Primary goals of healthcare reform include the core principles of reducing healthcare spending and providing cost-effective, high-quality care. Healthcare pricing transparency is a key piece to this puzzle, and it comes in the form of estimation tools that allow consumers to compare prices for healthcare services among multiple providers.
However, current legislation and healthcare practices are lacking in the areas of price transparency. Will 2017 be the year greater transparency in healthcare costs is achieved? We review recent news affecting this area of healthcare and examine strides taken in the direction of clear costs ahead.
“We’re still trying to understand how patients want to use price transparency tools to help them make better decisions.”
Will Pricing Transparency Be Included in the Future of Healthcare Legislation
Pricing transparency is an area of healthcare that has been forgotten by major legislation of recent years. Both the Affordable Care Act, also known as Obamacare, and the American Health Care Act that was recently proposed by Republican leaders in congress, provide little provision or reform to address the ongoing concern of improving pricing transparency for medical services.
According to a recent article in Chicago Business, this lack of pricing transparency legislation is “a fundamental flaw that impedes any effort to bring market discipline to a wildly inefficient industry.” The author, Joe Cahill, goes on to explain that price transparency is an essential element to bring forth consumer choice, which is at the core of healthcare reform. Cahill continues. “Meaningful choice in purchasing any product or service requires complete information about features, quality and price. Try getting that kind of information before buying your next medical procedure.”
Is Price Transparency be the Key to Cutting Healthcare Costs?
A recent article published in Brown Political Review, cites studies that show cost transparency can lead to a decrease in the use of hospital-based facilities, and promotes overall cost reduction due to the increase in competition. In recent years, hospitals have been purchasing physician offices, which allows them to charge additional costs for procedures done at these freestanding clinics owned by hospitals, whereas the independent clinics do not charge these additional costs.
The article describes, “One study from 2013 created a cost transparency program in which hospitals were required to inform patients about the price of MRI scans at different providers in the area, and allowed patients the opportunity to choose where to go. Patients who were able to choose a provider paid 18.7 percent less than patients in a similar geographic area without the transparency program. Additionally, the study found that the price variation between hospital-associated and non-hospital providers decreased by 30 percent in the area with the transparency program, suggesting that competition leads to higher value for the patient.” The author concludes that because America is a country where most bankruptcies are caused by mounting medical bills, by simply providing the proper tools to allow patients to make informed decisions about where to go for healthcare, could ultimately save families from financial ruin.
Future Legislation to Bring About Improvement in Healthcare Price Transparency
NonDoc reported on a recent bill has been introduced, by Rep. Sean Roberts, which is known as HB 2216. This legislation is designed to implement price transparency in the state of Oklahoma in respect to health providers that are non-contracted. A provider considered non-contracted, is a licensed health professional or provider who does not have a contract with the insurance plan of the patient. The rules included in HB 2216 include:
- A provision that requires non-contracted providers to provide a notice to patients before service that they do not have a contract with the insurance plan for that patient
- A provision that requires these physicians to give the patient a “good-faith” estimate of charges
The time frame for these notices would be 14 days prior to rendering services that are non-emergent in nature, and “as soon as practical” for medical emergencies.
Price Comparison Tool Launched for Southern Kentucky and Middle Tennessee
The Tennessean reports on a new price transparency tool launched by a local price transparency company, Healthcare Bluebook, for the residents of southern Kentucky and middle Tennessee. This tool is a solution to help consumers discern what a medical procedure will cost before receiving it. Not only does the tool provide the pricing information for the Nashville and surrounding areas, it also gives hospital rankings and links to other provider websites that allow customers to see for themselves how they compare on price and quality.
Do Pricing Estimation Tools Lower Healthcare Spending?
Some say yes. In theory, offering patients price transparency tools will save money for patients, level price variations among providers, and lower healthcare costs. In the past decade, many tools have been launched by insurers, employers, states, hospitals, and not-for-profit organization with varied success.
Health Data Management compares results in their recent article and report that the success will vary greatly depending on the engagement approach and the tool being used. The article states, “Among disappointing findings, only 3.5 percent of eligible Aetna members used the insurer’s member payment estimator between 2011 and 2012, according to a 2016 Health Affairs study. Meanwhile, as described in a 2016 JAMA study, healthcare spending rose among employees given access to a pricing tool.”
However, those results are a sharp contrast in comparison to the more promising findings. A JAMA study from 2014 found that medical spending decreased following the employees being given access to a price transparency tool, and particularly for lab tests and imaging. And according to Health Data Management, another report claimed that a pricing transparency tool saved one employer $1.1 million in claims. According to Richard L. Gundling, senior vice president, healthcare financial practices at the Healthcare Financial Management Association:
“It’s still a journey. We’re still trying to understand how patients want to use price transparency tools to help them make better decisions. And patients are still getting used to asking about the price of their healthcare.”