It is accepted truth in some academic and policy circles that pursuing real price transparency is a fool's errand, that making health care prices clear to consumers may only be trivially useful or even counterproductive. Earlier this year, a group backed by health plans intimated that only a small portion of health care services are "shoppable," and therefore transparent pricing could lead only to a small reduction in the costs of care. More recently, a longitudinal study of employees using a privately available price transparency tool suggested that the result of shopping for services led to selecting providers with higher prices.
However, a body of literature—some of which is referenced in our Fourth Annual Report Card on State Price Transparency Laws—suggests otherwise. In fact, consumers will make informed choices in health care, much as they do in other areas, when presented with the right information. And equally important, the public availability of real cost and quality information can affect the market, promoting competition that can lower costs and improve quality.
The Need for State Involvement
The private sector has made great strides in enhancing price transparency as is evidenced by the surge in transparency tools such as those offered by Castlight Health and Change Healthcare. But access to price information varies by employer or insurer. And consumers without employers or insurance are on their own.
States can play a role in making sure price information is available to all who need it, and some do. However, in our Report Card only three states earned an "A," one received a "B," and two got a "C." One was graded "D" and a stunning 43 states failed.
So what's the harm? First of all, price transparency is one key pillar of the nation's efforts to keep the cost of health care from continuing to spiral upwards. Without price transparency, consumers and their physicians cannot predict their medical bills or alter their behavior to choose high-quality, low-cost care. High Deductible Health Plans—which now account for 24 percent of insured lives—can't function properly without public pricing information.
The impact of high-cost bills is unequivocal when it comes to uninsured patients, for they typically bear the entire financial burden, potentially leading to medical bankruptcy. But these expenses can be significant and burdensome for insured consumers as well. For instance, the average deductible for an individual "silver" plan sold in health insurance marketplaces is $3,065. The lack of price transparency in the majority of states harms ordinary citizens who can be subject to vastly different out-of-pocket expenses depending on where they go for their episodes of care.
Furthermore, knowledge of differing prices for the same procedure in a given market can have effects on total costs of care that go far beyond the shift in those out-of-pocket expenses. If, for example, consumer pressure caused prices for colonoscopies to edge back towards the current median in every market, the average price decrease would be close to $1,000 per procedure. With 15 million colonoscopies performed each year, the savings to the nation would be at least $15 billion for this routine procedure alone. The reality is that price transparency done right would inflect current price trends significantly at both the national and state levels.
Components of a High-Quality State Price Transparency Program
But how can states help ensure that consumers have access to price information? One way is to adopt strong and actionable transparency legislation, and to turn those laws into action with comprehensive state price transparency programs, including outreach to consumers. Unfortunately, states across the country continue to falter in taking these obvious steps.
A few states have led the way on price transparency and helped us to identify key features that make legislation and programs effective. The gold standard is to mandate an All Payer Claims Database (APCD) to provide a rich data source on price information for a wide range of health care services, and then to display the results publicly on an accessible website. Using an APCD opens up a world of real payment data to consumers, not just list prices that are rarely, if ever, actually paid. An "A" state will make sure that its website delivers information not only on individual services but on complete episodes of care—health care events that affect Americans every day—and allows for comparisons between providers in an intuitive way.
Short of that, there are incremental steps that a number of states can take to improve quickly, such as making price data from existing APCDs available on a publicly accessible website. Currently, 13 states have APCDs but do not post the available price data on a public website.
Presentation Matters
How states present price information is also essential for making it accessible and usable for consumers. Judith Hibbard of the University of Oregon, an expert in how consumers experience, absorb, and act on information about their health care, has identified the best practices for displaying price information and maximizing consumer use. In a compendium of her research, Dr. Hibbard reports that it is important to point out best-value options for consumers when they are shopping for care. Her research has shown that consumers will select the lower-priced, higher-quality provider if that information is available. Without quality information, however, price acts as a strong proxy signal of quality, and a higher price is therefore interpreted as better quality of care.
There are critical features for transparency tools, and the lack of these features is one of the reasons why some research arrives at the premature and erroneous conclusion that pricing knowledge results in increased costs. Price information matters, but it needs to be presented the right way for consumers to act on it; when it is, they do.
The potential for transparency to empower consumers and shift costs down and quality up rests on the strength and comprehensiveness of each state's laws and their implementation. The efforts of most states are not robust or broad enough, but with a modest amount of effort close to half of all states in the union could provide consumers with the right type of quality and pricing information. That's a significant opportunity to quickly correct failing grades and to make up for failing American consumers.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2anABfV
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