More data, but not more clarity?

The study noted that hospitals, providers, and pharmaceutical companies negotiate with payers such as governmental bodies or commercial insurers. Payments for Medicare and Medicaid services tend to be lower, and among commercial payers prices are generally higher in areas with a higher concentration of providers.

Recent federal efforts to increase price transparency have resulted in more data being released; states are also attempting to increase transparency through state All-Payer Claims Databases (APCDs).

But such efforts still have a way to go, the Rand analysis said. One major problem is that releasing data on charges or negotiated prices does not actually reflect what consumers would pay for services out of pocket (OOP). The complexity of health plans, the various options available to consumers, and the lack of standardization in what providers charge for services, all contribute to a system where the data can be overwhelming, and means of interpreting the data are not available to the average consumer.

In on example, the Rand study notes, "OOP price transparency would be difficult to convey accurately, because any tool would need to know not only negotiated prices between plans and providers but also the specific plan benefit design information of each consumer's insurance plan and where the consumer falls in their benefit (for example, whether the deductible has been met)."

This level of complexity threatens to undermine the usefulness of the transparency efforts now underway. Because of this, the Rand analysts list a number of additional steps that they recommend to improve both transparency and usefulness of the data to consumers.

Recommended improvements

The report recommends a number of changes, including:

Improvement of transparency tools for consumers. The study said an increased emphasis on OOP price transparency would be more relevant to consumers. In addition, measurements such as the current Care Compare tools (which provide quality information on providers) should include more detail and do more to link quality and price data.

Require more disclosure on contracts and data. This would include requiring data from self-funded health plans. Self-funded plans have ERISA exemptions allowing them to avoid disclosure to APCDs. The report suggests setting up a federal APCD, although it acknowledges this would be a big task. In addition, many insurer-provider contracts currently do not allow negotiated prices to disclosed. Legislation requiring disclosure of these prices would give consumers more useful information.

Promote tools such as APCDs. The analysts said that states that have not yet established APCDs should do so, and those that have them should make sure that online price and quality tools have the depth and clarity of information needed by consumers.

"The barriers to consumer price and quality transparency identified through this work generally represented limitations of existing tools," the study concluded. "Efforts to achieve price and quality transparency have the potential to allow consumers to make better-informed decisions about their health care."

Read more: 

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