- Offering price transparency to patients is a rising priority in the healthcare industry. As more patients face high out-of-pocket costs, they are looking to manage their own healthcare spending.
Industry experts acknowledge that notifying patients of impending costs will allow patients to allocate their healthcare spending appropriately and mitigate sticker shock in patients. Healthcare professionals also contend that offering cost estimates will let patients shop around for their care, empowering patients to make treatment decisions that are valuable to them as consumers.
Offering price transparency also has its benefits for the organizations themselves. A report from the Health Care Cost Institute showed that price transparency could eliminate 7 percent of patient costs by allowing patients to shop around for affordable care.
However, it is undeniable that healthcare is behind the curve of offering price transparency to patients. Numerous reports indicate that few healthcare organizations are actually showing this information to patients, despite acknowledgments that price information is helpful for all concerned stakeholders.
Through individual hospital and health system action, as well as federal and state policymaking, the healthcare industry may be able to drive more cost transparency for patients.
Hospitals support patient access to cost information
More hospitals are recognizing the need to offer cost information to their patients, according to a 2016 report from PwC. The healthcare industry is increasingly taking a consumer-centric slant. For many hospitals, this means adopting retail-oriented strategies such as disclosing cost information prior to care encounters.
“A short time ago, it would have been unthinkable for American health systems to publicize how much they charge for medications and medical services,” the report said. “But now, most Americans are facing higher deductibles and other cost-sharing measures.”
At INTEGRIS Health, organization leaders are offering patients access to a patient-facing price transparency tool, the report noted.
This has helped drive patient retention. When patients view cost estimates and decide to shop around, INTEGRIS can work with the patient to place her in the appropriate, in-network facility for care. This improves care coordination and the hospital business, the report pointed out.
Pittsburgh-based St. Clair Hospital also offers cost estimates based upon patient needs, the report explained. The hospital previously offered estimates via telephone, allowing patients to call the billing department to understand patient out-of-pocket costs. Now, the system lets patients log into an online tool to see that information.
Federal, state regulations tackle cost transparency
Policymakers across the country are working to make price transparency a mainstay in all healthcare institutions. Federal and state legislative actions have seen variable success.
In June 2016, Representatives Michael Burgess, MD, and Gene Green introduced HR 5547, the Health Care Price Transparency Act of 2016. Burgess and Green introduced the legislation into the House of Representatives but the bill saw no further action after that.
In Ohio, a passed bill advocating for price transparency has struggled to roll out, according to a report from Rachel Bluth of Kaiser Health News. Although Ohio healthcare providers faced mandates to offer cost estimates for patients starting in January, that roll out date did not pan out.
Critics of the law, including the Ohio State Medical Association and the Ohio Hospital Association, said these cost estimates would slow down patient access to treatment. The law’s proponents say it will allow patients to make more informed decisions about where to access treatment.
Cost estimate laws have succeeded in other states, however.
In New Hampshire, patients can access a comprehensive cost estimator tool. The online interface allows patients to compare New Hampshire healthcare organizations based upon their cost estimates and quality of care scores.
In Washington, members of the Legislature are debating HB 1541, which calls for drug manufacturers to disclose when they increase the cost of medications. Although this is not broad healthcare price transparency, it does advocate for patients knowing more about the cost of their treatments.
“When health care costs go up, you have to adjust your budget. But for far too many people, costs aren’t just going up; they’re skyrocketing unfairly and putting families in the position of not being able to get the care they need,” said Representative June Robinson, the bill’s sponsor. “This bill will provide the information we need to make sure that our healthcare isn’t compromised while drug companies maximize their profits.”
This bill is currently in debate in the Washington State Legislature.
Price transparency use in flux
Although many stakeholders tout the effectiveness of offering patients price transparency, the present truth is that price transparency is not common and not all patients want or need it to be.
A 2017 study published in the American Journal of Managed Care found that patient responses to price transparency have been tepid. In a survey of 200 California state health insurance beneficiaries, only 17 percent reported frequent use of a price transparency tool (four or more uses).
Thirteen percent use these tools infrequently (between one and three uses), and 9 percent don’t use price transparency tools at all.
Respondents said they were frustrated by inconsistent healthcare pricing and also listed a litany of reasons for not using healthcare cost transparency tools.
“Several respondents noted that it was unimportant to shop for care because they were already beyond their deductible or because their co-payment for an office visit was always the same,” the researchers said.
Other barriers kept patients from seeing the utility of a price transparency tool. Living in a rural area precluded many patients from accessing less costly care because of travel barriers. Other patients did not want to seek out-of-network care.
A substantial number of patients were wary of price transparency tools because they did not account for secondary tests or physician referrals.
Other patients said factors such as healthcare quality and a need for timely care access made price transparency tools moot. Some patient respondents did acknowledge the role cost transparency could play in driving market competition and ultimately reducing healthcare costs.
Hospitals are also lagging behind. Sixty-three percent of healthcare providers struggle to offer patients price transparency, according to a 2016 Navicure survey. Eighteen percent of respondents said they don’t offer any cost estimator technology, and 13 percent said they lack the staff to address the issue.
Another 2016 report showed that price transparency regulations vary from state to state, making it cumbersome for patients to rely on cost estimates. Price transparency has become ineffective because patients expect different policies in different hospitals.
Driving better price transparency may be a team effort. Healthcare policymakers will need to determine the best standard requirement for providers offering cost estimates to patients.
From there, hospitals and clinics will need to adhere to those standards and determine the best strategies for engaging their patients in cost transparency.