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Healthcare Price Transparency – What Will It Take To Make It Work?

December 5, 2019

This week we’ve had some long chats about healthcare price transparency. The Trump Administration just finalized a transparency initiative for hospitals. Another one is pending that will affect insurers and employer-sponsored health plans. So, lots of people are talking about it, including us.

To be clear, we think greater transparency when it comes to medical care is a wonderful idea. However, when the topic comes up, we aren’t sure why so many people express unequivocal support. In certain health insurance circles, people talk about price transparency like it is a brownie – who could object?  This kind of thinking bothers us, for several reasons:

  1. It over-simplifies the issue. Providing healthcare transparency in a way that truly benefits all stakeholders (or even all consumers) is tricky, so it deserves critical thought.
  2. Details matter. If we want transparency to work, we need precision, not generalization.
  3. Focused debate helps improve public policy measures. That’s why we are never afraid of a little nuanced discussion amongst friends.

So, to kick off such a discussion, here are some points we think should be considered when it comes to healthcare price transparency tools:

  1. There are different kinds of consumers of healthcare, so transparency tools and data need to fit the intended stakeholders. For example, the typical patient probably won’t find the overall amount their health insurer pays a provider for a particular service beneficial, so don’t confuse them with it. When making a purchasing decision, individual healthcare consumers want and need to know what their specific out-of-pocket costs will be.
  2. Transparency tools need to be straightforward and easy to use. If you give consumers too many choices or too much information, they get overwhelmed and shut down. If you give them tools that are too complicated or untrustworthy, they will not use them. So, the goal should be convenient tools that provide accurate, practical, and comparative information geared towards good-decision making.
  3. It will take time to craft quality tools, and rushing will benefit no one. Healthcare transparency tools are too critical to rush, so give stakeholders enough time to create them, test them, and roll them out thoughtfully. Google “Medicare plan finder” if you think we are kidding.
  4. People don’t just want to compare prices; they want quality data too. A good outcome is crucial for healthcare consumers. So, if we’re going to create transparency tools that people will rely on, the ability to assess the quality of care, as well as cost data, is essential. Plus, if a person picks a high-quality provider from the get-go, it’s cheaper for every stakeholder in the end.
  5. Transparency should reduce prices – not raise them. When individual providers and payers and employers have to create and maintain detailed transparency tools, there is a cost involved that gets passed on to the consumer. So, shouldn’t we advocate for well-structured disclosure requirements, that actually work and save everyone money? How about transparency requirements that reveal all contractually negotiated rates? There is a real concern they will create a price floor rather than a ceiling, and costs will go up for everyone. Shouldn’t we talk about how to prevent that phenomenon?

Friends, do you agree or disagree?  Have more principles to add?  Do the proposed regulations meet these standards? Let’s discuss this.  And if price transparency doesn’t do it for you, we also are happy to opine on brownie recipes. Skip the baking powder. You aren’t making a cake!