In the United States, economic and political factors continue to push the healthcare industry toward price transparency. Earlier this month, the Centers for Medicare & Medicaid Services issued rules to increase price transparency among hospitals and payers.
The thinking is price transparency will help consumers easily shop for care to make more informed, responsible decisions about services, including weighing the financial implications of their care in their overall decision-making. Proponents also believe price transparency would both encourage competition among providers to help bring healthcare costs down and reinforce value-based care.
But a range of considerations must be made by and for consumers, providers, and payers, alike, for price transparency to be implemented and effective. Healthcare industry leaders shared insights on the challenges of implementing price transparency in the U.S. market and how to overcome them as part of Medical Alley Association’s “Leading the Conversation” series, which brings together life sciences and healthcare provider stakeholders and influencers. The event was held in November in Minneapolis.
“The political climate is making the conversation more mainstream and more accessible for the average consumer and the average patient, but the fact remains there are a lot of variables, roadblocks, and challenges,” said Jeff Leibach, director for Healthcare Strategic Solutions at Guidehouse.
“We’re not going to price shop who has the best deal on cancer treatment or when someone’s going to operate on our brain or heart. For those needs, the question is: ‘Which provider has the best outcomes?’” explained Joe Galatowitsch, managing director for Life Sciences at Guidehouse.
But that also is a complicated question to answer in the real world, Galatowitsch said. Finding the real price and value can be difficult, and the answer changes based on many factors. For example, consider that a suburban hospital might appear to provide superior outcomes based on reported results compared to a nearby urban hospital. But if the suburban hospital sees fewer complicated cases compared to its urban counterpart, which actually offers the better outcome? The one that does better with easier procedures, or the one that has extensive experience treating complex cases?
Furthermore, consumers must consider insurance coverage versus out-of-pocket costs and proximity of service, as well as the difficulty of navigating the healthcare system and its many codes.
“To make price transparency work well, we need to make sure information is being provided in a way that consumers can consume it,” said Ashley Hume, vice president of operations for Emerging Health Solutions, which provides gene and cell therapy services for insurance companies.
Hume explained that patients often find themselves in a circular conversation. The provider might give them a price but refers them to the payer to determine a patient’s out-of-pocket costs. In turn, the payer refers the patient back to the provider to determine how the procedure and treatment will be filed for coverage.
If hurdles like these can be overcome, then price transparency can be positioned to provide major benefits to patients.
“Price transparency addresses the inability of patients to easily shop for lower cost services between providers and appropriately weigh the financial implications of their care in their overall decision-making,” Leibach explained.
While price transparency tends to be regarded as something new in healthcare, it already has arrived in several segments, such as LASIK, over-the-counter medications, and others. These tend to be commodity-based applications, but some organizations also have successfully deployed price transparency strategies.
For example, Bind On-Demand Health Insurance, a three-year-old startup, offers on-demand health insurance for consumers to pay for the coverage plan they want. Treatment costs are listed by provider on the company’s website. Participants can build in coverage on demand, and the cost will be known upfront, as well as how much will be deducted from their paycheck to pay for it.
“We tied price transparency to the most important financial asset to most Americans, which is their paycheck,” said Shawn Wagoner, the networks lead for Bind. “So, now they’re thinking long and hard and having conversations with clinicians about the need for the treatment option, and the risks.”
Likewise, Dr. Owen O’Neill, an orthopedic surgeon with Twin Cities Orthopedics, shared how his organization restructured and created a bundled service with transparent pricing to lower its overall costs and differentiate from competitors. To date, the program has a more than a 98% patient satisfaction rate and has proved profitable for the organization.
“We are now in charge of the bundle and can determine which services actually provide value to patients and which don’t,” O’Neill explained. “It’s a better experience for our patients and in a better setting. Done well, price transparency and quality care go hand in hand.”
About Leading the Conversation 2019 Leading the Conversation 2019, a partnership between Guidehouse and Medical Alley Association, calls into question the fundamental supposition of value-based healthcare: that value is defined as outcomes divided by cost. Even with that framework, value is still difficult to articulate, much less implement, making the equation something less than formulaic. The two-part series explored this equation and its component parts with a focus on real-world examples of organizations solving for the value equation. The first part of the series, “Where are the ‘New and Improved’ Outcomes in Health?” was held in June.