Comparison shopping, common in every other field, has been a long time coming to health care. But recent news from the Centers for Medicare & Medicaid Services (CMS) may signal a sea change in price transparency.
Last month, CMS issued a proposed rule that requires hospitals to post their standard charges online (see Medicare To Require Hospitals To Post Standard Charges Online). If this sounds familiar, that’s because CMS already “requires” this, but currently allows hospitals an alternative. Hospital can elect to only show the charges by request, as long as the facility posts notices explaining this policy. If finalized, the new rule will eliminate the alternative and require the posting of standard charge list, online and publicly accessible.
CMS also recently released the responses to a request for information seeking comments about barriers that prevent provider organizations from informing consumers of their out of pocket costs; what changes are needed to support greater transparency around consumers obligations for their out of pocket costs; what can be done to better inform consumers of these obligations; and what role provider organizations should play in this initiative (see Feedback on New Direction Request for Information (RFI) Released, CMS Innovation Center’s Market-Driven Reforms to Focus on Patient-Centered Care). The goal of this price transparency is to provide consumers with the tools to do “price shopping” when looking for health care services – and reduce the cost of health care.
Does price transparency decrease health care costs? We’re not exactly sure because there has been little research done on this topic—and very few organizations that are actually transparent about their costs. The studies that are out there suggest positive results. For example, an insurer-initiated price transparency program that focused on elective advanced imaging procedures resulted in reducing variation in prices for magnetic resonance imaging (MRI) by 30% (see MRI Price Transparency Reduced Price Variation By 30% & Total Cost By 18%). Other studies have found that prices have dropped by 15 to 17% for lab tests when consumers have access to pricing and some have found prices dropped by 1.6% – still a statistically significant amount (see Does It Pay to Know Prices in Health Care?). And the CalPERS program in California saved $7 million on colonoscopies and $2.8 million on joint replacement after the implementation of a reference price program (see Appropriate Use Of Reference Pricing Can Increase Value).
But, the data is unclear whether consumers will actually check the price of health care services. There are a few resources out there that in theory allow consumers to access prices, but these take a lot of consumer effort (see Is It Time For Some ‘Comparison Shopping’?). After the California state employee health plan launched a price transparency tool in 2014, only about 12% of covered employees used it to search for prices on lab tests, office visits, and advanced imaging services (see 12% Of California Public Employees Use Health Plan Price Transparency Tool). And studies have found that as the number of procedures an individual searches and the complexity of those services increases, pricing tools are less likely to decrease cost (see Appropriate Use Of Reference Pricing Can Increase Value and Does It Pay to Know Prices in Health Care?).
This will likely all change in the next five years. I think that increasing popularity of high-deductible health plans will make consumers better shoppers. The number of consumers with high-deductible health plans increased from 26.3% in 2011 to 39.3% in 2016 (see High-deductible Health Plans and Financial Barriers to Medical Care: Early Release of Estimates From the National Health Interview Survey, 2016). And a report from Benefitfocus found that 70% of employers offered at least one high-deductible health plan (see Consumer-Directed Care, High Deductibles Popular for Employees).
What consumer-facing price information is available now? There are a small number. A couple of states such as Wisconsin and Maine have tools that allow consumers to compare prices across health plans and hospitals (see CompareMaine and Wisconsin PricePoint). Then there are the health insurer specific tools that are only available to members (see UHC Cost Estimator, Aetna, SelectHealth Medical Cost Estimator). But, the “disruptors” in the field are publishing fee schedules – take a look at the fee schedules of CVS Minute Clinics and the Cleveland Clinic (see CVS Price List and Cleveland Clinic Patient Price Information List).
But these are the exceptions. Most provider organizations do not have a public fee schedule and most do not have the ability to provide with point-of-service pricing. A 2016 survey for Navicure found only 33% of provider organizations have cost estimation tools (See Providers Struggle with Patient Price Transparency, Responsibility). The questions for executives of provider organizations are: if a consumer (or a health plan) wants to know how much as service costs, can they find that out on your web site? Can they call your customer service number and get a fee schedule? These will likely become the new standard for consumerism.
For more on the price transparency and comparison shopping, see CMS Quality Measures – The Tail Wagging The Dog, Scoring The Scorecards and Online Health Care Quality & Cost Comparisons. And for even more, join me on October 23 at The 2018 OPEN MINDS Technology & Informatics Institute for the session, “The Challenges Of Data Management In A Digital World: An Executive Discussion On Security, Privacy, & Consumer Control.”