The initial phase of federally mandated price transparency reporting included, perhaps not unexpectedly, data challenges, questions regarding utility, and in some cases, simple noncompliance. In its 2019 rulemaking process on price transparency, CMS required hospitals to publicly provide more detailed information on charges, discounts, and payer-negotiated rates in a machine-readable file to support further research and use of price data among third parties. Additionally, hospitals must provide an online tool with prices for 300 common services to assist patients in shopping for lower-priced care. CMS specified 70 shoppable services that must be included in this list but left it to each hospital to select the remaining 230. Upon implementation in January 2021, some of the initial data was considered difficult to use, and many hospitals were not immediately in compliance (perhaps purposefully) – prompting CMS to propose increased penalties moving forward. Beginning in July 2022, health plans must also provide information on in-network, out-of-network, and billed charges to allow patients to better understand out-of-pocket costs. Highlighting key takeaways from a recent AcademyHealth webinar, this blog post outlines key consumer considerations around price transparency and notes specific areas ripe for improvement.
Price Transparency and the Consumer
As the panel of experts noted in their opening comments, everyone from the U.S. Treasury to the patient entering a hospital or waiting at a pharmacy counter wants to better understand what they are paying and why. Despite new models and reforms, as our payment system becomes more complex and fragmented, there is more pressure to define a stated cost for individual services and products. However, we must accept that many factors create varied costs for the same service or surgery, and how a published cost translates into an actual cost for a covered patient. While more information about costs and consumer-friendly tools are needed, we may want to ask ourselves if we want consumers to navigate and make health decisions on a purely transactional basis.
So, what can price transparency help us accomplish? To begin with, cost information alone is not sufficient for informed decision-making. Others have noted that shopping for care based on price leaves gaps in accounting for the quality of care. While integrating information on quality has its own challenges and nuances, efforts to do so (particularly among third parties) can help us understand where low quality or unnecessary care is occurring. By layering additional information on price transparency data and creating useful tools, we can make a new pathway for patients to recognize what their anticipated costs might be, particularly for non-emergency procedures. However, due to networks and other factors such as convenience or geography, we also need to acknowledge that patients still may not have many choices or incentives to shop for lower costs.
Where Do We Go Next?
Another area of discussion during the webinar was the burden and utility of machine-readable files. Some panelists noted that such files are not readily usable for patients and consumers. In addition, contextual or business aspects of bundled payments or negotiated rates, as well as varying formats across health systems, make one-to-one comparisons very challenging. One suggestion to improve the utility of such files is to develop a formal certification process or “seal of approval” to ensure more timely and relevant information. Panelists also acknowledged that the machine-readable files present an opportunity for third parties to properly ingest and analyze the data from a non-consumer perspective, which is of particular interest to employers and others focused on benefit design.
The panelists agreed that more time was needed for both the development of online tools and reports through multiple years of “better” data and time for consumers and patients to become more comfortable and utilize such dashboards. In addition, broader price transparency provides an opportunity for hospitals, payers, and other business partners to further their value conversations with more accurate information, particularly in specific markets (e.g., those with a dominant payer or health system). These conversations can also better inform conversations about individual health spending. Finally, panelists expressed some concern over decreased use of cost estimate tools among older and lower-income patients and highlighted the need to be vigilant as we develop such tools to avoid inadvertently excluding important populations.
In conclusion, price transparency can aid consumer empowerment and market efficiencies. However, it is not the only solution to tackle the challenges in our health system or even the high cost of health care head-on. The reality is that price transparency data should not be viewed as informing a one-time consumer decision, but rather as another (albeit robust) instrument to help us understand the best ways to improve access, affordability, and appropriateness of care.