At the beginning of 2019, the Trump Administration revived the conversation around hospital price transparency with a new rule requiring hospitals to make their standard base prices for care or services — chargemaster prices — public. In the months since, there has been discussion of going further by requiring hospitals to disclose their negotiated rates with health plans. Facing increased public scrutiny on the rising costs of drug prices, the pharmaceutical industry and pharmacy benefit managers, or PBMs, have also been a central target of the conversation.
As Health and Human Services Secretary Alex Azar recently commented at the National Business Group on Health’s annual conference, these efforts are about making costs as transparent as possible to promote competition among the available health plan options.
All of this activity may mean the timing is right for a new era of health care consumerism, where cost transparency enables patients to comparison shop, while holding payers, providers, and pharmaceutical companies accountable. But as anyone who has actually experienced the American health care system is all too aware, the reality is: making informed health care decisions is harder than shopping for typical consumer products or services.
So while this renewed focus on the potential for cost transparency to transform the patient experience is exciting, we hope it will stay grounded in just how difficult it is to execute on this vision. Empowering patients with all of the information they need to make the best decision for their health calls for giving them more than basic prices. To be clear, transparency is still an essential component to transforming the patient experience, but it is just that — a component — of a larger whole.
So what else needs to be considered in order to design transparency that delivers on its promise?
First, it’s essential to remember that health care costs are extremely personal. Neither the chargemaster price nor the health plan’s negotiated rate is close to the price patients end up paying. Even patients seeking care for the same medical reason at the same hospital or practice can have vastly different individual bills due to their personal medical history, assigned course of care, rehab, medications, and the specific providers they see. To truly help people understand their costs, we must offer insights that, at a minimum, integrate a health plan’s negotiated rates, a patient’s plan design, and where they are in their deductible, to give them as accurate a prediction of their total and out-of-pocket costs as possible.
Second, cost is not the only, nor the most powerful, factor in shopping for health care. When patients are dealing with their own health, or the health of a family member, each decision weighs cost, but also quality of care, patient and provider location, and personal care preferences. And, to further complicate things, there’s no set formula, as individuals may value each factor differently. To connect patients with the right health care option, all of the variables patients consider must be synthesized to provide the best provider or care recommendation.
Third, no visit to the doctor or treatment exists in isolation; it’s part of a patient’s total health journey. Unlike the typical shopping experience, whether for a new car, home appliances, or furniture, health care involves ongoing, critical, and co-dependent choices. That’s why we cannot expect patients to individually seek out the information needed for each decision. To empower patients, information must be collected and presented to patients in a user-friendly, centralized location that they can turn to in their times of need, such as a health plan portal or navigation platform.
Finally, patients are not accustomed to shopping for health care. That is why all of this information needs to be available in a consumer-grade experience that patients can intuitively use, paired with personalized health care recommendations, and accurate price transparency tools that encompass all of the above considerations.
Requiring hospital prices of any kind to be available online is certainly encouraging progress, but comprehensive consideration of how patients actually access and use the information available to them in their decision-making process is required to empower informed health care consumers.