Most people wouldn’t think of buying an expensive item without doing significant research and price comparisons. Yet, when it comes to healthcare, which is often a major expense, comparison shopping has historically been non-existent. This is due, in part, to a lack of transparency in healthcare.
In the past, if you asked for a written estimate for a medical procedure, many doctors and healthcare facilities would treat it as a nuisance. Worse, they probably couldn’t provide an accurate estimate even if they tried, due to the lack of coordination and transparency between service providers, insurance companies and other key players in the industry.
The Push for More Transparency
Transparency in healthcare began to change with the advent of healthcare consumerism. Healthcare consumerism is a movement designed to make the delivery of healthcare services more efficient and cost-effective. Healthcare consumerism strives to do this by putting the purchasing power and decision-making in the hands of patients. When people become fully involved in their healthcare decisions, it places pressure on healthcare service providers to deliver the highest quality at the lowest price.
Previously, most patients learned the actual cost of a doctor visit or medical procedure when they received their bill afterward. Some medical providers now provide pricing and other information to consumers. However, doing so remains the exception rather than the rule.
During his tenure, President Trump signed Executive Order 13877 in June 2019 to help increase healthcare transparency. The executive order mandated that healthcare providers publish the cost of medical procedures before consumers receive them.
The Biden Administration has continued pursuing transparency. In 2021 it issued an interim final rule that allows for the following provisions:
- Ban surprise billing for emergency services
- Ban high out-of-network cost-sharing for emergency and non-emergency services
- Ban out-of-network charges for ancillary care at an in-network facility in all circumstances
- Ban other out-of-network charges without advance notice.
However, the interim rule delays other important provisions of the 2019 executive order:
- Health insurance companies now have until July 1, 2022 to publish the underlying negotiated rates paid to healthcare providers, historical information on charges from and payments to out-of-network providers, and negotiated rates and historical prices for covered prescription drugs.
- The requirement that insurers publish prescription drug costs has been delayed indefinitely
- Although they go into effect on January 1, 2022, disclosure rules that require insurers to provide consumers with estimates of expected costs will not be enforced
- Hospitals were to publish negotiated rates with insurers along with discounted cash prices, but implementing this reform has encountered roadblocks
Big Changes Ahead for the Healthcare Industry
In the traditional healthcare delivery model, patients tend to pay little attention to the cost of services. To develop more responsible healthcare consumers, key stakeholders – including healthcare, tax and benefits professionals and employers – are starting to provide the information, financial incentives, and decision-making tools patients need to make educated decisions.
Bipartisan support for lowering costs
From a political standpoint, the high cost of healthcare is a bipartisan issue. Lower costs and increased transparency both receive strong support from the two major parties and independents.
However, transparency regulations have faced pushback. In August 2021, the U.S. Chamber of Commerce and the Pharmaceutical Care Management Association (PCMA) filed lawsuits. The Chamber believes the regulations are not consumer-focused and instead are “counterproductive, wasteful and unlawful.” The PCMA challenges the part of the price transparency rule that requires plans and issuers to publicly reveal “sensitive data” during price negotiations.
Why transparency is so important
As transparency in healthcare increases, everyone from patients to physicians to insurance providers can benefit. Positive results of healthcare transparency include:
- Higher quality medical care
- Improved patient outcomes
- Lower operating costs for hospitals, medical practices and individual physicians
- Better control over the spiraling costs of healthcare insurance
- More efficient administrative process, such as billing and patient record-keeping
Transparency for consumers
Today’s healthcare consumers contend with High Deductible Health Plans (HDHPs) and higher out-of-pocket expenses. Transparency equates to having ready access to information about quality and cost. With this information, consumers can compare service providers and choose the best services at the best price.
To improve transparency, insurance providers are starting to make it easier for patients to determine costs. Many now provide a cost estimator application on their websites that patients can use before scheduling a procedure. Health systems have also begun publishing quality information on their websites so consumers can make quality-of-service comparisons before choosing a provider.
At the same time, Health Savings Accounts (HSAs), Flexible Savings Accounts (FSAs) and Health Reimbursement Accounts (HRAs) provide consumers with tax-advantaged financial tools which get them more involved in their healthcare decisions. Using these accounts to pay for healthcare expenses enables consumers to gain a better understanding of their healthcare costs.
Transparency for physicians
In the traditional healthcare model, physicians have no financial responsibility for the quality of care delivered by their referral partners. With more emphasis on accountability, physicians are becoming liable not just for the quality of services they provide, but also those delivered by their referral partners. As a result, physicians – especially those participating in value-based contracts – now want to know which potential referral partners have the best patient outcomes.
Transparency between payers and providers
The shift from a fee-for-service reimbursement system to value-based care – a delivery model in which healthcare providers are paid based on patient outcomes – requires payers and providers to start working as allies rather than adversaries. Previously, both sides closely guarded their proprietary information to gain the upper hand during price negotiations. Transparency means providing access to previously withheld information and jointly tracking agreed-upon quality, efficiency, and patient satisfaction metrics.
Transparency within healthcare organizations
For hospitals and large medical practices, transparency relates to more accessible information about resource costs, patient outcomes and internal quality improvement initiatives. It also means improved communications and collaboration between all departments within the organization.
In hospitals, determining costs within a specific area, such as an operating room, can be challenging. Within individual practices, doctors often have trouble seeing what other doctors are doing. Many also don’t know how their own performance contributes to the overall process. In response, many hospitals and practices have started investing in new technologies and team building efforts in order to improve efficiency and quality, reduce costs and improve patient outcomes and satisfaction.
Greater Transparency in Healthcare
Recent efforts by elected officials and the move to healthcare consumerism represents a major cultural shift. Everyone involved – government, healthcare providers, insurance payers, and patients – wants the same outcome: higher quality medical care at a lower cost. More emphasis on transparency and healthcare consumerism could be the combination that gets us there.