More transparency could save health industry billions

The health care industry could save as much as $100 billion over 10 years if it provides more and clearer information on health care prices.

That’s according to new analysis from the Gary and Mary West Health Policy Center, which found providing price information to three key stakeholders —physicians, employers and policymakers—would have a greater impact just sharing it with consumers.

“While health care transparency is typically viewed through the lens of patient-facing transparency tools to drive comparison shopping, our analysis suggests even greater impact could be achieved by expanding the audience for such information,” said Dr. Joseph Smith, chairman of the West Health Policy Center Board of Directors.

Consumers — though important — are just one audience for price information — and one with a limited ability to respond.

“Employers, physicians and health plans can have a significant influence on spending if they make decisions based on what care costs,” the report read.

Just last week, three carrier giants — UnitedHealth, Aetna and Humana — announced through the Health Care Cost Institute that they would “develop and provide consumers free access to an online tool that will offer consumers the most comprehensive information about the price and quality of health care services.”

Their report offered three policy recommendations to help the industry achieve billions in savings:

• “Use state all-payer health claims databases to report hospital prices. This initiative could save up to $55 billion in several ways: by using claims data to make employers more aware of price differences and realize savings from narrower provider networks and tiered benefits; by increasing pressure on high-price hospitals to reduce or justify their prices; and by informing the discussion of policy options for controlling costs.

Require electronic health record systems to provide prices to physicians when ordering diagnostic tests. Physicians play a key role in recommending which tests and treatments are necessary, but they are often unaware of the cost of the services they are ordering. Providing cost information to physicians would enable informed, shared decision making about the relative value of discrete tests or treatments when developing patient-specific treatment plans. This is estimated to produce up to $25 billion in savings over 10 years.

Require all private health plans to provide personalized out-of-pocket expense information to enrollees. Estimated to reduce health spending by $15-20 billion over the next decade, this initiative would have a relatively modest impact because most private plans already offer a personalized price tool but few consumers actually use them. More effective patient-facing transparency tools and/or steeper incentives for their use could increase the impact of this initiative.”

“Price transparency alone isn’t going to change the structural factors that support excessive spending in our healthcare system, but in concert with the transition to newer health plan designs, and newer ways of paying providers, it plays an essential role,” said Chapin White, lead author of the analysis and a former HSC senior researcher now at the RAND Corp.

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