It sounds logical: To turn patients into engaged healthcare shoppers, give them estimates of their out-of-pocket costs and show them how prices vary from provider to provider.
Proponents believe transparency efforts will save patients money, level price variation across providers through increased competition, and lower U.S. healthcare costs. Over the past decade, a variety of stakeholders have launched tools designed to give consumers price information, including insurers, employers, hospitals, states and no-for-profits.
But the success of these undertakings varies widely, depending on the tool and engagement approach used. Among disappointing findings, only 3.5 percent of eligible Aetna members used the insurer’s member payment estimator between 2011 and 2012, according to a 2016 Health Affairs study. Meanwhile, as described in a 2016 JAMA study, healthcare spending rose among employees given access to a pricing tool.
Yet, these results contrast sharply with other more promising findings. A 2014 JAMA study of 18 employers found that medical spending decreased after employees were given a price transparency tool, particularly for imaging and lab tests. And another tool saved one employer $1.1 million in claims, according to one report.
In technology terms, price transparency is still in beta testing.
“It’s still a journey,” says Richard L. Gundling, senior vice president, healthcare financial practices at the Healthcare Financial Management Association. “We're still trying to understand how patients want to use price transparency tools to help them make better decisions. And patients are still getting used to asking about the price of their healthcare.”
As healthcare IT leaders develop, adapt or purchase next-generation pricing tools, they might consider these lessons learned.
The ability to shop
“In the middle of a heart attack, I’m not going to pull out my iPad and tell the ambulance driver to slow down so I can do some price research,” says David Newman, executive director of the Health Care Cost Institute.
In other words, shopping that is detrimental to a patient’s health should be discouraged. That’s why price transparency tools focus on shoppable services, which are primarily common services that can be scheduled in advance, such as mammograms and total joint replacements.
These shoppable services make up as much as 43 percent of what consumers purchase, according to an HCCI study on individuals with employer-sponsored insurance. Within this 43 percent, more shopping is possible around outpatient and physician services than inpatient services.
Even though a sizeable percentage of healthcare services are shoppable, Newman is skeptical that consumer shopping can move the needle on healthcare costs. “Patients only have control over their copays, deductibles and coinsurance,” says Newman. Taking that into account, he estimates that about 3 percent of the total U.S. healthcare spend is impacted by patients’ shopping choices.
Even so, cost reduction is only one goal among many cited by healthcare stakeholders launching price transparency tools. For many hospitals and physician offices giving price estimates, it’s about taking the surprise out of a healthcare transaction, Gundling says. “There’s nothing that dissatisfies a patient more than to get a bill for $2,500 that they were not expecting.”
And a dissatisfying medical billing experience could result in a loss of patients and revenues. According to the 2014 Connance Consumer Impact Study, 95 percent of respondents who were highly satisfied with their billing experience would return to the same hospital for an elective service. In comparison, only 58 percent with less-than-satisfactory experiences would remain loyal. The same survey found that satisfied patients were more likely to pay their medical bills than unsatisfied patients.
“Patients consider ‘price’ to be what their out-of-pocket responsibilities are,” Gundling says. “After all the insurance and government payments happen, what do I owe?”
An insured patient’s financial responsibility will vary depending on insurance benefits and the contract rate the insurer has negotiated with a particular provider. As Newman explains: “It’s easy for United Healthcare to say, ‘This is your price with your insurance at this hospital.’ But if you go to a hospital and ask, ‘What’s your price for a normal vaginal delivery?’ they’ll say, ‘I have 10 prices, because we contract with nine insurers and we have a price for uninsured patients.’ ”
That’s why HFMA believes health plans are best poised to give members price estimates, as summed up in a report from the association’s Price Transparency Task Force.
Most major insurers have stepped up to the plate for their members. For instance, 18 months ago, Priority Health launched a cost estimate tool that enables members to see what their out-of-pocket costs would be for more than 300 services and how those costs vary across providers.
What if patients don’t have insurance? HFMA recommends that uninsured patients turn to their providers for price estimates, as well as help obtaining potential coverage or charity discounts.
There is also a growing number of public-facing websites that can give patients a fair idea of what common health services cost, often searchable by ZIP code or location. These include state-mandated all-payer databases, such as Colorado’s Medical Price Compare. A number of companies and nonprofits also have free online tools, such as HCCI’s Guroo.
Quality Matters, Too
Like many pricing tools provided by insurers and employers, the Priority Health transparency tool also gives each provider a rating of 1 to 5 for overall quality. This is important in healthcare shopping, Gundling says. “We don’t buy anything just based on price. Hospital A may be more expensive, but I'm still going to go there because I trust it. All my friends go there. To be more comfortable is worth $100 for me.”
The evolution of Castlight Health’s platform for employers and insurers helps illustrate how thinking about transparency is evolving. “We started out being very much about price transparency,” says Kristin Torres Mowat, senior vice president, plan development and data operations. “Now we’ve expanded to be about managing benefits more broadly.”
The Castlight Health platform enables employees to compare prices and quality across healthcare providers for specific medical procedures and services. But now employees can also find information about all the health-related benefits their employer offers, from employee assistance programs and telemedicine to dental and mental health benefits. All this information is integrated so when an employee searches for a behavioral health therapist, for example, the platform provides information on the employer’s EAP and explains that the first four visits are covered under the EAP.
The platform also personalizes the information by calculating, for example, how much of an employee’s deductible has been met, and explaining benefit terms in easy-to-understand language.
To help explain why Castlight Health expanded its solution, Torres Mowat points to statistics like this one—73 percent of employees don’t understand their benefits, according to AFLAC.
“Benefits are complex, and we typically need information about our benefits when we’re sick or a family member is sick, and that’s not usually a time when we’re going to try and understand how our benefits work,” Torres Mowat says. “Ultimately, we believe we need to engage people in their benefits at the time they need care so they can make the best decision.”
Build it first
Thoughtful push-pull strategies can help encourage more patients to use pricing and benefit tools or consider price when shopping for services.
One insurer saved $220 per MRI after outreach staff telephoned members to let them know that MRI prices varied, particularly between hospital-based and freestanding facilities. As detailed in a 2014 Health Affairs study, member use of hospital-based facilities decreased by 7 percentage points in two years. The initiative also appears to have spurred price competition, given that variation in MRI prices across hospital-based and freestanding providers declined by 30 percent.
Within the Castlight Health solution, employees can sign up to receive money-saving and health-saving tips, Torres Mowat says. For instance, if an employee goes to the emergency room for a non-emergency, such as a headache, then that employee might receive a note in her employee benefit portal that says something like, “Here’s your claim from your emergency room visit. Did you know that you save X dollars by going to an urgent care center in non-emergency situations instead of an emergency department?”
Given privacy considerations, Castlight Health is careful to only push out notifications that employers agree to send and employees agree to receive, Torres Mowat adds.
Include the physician
The patient’s physician is a crucial person often missing from price discussions, says Gundling:. “A lot of clinicians are uncomfortable at first having these conversations because they don’t want the patient to think that money is getting in the way of their care. But patients say these discussions empower them.”
In an ideal scenario, physicians or their staff would have easy access during a meeting with a patient (for example, via mobile devices) to information on a patient’s insurance benefits and out-of-network costs.
“If the physician said, ‘Rick, you're going to need knee surgery and it's going to be $2,500 out-of-pocket for you,’ it gives me a chance to say, ‘You know, I don't have $2,500. Can we wait a few months so I can save up? Or is there an alternative to surgery?’ Then the physician might say, ‘Maybe we could try this drug treatment first.’”
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