Price Transparency in Healthcare

Population Health Management is the aggregation of patient data across multiple health information technology resources, the analysis of that data into a single, actionable patient record, and the actions through which care providers can improve both clinical and financial outcomes. The Centers for Disease Control and Prevention (CDC) identified the 10 most important public health problems and concerns as follows:

◾ Alcohol-related harm and food safety ◾ Healthcare-associated infections ◾ Heart disease and stroke ◾ HIV- and AIDS-related illnesses ◾ Motor vehicle injury ◾ Nutrition, physical activity, and obesity ◾ Prescription drug overdose ◾ Teen pregnancy ◾ Tobacco use

For primary and preventive care, value should be measured for defined patient groups with similar needs. Patient populations requiring different bundles of primary and preventive care services might include, for example, healthy children and adults, patients with a single chronic disease, frail elderly people, and patients with multiple chronic conditions. Care for a medical condition (or a patient population) usually involves multiple specialties and numerous interventions. Value for the patient is created by providers’ combined efforts over the full cycle of care. The benefits of any one intervention for ultimate outcomes will depend on the effectiveness of other interventions throughout the care cycle.

Accountability for value should be shared among the providers involved. Thus, rather than “focused factories” concentrating on narrow groups of interventions, integrated practice units that are accountable for the total care of a medical condition and its complications are needed.

One tactic for reducing spending is to increase price transparency in healthcare—to publish the prices that providers charge or those that a patient would pay for medical care—with the aim of lowering prices overall (Sinaiko and Rosenthal, 2011). State progress on healthcare pricing transparency has

slowed around the country, and some states have even stepped backward in providing clearer information to consumers about their healthcare costs. Altarum’s Center for Payment Innovation, along with Catalyst for Payment Reform, has published state report cards on healthcare price transparency since 2013. In Altarum’s latest rendition, the center examined how readily consumers can access healthcare prices across all 50 states. According to the report, 43 states received an “F” for healthcare price transparency. High grades were given to states that required providers to report prices or mandate an all-payer claims repository; offered data denoting paid amounts as opposed to charged amounts; provided inpatient and outpatient procedure information; and had an accessible website.

Most experts agree that that the U.S. healthcare market is unlike any other market. Patients rarely know what they’ll pay for services until they’ve received them. Healthcare providers bill payers pay different prices for the same services, and privately insured patients pay more to subsidize the shortfalls left by uninsured patients (Sinaiko and Rosenthal, 2011). According to Sinaiko and Rosenthal, “prices” refers to consumers’ out-of-pocket costs and the amount paid by an insurer on their behalf. Understandably, consumers are mainly interested in what they will have to pay. Therefore, most price transparency efforts attempt to distinguish between total prices (the actual charges by hospitals and other providers) and consumers’ out-ofpocket costs.

In a report by the National Conference of State Legislators (NCSL, 2017) prices for health services vary significantly among providers, even for common procedures such as laboratory tests or mammograms, although there’s no consistent evidence showing that higher prices are linked to higher duality. One analysis found considerable price variation for common preventive services: a 755 percent cost variation for diabetes screenings (from $51 to $437), 264 percent variation for Pap smears (from $131 to $476), and 132 percent cost variation for colonoscopies (from $786 to $1,819) over a 12-month period. Since the Affordable Care Act mandates these preventive screenings be free for individuals, plan sponsors bear the costs. Another analysis found that hospital charges for appendicitis in California hospitals ranged from $1,529 to a high of $182,955 (Hsia et al., 2012). One analysis found that U.S. spending on healthcare could be reduced by $36 billion a year if the 108 million Americans with employer-sponsored coverage comparison-shopped for 300 common medical procedures (Coluni, 2012).

Indeed, according to the U.S. Government Accountability Office (2011), “Meaningful price information is difficult for consumers to obtain before