Healthcare is the only industry that has no idea of the price of the service you purchased until the fact that the medical expenses arrive. However, patients want transparency about the expected costs of office visits, diagnostic testing, imaging studies, surgery, hospital services, and more.
Unfortunately, determining the amount that a single patient must pay is much more complicated than knowing the price of a service. Health insurance companies negotiate with contract providers in their network. These rates range from one provider to another, from one facility to another. Rates also vary by product line (such as self-insured or fully insured business plans, Medicaid, and Medicare).
Additionally, this complicates patients’ deductibles, copayments, co-insurance and annual out-of-pocket expenses to the greatest extent. Usually, the doctor or other provider may not know the test or procedure they will order before meeting the patient. These additional procedures and costs must be determined and incorporated and placed according to the individual’s personal circumstances to calculate the total care costs for any particular medical issue.
What really helps patients and their families is being able to determine costs and make informed decisions about their care. For example, a patient may need an MRI, but the cost of an MRI can vary depending on whether it is performed in an independent imaging center or a hospital imaging center. When patients and providers know the difference in costs, they can work together to decide which option is better.
Price transparency is a step in the right direction
In the United States, price transparency authorizations are developed to help consumers become smarter shoppers and choose the healthcare that best meets their needs.
Health transparency of hospitals:
- The Centers for Medicare and Medicaid (CMS) issued a rule in January 2021 to increase transparency in health care costs, requiring hospitals to make prices easy for consumers
Health Plan Price Transparency:
- Starting in July 2022, federal rules require health programs to disclose the negotiated prices they pay for each item and service they provide.
Implementation of hospital price transparency has been a challenge. The Office of the Inspector General released a report online on November 8, 2024. The report outlines a sample of 100 hospitals to see if they comply with the hospital’s price transparency (HPT) rules. They then pushed the data to 5,879 hospitals in the United States. They found that 46% of people do not comply with HPT rules. This is due to several factors, including the lack of standardized data collection and analysis, multiple contracts with health insurance companies and CMS, and complex standardized reporting requirements.
Beginning in January 2024, health plans are required to provide its members with cost-sharing estimates for all covered services. Many health plans have introduced online price transparency tools for their members, but these tools can be difficult to use and may not always reflect current pricing.
Price transparency is a step in the right direction, but that's not enough. Patients also need to know the quality of care they receive from any given provider or healthcare facility.
Transformative changes will be achieved by combining cost, quality and efficiency measures
One of the most critical parts of being a smarter healthcare shopper is determining the quality of care provided. Price transparency cannot be solved. In fact, shopping only at the price may lead consumers to choose care in the facility if they know the risks of poorer outcomes, such as increased readmission rates or infections obtained by the hospital.
Many studies show that 25% to 30% of medical expenses in the United States are spent on unnecessary testing and procedures. Price transparency does not necessarily protect consumers from shopping, which may be unnecessary and can be avoided. What is the cost of an unwanted MRI, especially when it leads to further testing or unwanted programs?
Cost alone is not enough to determine the best care. For some, cost may be a major factor in choosing a provider or facility. However, combining cost, quality and appropriate care is a better indicator of the highest value provider in a geographical area. Choosing the best provider based on quality and value can save consumers more money than the price of buying programs that may not be needed.
Furthermore, studies have shown that choosing a high-value provider can not only save costs, but also improve outcomes and reduce mortality. For example, a 2022 study from Norway found that an increased standard deviation in GP quality results in a 12.2% reduction in patients' risk of mortality in two years. By combining quality, suitability, and efficiency scores and price transparency of its provider finder tools, health plans will change the provider selection process for their members. These types of provider quality scores can be obtained from third-party entities using recognized nursing guidelines in the professional society based on reasonable scientific measures.
In addition to providing a provider’s selection process, combining price transparency with quality, appropriateness and efficiency scores will change how providers evaluate and improve their own practice patterns. For example, the provider can:
- View your own cost, quality, suitability and efficiency scores
- Based on these scores, modify their behavior if necessary
- Recommend patients only to high-quality experts
Make it feasible – the last piece of integration of price and quality transparency
An accurate price estimate with provider quality is the real “transparency” required for the industry, but if used in practice, it is accessible in both processes and places that the patient and the provider have visited, neither of which transparency is helpful. It is unrealistic to ask patients to browse complex data when they already have limited knowledge and trust in the resources available to them or require providers to enter another portal or dashboard. Making this data easier to access does not necessarily have to be complicated and should aim at the smallest current workflow possible. It looks like embedding it into the patient and EHR's member provider directory, as well as the dashboard used internally, and even a printable recommendation list for the provider.
Just as we highlight the challenge of price transparency in terms of data accuracy and data complexity, there is also an accessibility problem: Currently, it is published in difficult to read and difficult to explain machine-readable files that meet regulatory requirements, but are far from enough people who need it the most. Despite the isolated examples of successful implementation, the industry will not see opportunities for results improvements and cost savings associated with this strong data until it is implemented into daily workflows and accessed regularly, which will effectively put large-scale pressure on its availability and accuracy.
Photo: Sinemaslow, Getty Images
HealthCorum Chief Medical Officer Roki Chauhan is a board-certified family physician who has been 15 years before transitioning to system leadership. Roki served as Director of Quality Medical at Providence Health Program in Washington and served as Chief Medical Officer at Premera Blue Cross, where he is responsible for senior corporate medical leadership, implementation of strategic plans and clinical programs. His main passion is to improve quality and reduce unnecessary care in healthcare. He has actively worked with doctors to develop physician reports that show them how to improve quality and better manage medical expenses.
Beth Carvette, Vice President of HealthCorum, an epidemiologist and innovative leader in clinical development, leverages multiple datasets and classification systems to define algorithms that support programs and metrics to improve health outcomes and optimize value in healthcare. She has previously held clinical analytical leadership roles at Rowdmap, Cotiviti, Health Dialog and Anthem BCBS. Beth’s career includes ensuring an impressive track record of provider rating processes and approaches that not only reflect the latest industry and clinical best practices, but also highlight providers that produce the best results and provide the highest value.
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