Price transparency: the good, the bad, and the missing

July 15, 2021
Josie Rasberry

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Price transparency has been the hot topic of healthcare ever since the Hospital Price Transparency Rule was first mentioned as a possibility. Now that it’s here, we can only expect price transparency (and the healthcare consumerism movement it’s helping propel forward) to stay and expand into more areas of healthcare. However, anyone in healthcare can see that hospital price transparency so far is limited, confusing, or simply not there. Many consumers would likely agree since 69% are unsure if hospitals offer price transparency and 22% believe hospitals aren’t required to disclose prices.

So, let’s look at the good, the bad, and the missing in the current state of price transparency and how it’s impacting healthcare consumerism.

The good.

First of all, let’s applaud the fact that it even exists. For years it was just a concept, but at last, it’s finally here. Is it perfect? Certainly not. But that CMS is requiring hospitals to make the:

available for 300 shoppable services is a huge step in the right direction towards lower overall healthcare costs and greater transparency in healthcare.

The current state of price transparency is still difficult for the average consumer (and even health journalists and health lobbyists) to decipher. But, for companies that are experienced in healthcare navigation and have the team, technology, and data to make healthcare shoppable, the price transparency rule has been extremely helpful in providing more data to create a well-rounded product. These digital health companies are able to make sense of the data and convert it into an easily consumable format for consumers. This in turn is great news for healthcare consumers.

The final positive is that the price transparency rule has created a reckoning for hospitals that overcharge patients and negotiate high rates with payers. In recent years, hospitals have been called out for predatory billing practices, and it’s led to positive changes. Revelations made through new price transparency rules will also lead to positive changes in hospital billing practices.

The bad.

Now, on to the not-so-positive aspects of price transparency. We already hinted at it, but the current hospital lists are extremely confusing and hard to read. There are experts who have a difficult time making sense of the lists hospitals have out, so how on earth is the average American expected to navigate these confusing lists? CMS states on its website that the lists must be easy to read, but you’ll be hard-pressed to find a hospital whose list of prices fits that description. 

Not to mention, many hospitals aren’t complying at all. According to a recent study by JAMA, in an audit of 100 random hospitals, 83 were not compliant with at least one major requirement. One of the main reasons that hospitals are choosing to be non-compliant is because the penalty is so minor. Which leads to our next “bad” of price transparency: the fine for non-compliance is a joke. A $300 daily maximum fine for most hospitals is nominal. In fact, for many hospitals, it would be more costly to display their prices than to pay a possible maximum of $300 every day. If CMS wants hospitals to comply, they’re going to have to create a greater penalty or introduce an incentive.

The missing.

As mentioned above, part of what’s missing in the current price transparency rule is a sufficient penalty for noncompliance. Even a positive incentive could potentially work well. The biggest thing that’s missing though is better enforcement of the rule. Even for hospitals that are complying, their lists are by no means “easy to read and navigate.” A truly shoppable experience is still missing when you look to just hospitals for price transparency. 

Another thing missing is price transparency for non-plannable healthcare services. Obviously, in an emergency situation, no one is going to look up prices in the moment. But emergency healthcare services are often expensive and need a solution to lower costs too. 

Price transparency also doesn’t address issues with balance bills. Someone may be a good healthcare consumer and plan their rotator cuff surgery and review the cost for it beforehand, but they could still get a surprise bill if the anesthesiologist is out-of-network or the surgeon is employed by a 3rd-party medical staffing firm.

Why you should care.

So if you’re a health plan, health cost sharing group, TPA, or self-insured employer, why should you care about price transparency? Expensive hospital prices get passed on to you and your members. Plus, your members want to be able to shop and compare their healthcare services and will look to you to help enable that. Disappointment and frustration with lack of transparency, digital tools, and benefits will lead to poor reviews and higher member churn for you. Not to mention that fear of price often keeps members from receiving medical care, which has several negative aspects for you. It can:

  • Prevent members from getting care early that would avoid higher expenses later.
  • Skew your estimated costs for care.
  • Ultimately lead to unhealthy and frustrated members.

But with transparent prices, members are more likely to receive care. Price transparency ultimately means lower overall healthcare costs and happier members. Who doesn't want that?

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