In the United States, the rising cost of healthcare has become a significant concern for people, with many finding themselves unable to afford even primary medical care. The high cost is a complex issue with many contributing factors, including the lack of price transparency in the healthcare industry. For too long, people have been in the dark about the actual cost of medical procedures and services, and it is time for policymakers to act and promote price transparency.
The Hospital Price Transparency rule , implemented in 2021, requires hospitals to publicly release machine-readable lists of payer-specific prices for standard charges to promote price competition and help patients and providers make informed decisions about healthcare costs. However, the availability and accuracy of these lists can vary, and other factors, such as deductibles and copays, may influence the final price of care.
A study by the Kaiser Family Foundation found that the hospital price transparency data shared with the public is missing crucial information and is often inconsistent. This highlights the need for standardization and specificity in labeling minimum and maximum negotiated charges and more comprehensive data.
In addition to the federal government’s efforts to promote price transparency, several ideas could help improve healthcare price transparency at the state level. A new study by the Pioneer Institute has found that most U.S. states have weak laws on healthcare price transparency. There are many ways states can act to strengthen and improve price transparency.
These ideas include codifying federal insurer and hospital rules that include billing and reimbursement, patient care and safety standards, and guidelines for managing patient health information, providing robust advanced explanations of benefits, and requiring price transparency at all locations. These solutions would help create a better healthcare market, benefiting consumers by promoting competition and lowering prices.
Furthermore, it is essential to ensure that healthcare price transparency regulations are enforceable and accessible. One reason why compliance with the 2021 Hospital Transparency Rule is low is that the Centers for Medicare and Medicaid Services — so far — has not strongly enforced it. While the agency has issued hundreds of warnings, only two hospitals have faced penalties.
Price transparency, once realized, would benefit people in a variety of ways. Consider this scenario: Mary is a 45-year-old who needs knee replacement surgery. She has health insurance, but she’s concerned about how much she’ll need to pay. Mary uses an online price comparison tool provided by her insurance company to compare the surgery price across different hospitals. She can find a hospital that offers the surgery at a lower price, which helps her save money and feel more confident in her decision.
Or consider John: John is a small business owner offering his employees health insurance. He’s concerned about the rising prices in healthcare and the impact on his business. John partners with a healthcare provider that offers personalized prices for medical procedures and services, which helps his employees understand the prices of their healthcare and make more informed decisions. This, in turn, allows John to manage his healthcare expenses more effectively and keep his costs under control.
Price transparency can help when it comes to drugs as well. For example: Sarah is a 65-year-old who needs to take medication for a chronic condition. She’s concerned about the drug’s price and whether her insurance will cover it. Sarah looks up the list price of the medication on the pharmaceutical company’s website and discovers that it’s much higher than expected. She talks to her doctor about alternative medications and can find an affordable option that works just as well for her.
Here’s an example of price transparency in a physical therapy practice with a diagnosis of rotator cuff tendinitis. The practice may inform the patient of the cost of an initial evaluation ($250), follow-up appointments ($150 per session), and the total price of a 10-session treatment plan ($1,500).
The practice may also inform the patient about insurance coverage and out-of-pocket expenses, copay, or coinsurance if applicable. By providing this information upfront, the patient can make an informed decision about their treatment plan and understand the expected prices associated with their care. This can help the patient budget for treatment and avoid unexpected bills or financial stress.
In short, promoting price transparency in healthcare is crucial to making medical care more affordable, accountable, and accessible. Price transparency encourages providers to compete on price and helps reduce healthcare disparities. Policymakers must urgently work with stakeholders to address these challenges and promote price transparency in healthcare.