For healthcare consumers, price transparency is a game changer. Consumers need clear, accessible, easy-to-understand information about hospital rates to help them make informed decisions.
Access to pricing information will allow patients to shop around and compare rates before a procedure and avoid being blindsided by unexpected bills. It will also allow them to budget accordingly.
It Helps Patients Make Informed Decisions
Since 2021, federal law has required hospitals to post their standard charges publicly, and health insurance has negotiated discounts for many standard services to promote transparency and competition. Unfortunately, the current way of sharing this information makes it difficult for consumers who want to compare prices or research.
The price differs from the accurate price for insured patients, as deductibles and co-payments often apply to their total costs. Price transparency in healthcare should focus on unit prices that are meaningful to consumers, such as episodes of care and procedures. It will help consumers shop smart and save money. It will help to facilitate the shift from fee-for-service to payment for value or outcomes.
It Helps Employers Save Money
In addition to helping patients save money, price transparency can benefit employers too. The ACA’s pricing transparency rule, now in full effect, requires hospitals to publish their standard charges, negotiated rates, and historical out-of-network payments for the 300 “shoppable” services they offer in a publicly available, machine-readable file. This information allows payers to compare providers and prices in a new light, driving down costs without compromising quality.
But if consumers are going to respond to price transparency, it needs to be more than just about prices. The fact is that consumers are far more interested in the total episode of care’s cost than individual service prices.
To address this, transparent healthcare organizations should focus on delivering transparency on quality and performance measures. It will help drive engagement and change, boosting value in the market. It requires a holistic approach and willingness to disrupt business. The rewards are valuable.
It Aids Patients in Taking Charge of Their Medical Costs
When consumers are empowered to shop for better prices, they’re more likely to consider the value of healthcare services. It drives providers to focus on delivering high-quality care while keeping costs down.
Similarly, transparency initiatives that include public reporting of readmission, complication, and healthcare-associated infection rates can simultaneously lower costs and improve patient outcomes. Ongoing research has indicated that these efforts have the potential to yield as much as $5 billion in yearly savings.
While some hospital leaders fear that price transparency will lead to “price wars,” the right mindset and approach can bolster hospitals’ financial performance by helping them to negotiate higher fees with payers.
To effectively promote price transparency, it is crucial to concentrate on products and services that can easily be purchased, like specific medications and procedures. It’s also essential to combine this data with quality information so that patients can make the most informed purchase decisions. It will ensure that consumers aren’t chasing low-cost providers without a corresponding improvement in the quality of their care.
It Helps Hospitals Make Better Decisions
Next to housing, healthcare consumes the most significant percentage of many families’ budgets, yet consumers can do very little financial planning or predict their health costs. It is due mainly to third-party payments, high deductibles, and significant differences in prices among hospitals, even for the same procedure performed by the same physician.
With more price transparency, patients will be better prepared to discuss the cost of their care with their providers, helping build trust between patients and medical professionals. Providing transparent medical billing helps reduce patient frustration. Studies have shown that unclear billing can lead to lower patient satisfaction scores in HCAHPS surveys.
The HHS’s new transparency rule requiring disclosure of hospitals’ payer-specific negotiated prices and discounted cash prices for 300 shoppable services is an essential first step. Still, it poses some obstacles to a detailed investigation of the impact on prices. One is that data on prices before adopting the rule may be missing, making it challenging to compare pre-and post-rule data.