Methodology
v2.1Last updated May 2026Our Methodology Is Published. Theirs Isn’t.
Every finding in the Rate Competitiveness Scorecard traces back to a documented, verifiable methodology. This page describes exactly how we normalize MRF data, construct peer groups, and produce benchmark findings. When a CFO asks “how do you know?” — this is the answer.
1. Data Sources
The Price Intelligence Engine draws from three categories of source data, each with documented provenance and currency.
Machine-Readable Files (MRFs)
Published monthly by every major payer under the Transparency in Coverage final rule (CMS-9915-F). Covers negotiated rates at the payer × plan × provider × CPT level. Current coverage: 6,200+ hospital systems, approximately 82% of US in-network claim volume.
Medicare Fee Schedules
CMS Physician Fee Schedule and Outpatient Prospective Payment System, updated quarterly. Used as a reference rate anchor (“your plan paid 8.2× Medicare at this facility; the market average is 2.9× Medicare”).
NCCI Edits & Clinical Rules
CMS National Correct Coding Initiative edit tables, updated quarterly. Applied to claims-level audit for unbundling, modifier validation, and mutually exclusive procedure detection.
2. Normalization Rules
Raw MRF data requires normalization before it can produce defensible benchmarks. The following rules are applied uniformly across all ingested files.
- N1.Site-of-service normalization. Rates are adjusted for facility vs. non-facility setting. A $1,400 MRI at a hospital outpatient department is not directly comparable to $650 at a freestanding imaging center without this adjustment.
- N2.Bundled-procedure decomposition. Episode-based rates are decomposed to component CPT codes before comparison. A bundled surgical episode is compared against the sum of individual components at the comparison facility.
- N3.Geographic adjustment. Rates are compared within CBSA-defined metro areas. A Houston rate is compared to Houston peers, not national averages.
- N4.Modifier handling. Bilateral procedures, assistant surgeon, and technical/professional component modifiers are resolved before rate comparison.
- N5.Outlier exclusion. Rates below the 5th percentile or above the 95th percentile within a peer group are flagged as outliers and excluded from median calculations (but reported separately).
3. Peer Grouping
The Rate Competitiveness Index compares an employer’s contracted rates against a peer cohort. Cohort construction determines the validity of every finding.
Cohort dimensions
- • Geography: Same CBSA metro area
- • Employer size: Similar covered-lives band (e.g., 1,500–8,000)
- • Industry: SIC/NAICS grouping (e.g., manufacturing & adjacent)
- • Minimum cohort size: 20 employers required for a benchmark to be published
The peer cohort definition is printed on every scorecard. If a cohort is too small to produce a statistically meaningful benchmark, the finding is withheld rather than published with insufficient data.
4. Exclusion Logic
Not all MRF rates are usable. The following are excluded from benchmark calculations.
- ×Rates with incomplete provider or CPT identifiers
- ×Rates published in non-standard formats that cannot be reliably parsed
- ×Out-of-network or reference-based pricing rates (benchmark applies to in-network contracted rates only)
- ×Rates older than 90 days at the time of scorecard generation
- ×Statistical outliers (below 5th or above 95th percentile within peer group)
5. Update Cadence
MRF data: Ingested monthly as payers publish updated files. Data currency stamp on each scorecard reflects the most recent MRF refresh date.
Medicare fee schedules: Updated quarterly when CMS publishes new rates.
NCCI edits: Updated quarterly with each CMS release.
Scorecard delivery: Quarterly per employer. Each scorecard includes a data currency stamp and methodology version number.
6. Attestation
The normalization methodology is designed for independent third-party attestation. This converts findings from “trust us” to “here is exactly how we got there, verified by an independent review.”
Attestation status
Independent third-party attestation is in progress. Attestation will cover normalization rules, peer-grouping logic, exclusion criteria, and data currency standards. Contact us for the latest status.
See the methodology in action
The Rate Competitiveness Scorecard is where this methodology produces findings. Every number on the scorecard traces back to the rules documented above.
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