At the close of July, the Trump administration proposed new policies that would create greater price transparency among healthcare providers. The driving idea behind the new proposal is that patients will be better able to shop around for care and choose options that fit within their budgetary limits instead of seeking care from the nearest provider and hoping that the bill they receive after the fact isn’t out of their financial reach. It’s a measure meant to empower and facilitate cost-savings for overburdened consumers — and given the current sky-high state of healthcare prices in the United States, it may well be a welcome one.
It’s a well-established truth that Americans spend a lot on healthcare. Recent estimates published in Health Affairs revealed that Americans spent a collective $3.65 trillion, or $11,121 per person, on health in 2018. Spending on hospitals, doctors, and other clinic-related services alone accounted for $2.16 billion. These numbers are high enough when considered in isolation; however, they become even more startling when one considers them in a year-over-year context. The same report also found that per-person spending among privately-insured patients rose 4.5% despite flat enrollment, while expenditures for Medicare patients rose 3.1%.
Spending trends are rising faster than increased enrollment can account for, thereby forcing patients to pay more for the care they need to maintain their health and well-being.
But how much of this financial pressure would be alleviated if patients had more control over their financial futures — if, as the administration’s proposal intends, patients were able to cherry-pick their services and get the most value for their buck?
Let’s discuss what the proposed action would do.
What Will the Proposal Do?
Under the administration’s proposal, hospitals would be obligated to post their insurer-negotiated prices via an accessible, searchable, and consumer-friendly online platform starting January 1st, 2020. These postings would encompass nearly every drug, service, and item a hospital offers its patients and incorporate standard billing codes to allow for easy price comparison among identical services. The proposal would also provide consumers a chance to view payer-specific negotiated charges for common “shoppable services” that can be scheduled in advance by a consumer.
In theory, the price-shopping this transparency provides would empower consumers to both avoid unexpectedly high bills and pursue low-cost healthcare. However, creating those benefits isn’t quite as easy as posting prices online.
The Downside of Data-Heavy Transparency
Being able to compare costs is an invaluable convenience — if you know what you’re looking for and where to find it. Hospitals have countless services; as one health reporter wrote in a recent piece for NPR, “Start with the fact that each hospital has tens of thousands of charges, from room fees to suture costs to the price of each tablet of aspirin. Then multiply that by the number of insurers that contract with each hospital and the total amount of data could be staggering.”
The sheer amount of data that increased transparency provides could be as unwieldy as it is useful. Patients would need to know precisely what they need to look for and search through countless pages of numbers to find it. To its credit, the administration’s proposal does ask hospitals to bundle the costs of common procedures — think c-sections or hip replacements — into one charge; a requirement which would prevent patients from having to account for the costs of individual sutures or room prices when calculating a shoppable service. It’s a help — but patients would still face a metaphorical mountain of data during their price comparisons.
This, of course, is given that hospitals will be able to comply with the transparency posting guidelines in a consumer-friendly way. However, our current problems with digitally releasing patients’ medical records cast some doubt on that assumption.
Federal guidances hold that hospitals should have an option to give patients a copy of their digital health records for no more than $6.50 a copy. However, one study conducted in 2018 found that: “most hospitals were out of compliance with federal regulations by refusing to provide the documents in the format requested by patients […] despite federal guidance that records delivered digitally should not cost more than $6.50, hospitals charged as much as $541.50 for a 200-page record, often without mentioning other options.”
It seems fair to assume that, given our persisting problems with sharing digital health records, we may face similar barriers to consumer-friendly policy adherence with online price-sharing.
The final issue we face in our pursuit of transparency is one of usership. Despite the potential cost-saving benefits that stem from comparing posted costs, many patients choose not to shop around. Consider New Hampshire, which already requires hospitals to display their insurer-negotiated prices online; one recent study of consumer behavior in the state found that only a fraction of patients opted to use an online price comparison tool. However, it is also worth noting that those who did use the tool saved money; researches found that the online tool reduced the expense of medical imaging procedures by 5% for patients and 4% for insurers. As the study’s leaders write: “A simple calculation implies that individuals saved around $7.9 million and insurers saved $36.0 million on X-Ray, CT scan, and MRI scans over the five year period.”
Those numbers are not insignificant — and they imply that cost comparison tools are worth pursuing, if we can only navigate their user-unfriendly tendencies.
Cost Comparison — A Way to Go in the Future?
The Trump administration’s proposal is on-track and necessary, but incomplete in its scope. Given the results from the study of patients in New Hampshire, there could be an enormous cost-savings benefit from the widespread adoption of cost comparison tools. However, several changes will need to occur before such a positive shift can happen.
First, there needs to be better instruction and follow-up as to how the information is shared online. People need to be able to access cost comparison tools and data effectively, without being charged high prices or dissuaded by user-unfriendly platforms. Second, there needs to be a greater emphasis put on educating patients about the value of price-shopping their healthcare services; otherwise, few people will take advantage of available tools or benefit from the savings they provide.
There are ways to make this change happen. Castlight Health, for example, is a cloud-based healthcare analytics program that helps health plans and self-insured employers empower their consumers to compare prices and shop for affordable health care. Tools like Castlight’s do the hard work of parsing data for their consumers, thereby allowing them to compare costs without being overwhelmed or discouraged by the sheer volume of information. However, Castlight’s benefits are wholly contingent on employers and health plans adopting it — and as such, it’s a limited solution.
For the administration’s policies to work, we need to prioritize patient education and pair our push for transparency with the widespread implementation of tools which, like Castlight, can empower patients to compare hospital-provided data quickly and easily.
We’re on the right track — but as matters currently stand, transparency alone won’t do much to alleviate the pressures posed by high healthcare costs.
Originally posted to marytolan.net on September 11th, 2019.