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Refining Price Transparency Tools to Increase Patient Use, Cut Costs

Price transparency tools have thus far fallen flat in cutting healthcare costs. Fixes are necessary to drive patient use.

price transparency healthcare

Source: Thinkstock

By Sara Heath

- With patient financial responsibility posing a challenge throughout the healthcare industry, more healthcare experts are looking to price transparency to help patients make healthcare decisions and potentially decrease healthcare costs.

Healthcare price transparency tools have already made their mark on the healthcare industry, with policymakers agreeing that they are essential to the patient care experience.

As of 2017, 27 states had enacted legislation requiring healthcare organizations provide price transparency tools for their patients, according to the National Council of State Legislatures.

And price transparency is slated to become a nationwide industry standard following updates to the Inpatient Prospective Payment System and Long-Term Care Hospital final rules from CMS. These rules require all Medicare hospitals to publicly report their services charges online for patients to access and make better healthcare decisions, the agency said.

But there is still industry debate about the efficacy of price transparency. Do these tools actually improve patient experiences with healthcare? Can they cut costs? And how can organizations reconfigure tools to increase effectiveness?

Can price transparency reduce healthcare costs?

READ MORE: Point-of-Care Price Transparency Needed for Patient Care Access

Evidence suggests that as currently utilized, healthcare cost comparison tools do not in themselves reduce costs.

A 2016 study published in Health Affairs found that patient access to a price transparency tool actually increased out-of-pocket outpatient spending by about $59 per patient. Low patient awareness or perceived need of the tool may have resulted in limited utilization rates, the researchers suggested.

Additionally, cost compare tools did not present many meaningful areas for cost savings. Price transparency tools hold the most promise for less expensive and non-emergent health needs, the researchers explained. There are few health concerns that meet that criteria, meaning patients may not yield many meaningful cuts in costs.

Other studies have shown similar results. A 2017 report in the American Journal of Managed Care (AJMC) found that although patients liked the idea of a cost comparison tool, they ultimately saw little utility to the tool. They either forgot to use the tool before seeking care or did not see any use because they were already beyond their deductible or saw consistent copayments at their doctor’s office.

The AJMC article also touched on the idea of patient loyalty. Although patients could use price transparency tools to find a less expensive care option of equal quality, a sense of loyalty kept them going to their current clinicians.

READ MORE: How Healthcare Orgs Offer Price Transparency to Patients

“Overwhelmingly, respondents did not want to shop for care because of loyalty to their current providers,” the researchers found. “Many respondents commented that differences in price were relatively unimportant when it came to their primary care physicians (PCPs) and specialists with whom they had an established relationship.”

Payers who offer price transparency tools have also had little luck with the tools. A 2017 report published in Health Affairs found that although scanning a cost compare website could result in 14 percent cost cuts for imaging services, only 1 percent of patients actually use the tool, making it of little use.

But industry professionals insist the promise is there

Although data has suggested price transparency tools are not currently making a dent in rising healthcare costs, the tools still have the potential to reduce out-of-pocket spending and the patient experience.

If properly utilized, cost compare technology should help patients cut their own healthcare spending because they know the lower-cost providers to visit. Patients with access to a price transparency tool have the opportunity to compare cost and quality and make their preferred treatment selection based on that data. Ideally, this will lead patients to a lower-cost option.

Additionally, cost comparison tools should reduce charge lists because they facilitate market competition.

READ MORE: Top Strategies for Collecting Patient Financial Responsibility

“If consumers realized that they could receive high-quality services from lower-cost providers, they would seek them out,” the Commonwealth Fund’s Martha Hostetter and Sarah Klein wrote in a previous report. “This, in turn, could encourage competition among providers based on the value of care—not just on reputation and market share.”

Clinics have little incentive to lower their costs when patients do not know how much they’ll pay before they receive the service. But if all clinics knew patients were visiting a high-quality facility with substantially lower costs, area competitors could be forced to change their prices, as well.

How can we make price transparency work?

Making price transparency tools that are attractive and useable for patients will be critical for delivering on the promise of cost compare. Simply offering a price transparency tool will not lower costs. Patients must actually use these systems to select lower-cost care.

According to a report from the Catalyst for Payment Reform, price transparency tools must be easy to use and display information in a way that is understandable for patients. These tools should allow patients to look at different prices side-by-side.

Price transparency tools should also include information about pharmacy or other ancillary services – after all, most care encounters include more than just the clinician consultation, so price should reflect that.

Tools should also help patients understand the quality of care they are considering. This means displaying quality metrics that are meaningful to patients and using language that makes value metrics understandable for patients.

Finally, organizations hosting price transparency tools must have the mechanisms in place to encourage patient use. Marketing the tool to all patients, teaching them how to use it, and emphasizing the patient-facing benefits to the tool could drive more patient use.

A 2018 report from the Pioneer Institute found that leading price transparency tools in the Massachusetts health insurance market also lean on incentives for patients to use the technologies, such as a cash reward or a waived copay.

As the healthcare industry continues to place more financial burden on patients, it will need to adopt strategies that help patients. High copays and high-deductible health plans have put patients in the role of the healthcare consumer. Price transparency tools are a key retail-style engagement strategy that will help consumers make better decisions about where to access care.

But in order to make those price transparency tools effective, industry leaders must keep the patient at the center of their design. Making a usable cost compare tool that uses simple language and factors in metrics that are important to patients will be integral going forward.

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