valuable asset. Healthcare claims data is integral in helping identify and monitor trends in the healthcare market. This is where FAIR Health comes into play.

FAIR Health is a national, independent, nonprofit organization whose mission is to bring transparency to healthcare costs and health insurance informationi. They strive to develop robust, unbiased data products and solutions to meet the needs of those they serve. FAIR Health is widely recognized as a reliable, objective source of data, frequently cited in media reports and honored for its leadership in promoting and modeling transparency in the healthcare field.

Consumers and payors have limited choices when it comes to choosing a reliable database as comprehensive as FAIR Health and would provide a wide coverage of the United States. The vast databank from FAIR Health is accessible to anyone who wants to use it and because of the size of the underlying data, it has become one of the largest in the world.

How is pricing methodology determined?

FAIR Health licenses its provider charge modules separately. The modules are updated twice a year and the data included in the modules fall within a 12-month moving window. For example, the May 2016 release included data from the preceding year, trended forward using the consumer price index.

FAIR Health's methodology can be found on their website for each module they provide. This year, FAIR Health has plans on updating and making methodology changes to the Medical/Surgical Module payors use which will include a delineation of actual and derived benchmarks. This new database will be the unification of two differing products and create unified benchmarks for all. The FAIR Health website will match the data used by payors after deployment.

The majority of charges we will see in relation to the industry will be actual charge data as the top codes used represent approximately 150 of the approximate 10,000 Current Procedural Terminology (CPT) codes used today. Mitchell will keep customers apprised when deployment is ready in our products with the new unified database. There will be educational materials and information provided for a clear understanding prior to usage.


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