Tackling True Cost Transparency in Healthcare

United States health agencies are doubling down on calls for price transparency across healthcare.

Earlier this year, the HHS released a new proposed rule calling for hospitals to disclose their privately negotiated rates with insurance plans. This was quickly followed by a requirement from CMS that hospitals post standard charges for services on their websites as well as a call by HHS for pharmaceutical manufacturers to publish list prices of drugs that cost more than $35 per month on their television advertisements. Many expect to see more rules, perhaps even executive orders, pushing other forms of price transparency coming down the pipeline in the near future.

Supporters of these actions suggest that such regulations can not only help balance the healthcare market, plagued by skyrocketing costs to both healthcare entities and patients, but also provide consumers the ability to better price and shop for their doctor appointments and surgical procedures.

But Jay Wolfson, DrPH, JD, associate vice president for health law, policy, and safety at the Morsani College of Medicine at the University of South Florida, says there’s just one issue: the list prices that many organizations will be required to share are fairly “irrelevant.”

“Only a few people pay those list prices,” he explains. “It doesn’t tell the average person much about what their out-of-pocket costs will be for any procedure.”

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Price transparency plans that require hospitals to tell patients what a particular service will cost them upfront, based on their insurance plan (or lack thereof) are more useful, Wolfson says, but they still overlook the fact that healthcare consumers do not operate, or “shop” in the same way that consumers in other industries do.

“Certainly, we do see more patients who are looking on their computer to see if they can find out which hospitals offer a particular procedure and how much that might cost,” he says. “These patients may shop around, they may look up the names of doctors covered by their health plan, and they may ask friends for recommendations. But, at the end of the day, it’s not the same as buying a used car. Unfortunately, very few patients are able to make their own decisions about which hospital they are going to. There may be only one in network or, in the case of an emergency, the decision will be made by the EMTs. So, while it is a form of shopping, it’s not quite the same.”

While Wolfson does appreciate the Trump Administration’s proposals for price transparency, he says actions like Congress’ resolution to eliminate balanced billing may do more to help contain unnecessary healthcare costs for consumers than the publication of list prices on websites or television commercials.

“Too often, when you go to a hospital for a procedure, it’s common that pathology, radiology, or other ancillary services are actually run by private companies and you get stuck with a balanced bill,” he said. “Insurance companies should have the obligation of requiring that all contracts with hospitals, on behalf of beneficiaries, include provisions that those ancillary providers will also be in network. That’s something that could have remarkably good effects.”

Yet, while Wolfson says these new price transparency actions are “a step in the right direction,” he believes that to offer true value to consumers HHS needs to also require hospitals to share information about the quality of services and relative outcomes in addition to prices.

“Within a community, within two hospitals just across the street from one another, the costs of a single procedure could differ by 150%,” he said. “But the cost information doesn’t mean anything unless it also tells the consumer what kind of quality and outcomes to expect. That information could be available.”

Wolfson hopes that more physicians and insurance companies will take a proactive role in shaping new government rules and regulations so that patients have adequate information to make informed decisions about their own healthcare.

“This is a slow process. It’s taken us a long time to get here,” he said. “These rules aren’t perfect, but they are the next step to opening the door. Once the relative data is available, patients, newspapers, and citizen groups can really look at why a heart valve procedure at Hospital A costs so much more than the one at Hospital B. Is there something about the quality of Hospital A? Do they have better outcomes? You can’t ask the right questions, or make the right decisions, until the right data is out there.”

Kayt Sukel is a science and health writer based outside Houston.