Why healthcare price transparency has evolved so slowly

While everyone wants to know what healthcare treatments cost in advance, deriving straightforward answers is difficult to legislate.

Healthcare prices vary significantly from one organization to the next for the same services, and patients are highly unlikely to know what those prices will be in advance of receiving services. The issue is a topic of frequent debate and concern for all within healthcare. With all of those discussions, price transparency can often be touted as a panacea to the ills of the system. That is not necessarily true.

When thinking about price transparency, the meaning of transparency may need to be defined. Like so many other areas of healthcare, transparency takes on many meanings. Is it revealing just the chargemaster at a hospital, which was the result of a new rule that became effective on Jan. 1, 2019? Is it quoting an anticipate charge for a service as has ostensibly been required for years at this point under Massachusetts law? Is it posting negotiated rates that may reflect the amount actually paid?

Each of those is a form of transparency that has been or is being implemented. A brief review of each will help underscore why transparency is neither easy nor the final solution.

Revealing the hospital chargemaster did not create a ready trove of prices that were easily understood by patients, or really anyone. The chargemaster is a comprehensive compendium of all charges for all services that a hospital may provide. Further, it is possible that the chargemaster includes services no longer provided if it has not been updated recently. The prices listed also do not reflect what may actually be paid.

Instead, the chargemaster could be considered the list price from which all negotiations start. In that way, it is almost like the manufacturer’s suggested price for a car. It is shown, but highly unlikely that anyone actually pays that specific amount. The other difficulty in extracting easy to understand information for the average person from a chargemaster is that it will be organized by billing code or some other coding context. It would not, for example, say hip replacement, X-ray, or another readily identifiable service.

While obtaining a chargemaster does not necessarily help someone determine what they will have to pay, it is an important data element. As discussed with Aneesh Chopra in an episode of Healthcare de Jure, the chargemaster information can be combined with other pieces of information to begin stitching together the bigger picture. Each piece of information sheds light on some area that will be helpful, even if the nature of that help is not ascertainable at first.

What about requiring that health insurance companies, and hospitals or physician groups disclose the cost of a service? The second round of healthcare reform passed in 2012 included a provision obligating health insurers, hospitals and physicians to disclose the cost of a service upon request. The seemingly simple requirement has a lot of nuance and complication, which results in the right not being invoked very frequently.

To obtain a quote, an individual may need to state a specific CPT code, something that most people either have never heard of or would not know with sufficient specificity. Additionally, the quote will only apply to a specific service identified, which means any additional service or procedure provided in addition to the one asked about will come with an unknown cost.

The difficulties in obtaining a price come from the personal experience of this author. Within the past year, a request was made to a clinician’s organization about the cost of a procedure. The response given was to ask the health insurance company. The health insurance company would not answer until coverage was effective and even then, punted the question back to the clinician organization. The merry-go-round would likely have continued indefinitely and was only short-circuited after communication was made to an internal contact to address the issue.

The Massachusetts experience could soon go national following the recent executive order on Improving Price and Quality Transparency in American Healthcare to Put Patients First issued by the president. The broad brush of the executive order will force hospitals, physicians, other clinicians and health insurance companies to make price information available.

Regulations should begin to be proposed within 60 days of the executive order. Leaving aside whether the timeframe is reasonable, what will or should the upcoming regulations look like? Every person who answers that question could very well have a different answer. The one likelihood will be that any required action will not act as anticipated.

With all of the recent and not-so-recent actions, what does that mean for price transparency? It means that price transparency is not easy, individuals may not necessarily use the information, and no system of disclosure will operate as intended or expected.

Despite those challenges, efforts to increase the availability of information should likely proceed. Putting more data points out into the wild provides the ability for someone (or many someones) to put the data together in a new way or present it in a new manner that enables better comprehension and use.

While price information has traditionally been jealously guarded as proprietary or a trade secret, why is that the case? Why should light not be shone on that information to potentially create a more level playing field and one where informed decisions can be made?

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