Tom's Take Blog

March 14, 2019

How much progress is being made with price transparency in health care?

Tom’s Take: I’ll start by saying this is a topic that’s getting more attention than ever before from all parties involved, including health plan administrators, legislators, patients and providers. The issue of price transparency is now front and center as we’re seeing new cost comparison solutions being developed, administrators working directly with facilities to negotiate more reasonable rates and patients becoming more proactive about understanding the fluctuating price tags attached to different care options. The topic has also been on the governmental radar, with regulation happening at both the state and federal levels.

 

In this regard, I’d say there’s been positive progress. But with so much money being pumped into health care – the Centers for Medicare & Medicaid Services (CMS) reports more than $3.3 trillion is spent on it in the U.S. each year – we still have a long way to go to improve transparency efforts.

 

On the patient side, yes, we’re seeing more forward-thinking tools like mobile apps and online calculators that allow consumers to shop for health care services based on price and quality. But not enough patients are being educated about the need for this cost comparison or the fact that these tools even exist. Think of it this way … is there any other major purchase one would make without knowing the price (or some idea of the price) until AFTER the bill comes? This lack of pricing knowledge is also an issue with providers. They’re the ones delivering the care, but oftentimes, they don’t even know what these procedures and tests cost to deliver.

 

As for hospitals and health systems, some “get it” and are being proactive about the demand for price transparency by putting their rates out there for public access. But this definitely isn’t the norm. Yet. With so many plans moving to a reference-based pricing (RBP) model, more and more care facilities are being approached about setting reasonable rates by service. It’s likely that more progress will be made here because those who refuse to share prices upfront or negotiate prices in advance could lose business to their competitors who are on board with the concept.

 

Government involvement is another area to consider. Several states have adopted mandates for transparency which have resulted in public websites and databases with health care costs provided. The bad news? To date, not all states have adopted laws like this, and in some cases, the laws are voluntary or unclear. Over the summer though, CMS finalized a federal bill that will require increased price transparency at the hospital level starting in 2019. With it, hospitals will have to publish a list of their standard charges online and update this data at least once a year. And CMS clarifies that even if a hospital is participating in an online transparency initiative at the state level, this does not make it exempt from the federal requirements.

 

To sum it all up, I’d say we are starting to see some good progress with price transparency in health care. There are still a lot of hurdles though, including the lack of education in WHY price comparison is so important for patients and the resistance from many care facilities in agreeing to reasonable rates and making costs available upfront. Seeing more engagement solutions and regulation is a promising sign, and hopefully we have reached a point where it’s no longer possible to overlook the transparency topic!

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