• Alan Shoebridge

Healthcare price transparency: Real change or wishful thinking?



Wishful thinking describes decision-making and the formation of beliefs based on what might be pleasing to imagine, rather than on evidence, rationality or reality.”

News broke last week that CMS issued a final rule requiring hospitals to disclose the rates they negotiate with insurers beginning in 2021. The Trump administration also released a proposed rule that would require health plans to share price and cost-sharing information with members up front. I was immediately skeptical that these rules will drive real change and offer value.


The stated goal was to help promote consumerism so that patients can shop for their care and make decisions that will save them money and ultimately drive down costs as providers are forced to compete on price. That sounds great in theory, but I think it’s wishful thinking at best. Here are three reasons why.


One: The most expensive care is totally unpredictable

So much of our most expensive care is for situations that cannot be planned or shopped for in advance. Heart attacks, strokes, organ failures, trauma, etc. happen with little to no advance warning. You end up in the hospital with no chance at all to shop for services and compare prices. In addition, you are also likely to be in a state of emotional distress and personal vulnerability that is totally unsuited to making purchasing decisions.


Where this proposed transparency effort might help is for procedures where you have time to consider options and conduct research. Orthopedics is a good example of this. Price transparency for these services might help drive some costs down over time, but that spending only affects a small slice of what’s driving cost increases overall.


Two: Price information will be available, but few consumers will understand it

Here is how Kaiser Health News sums up what consumers will have to wade through:


“The amount of information the rule requires to be disclosed will be massive — including gross charges, negotiated rates and cash prices — for every one of the thousands of services offered by every hospital, which they will be required to update annually.


In a nod to how hard it might be for a consumer to add up items from such an a la carte list of prices, the rule also requires each hospital to include a list of 300 “shoppable” services, described in plain language, with all the ancillary costs included. So, in effect, a patient could look up the total cost of a knee replacement, hernia repair or other treatment.”


Unfortunately, each patient would have a different out-of-pocket payment than what’s actually listed for those services, which they would have to figure out on their own. Nothing about that sounds easy or even in the realm of what most members of the public could makes sense of without assistance. I’m not sure I could even do it well, and I’ve worked in healthcare for nearly 20 years. It does sound like the information could have value to insurers and providers, but even that has sparked debate over whether access to that information will actually lower or raise costs.


Three: These rules ignore issues around lack of choice and access

In many parts of the country, you might only have one choice for a hospital to go to or one specialist to see for a given condition. In that scenario, seeing a list of charges might be valuable in helping you understand your financial exposure, but would offer little to no value in terms of getting care. In fact, we might see more delays in care as people put off getting what they need due to the costs.


Where we go from here


Overall, I think this rule is being pushed forward to cover for the fact that no legislative progress has been made to actually address price, quality or access issues in any meaningful way.


There are a lot of issues with these proposed transparency mandates and litigation might prevent them from actually being put in place. However, I think the biggest issue is that we keep falling back to asking patients to approach healthcare the same way they would buy a car or a new refrigerator. That’s a mistake. People really don’t want to be “consumers” of healthcare in the traditional way that they purchase other products. Expecting them to act otherwise because more information is made available is wishful thinking at best and negligence at worst. In fact, the evidence for the underlying strategy even working at all doesn't look good:


"Years after Massachusetts health insurers launched websites to help consumers make sense of medical costs, the tools are seldom used and are failing to contain health spending as hoped, according to a report from Attorney General Maura Healey’s office. The analysis injects fresh skepticism into the popular theory that giving consumers more information about the cost of medical services will compel them to choose lower-cost health care providers."


Let’s figure out how to get more people into the right settings of care and limit billing surprises. I think that is where the future is brightest. Let’s stop forcing healthcare to be something it will never become: a consumer product in the traditional sense of that term.

37 views
CONTACT ME

© 2017 By Alan Shoebridge. Proudly created with Wix.com