10 things to know about price transparency
Healthcare pricing is a convoluted and often misunderstood process, but providers are being driven to illuminate cost. Consumers, and increasingly legislators, are demanding a more transparent approach to pricing.
Here are 10 things to know about price transparency in the healthcare industry.
1. There are 28 states with active health price transparency and price disclosure legislation, according to the National Conference of State Legislatures. Legislation ranges from requiring hospitals and other providers to report prices to state health agencies to requiring providers to inform patients of prices for common procedures. Legislation has been enacted as early as the 1980s and as recently as last year. Here are the states with some form of price transparency legislation:
• New Hampshire
• North Carolina
• Rhode Island
• South Dakota
2. Several states have all-payer claims databases, which aim to increase transparency in healthcare and bridge information gaps for state agencies, amongst other goals. The first APCD was established in Maine in 2003, according to a Robert Wood Johnson Foundation report.
The following states have an existing APCD, according to the APCD Council:
• New Hampshire
• Rhode Island
Connecticut, Nebraska New York and West Virginia are in the process of implementing an APCD. California and Wisconsin have existing voluntary APCD efforts. Several other states have expressed a strong interest in beginning an APCD. Today, just 10 states have no activity associated with APCDs.
3. In addition to price transparency outlets offered at the state level, a number of companies have begun to offer platforms. For example, Castlight Health, founded in 2008, offers enterprise healthcare cloud technology driven at controlling healthcare costs and integrating benefits program. The solutions allow employers to provide healthcare cost and quality information to their workers.
4. Many ASCs are actively participating in price transparency initiatives. Several centers have joined the online platform Pricing Healthcare. The company was founded in 2012. All prices posted on its website include facility, physician and anesthesiologist fees.
5. Surgery Center of Oklahoma in Oklahoma City was an early adopted of price transparency. The center has prices posted for more than 100 of its procedures online. More ASCs are taking this step and adding prices to their websites, offering transparency for the most common procedures.
6. Last year, a study from the Gary and Mary West Health Policy Center found that increased price transparency could save $100 billion over the next 10 years. The study authors suggested price transparency be increased for not only patients, but physicians and policymakers, as well. The potential savings predicted in the study could be driven by increased utilization of APCDs, requiring EHRs to provide physicians with prices when ordering diagnostic tests and requiring all private payers to provide personalized out-of-pocket price information to patients.
7. Given the potential for savings and increased demand, the market value for price transparency products is expected to grow. The total U.S. market for these products, worth $540 million in 2012, is expect to reach a value of $3.09 billion in 2016, according to a report from advisory firm Aite Group.
8. Price transparency may be highly valued, but it remains a struggle for most states in the country. In July, the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute released their report care on state healthcare price transparency laws based on 2014 legislation. Forty-five states received "F" grades. New Hampshire was the only state to receive an "A." Colorado and Maine received "B" grades, while Vermont and Virginia received "C" grades.
9. Grades were based on a 50-point scale. States could have earned all 50 points for legislated price transparency websites, by doing all of the following:
• Estimate consumers out-of-pocket expenses
• Have quality and price side-by-side
• Offer provider comparisons
• Have clear language, no jargon
• Have a search function by provider/procedure/service/condition
• Have ease of navigation/layout
• Include a large number of services
• Include a large number of providers
• Include paid amounts (not just charge data)
• Have information that comes from a reliable source (extra points for all-payer claims directory)
• Provide confidence of estimate and current data
• Have data flowing to the site
10. Further studies have revealed price transparency still has far to go. The Pioneer Institute recently conducted a study that found many providers in Massachusetts were reluctant or unable to disclose pricing information, despite the price transparency legislation in place. The study authors called 96 medical providers in the dermatology, gastroenterology, ophthalmology and dentistry specialties. The results of the study were mixed.
Dentists proved to the most able to provide cost information within two business days. Dermatologists offered little specificity, and some providers expressed uncertainty over whether they had the authority to disclose the information. Ophthalmologists fell somewhere between the dentists and dermatologists in the study. Gastroenterologists were asked about the cost of a colonoscopy. Just 13 of 25 practices included in the study were able to provide price information for physician, facility and anesthesia fees within two business days.
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