Achieving transparency in health care prices -- experts say the goal is within reach

Topics: Care Delivery, Costs and Prices, Providers

New research suggests the health care providers are not consistently sharing pricing information with cost-conscious patients -- but some experts say that raw pricing data is only one piece of the price-transparency puzzle.

A market imperative

As high-deductible health plans grow increasingly common, more and more patients are comparison shopping for health care. For instance, a recent study from Public Agenda found 56 percent of U.S. residents now actively look for pricing information before getting care.

The trend could have big financial implications for the industry. A 2014 report from the Gary and Mary West Health Policy Center found that the health care industry could save as much as $100 billion over 10 years if it improves and increases stakeholders' access to information about health care costs.

Health care providers also stand to benefit. Ed Hock, who leads the Advisory Board Company's price transparency strategy team, said a four-hospital system can see swings in revenue of $16 million to $40 million dollars due to their price transparency strategy -- or lack thereof. He said, "Providers who can share information quickly and clearly can steer patients away from their competitors." The Advisory Board Company publishes American Health Line.

Adoption lagging

But a new secret-shopper style survey released by the Pioneer Institute finds that sharing price information remains a major challenge for providers. Pioneer researchers posed as patients and requested pricing information on an MRI for the left knee without contrast at 54 hospitals in six states.

According to the survey, most hospitals took more than 15 minutes to provide pricing information that included the cost of a radiologist reading the MRI, and about 25 percent did not provide price information despite as many as 11 calls. Many organizations required patients to provide diagnostic codes or other difficult-to-find information in order to receive pricing data.

Barbara Anthony, a senior fellow at Pioneer Institute who called some hospitals herself, concluded that patients currently "can't shop for price, even if they wanted to."

Further, while most states have health care transparency laws on the books, only one -- New Hampshire -- scored an A grade from the not-for-profits Catalyst for Payment Reform and the Health Care Incentives Improvement Institute in their 2015 report. In fact, all but five states received failing grades.

Refocusing efforts on price transparency

Some states are looking for ways to improve their transparency efforts. For example, the Michigan Senate Health Policy Committee last week heard a bill (SB 147) that would require hospitals to post online their "chargemaster" documents, or their master lists of fees for the procedures, services and supplies they offer.

But making charge prices available may fall short of what patients are looking for.

Cassie Wolfe, director of the Advisory Board's Performance Technologies division, noted that patients' costs depend on a range of factors, from the status of their deductible to the details of their insurance coverage. Even self-pay patients frequently pay less than a charge-list price because of discounts and assistance policies, she said.

To improve price transparency, Hock said providers need "a tool to wade through the variables" -- and they need to focus their efforts where they will make a difference.

Beyond simply offering price information, Hock added that organizations need a comprehensive strategy to realize returns on their transparency efforts, including:

  • Deciding whether to play in the market;
  • Understanding consumer and referral behavior; and
  • Benchmarking key prices.

Providers also need to "be able to communicate [pricing] to customers clearly in a way that reaffirms the value they are getting and then successfully schedule care," Hock said.

by Sam Bernstein