Insights

Transparency in Health Care Pricing

How much does this procedure cost? It’s a question that some Americans are asking – and one that perhaps more Americans should be asking. According to research conducted by Public Agenda, 21 percent of Americans have compared prices from multiple health care providers. However, 47 to 57 percent do not realize that the same procedure from the same physicians might come with a different price tag depending on the insurance provider.

As a result, approximately half of Americans may be ill-equipped to ask the right questions in the search for affordable health care.

Most states are failing.

The Health Care Incentives Improvement Institute (HCI3) and the Catalyst for Payment Reform have issued their 2016 Report Card on State Price Transparency Laws. It’s their fourth installment, and although some states have shown improvement – Oregon, notably, went from an F grade in 2015 to a B grade this year – most states have stagnated. In fact, 43 states received F grades for price transparency laws.

Nevertheless, health care price transparency shouldn’t be written off as a lost cause just yet.

In April, Florida Governor Rick Scott signed legislature, HB 1175, to increase price transparency by requiring hospitals to publish their prices and average payments online. Meanwhile, the New York State Senate is reviewing a bill that would require transparency in terms of pharmaceuticals, and Ohio’s bill requiring health care providers to supply cost estimates before non-emergency service goes into effect on January 1, 2017.

Why Does Health Care Pricing Transparency Matter?

The stated purpose of Florida’s price transparency bill is to prevent price gouging by hospitals. An article in the Healthcare Leadership Blog discusses the economic theory that publishing the price of procedures will lead to lower costs, a theory that has proven true in other industries. Although selecting a health care provider is a complicated decision that relies upon many factors, upfront knowledge of costs can only be beneficial to consumers.

Furthermore, as HCI3 explains, many Americans have insurance plans with high deductibles and co-insurance, meaning that even for the insured, a lot of medical expenses have to be paid out of pocket. As a result, it makes sense for consumers to shop around for the best price before selecting a plan – something that can only be done if costs are known in advance. To help in this effort, HCI3 provides guidelines for useful price transparency tools. And, many other websites are launching to help consumers research health care costs online.

Currently, most Americans struggle when it comes to comparison shopping for health care. As price transparency laws improve and providers supply better information, this should change. Hopefully, the result will be lower prices and fewer unexpected bills.

What Employers Can Do

As you communicate benefits options to your employees, also include education about how they can be smart health care consumers. Teach them that it’s a good idea to compare prices before choosing a provider, and how these choices can impact their out-of-pocket costs. The cost of a procedure can vary by as much as 300 percent between providers in a single city. If they choose the provider that charges the most, their out-of-pocket portion will also be higher.

Also make sure they know that their choices impact how much the group health care policy costs each year. The cost of the plan is usually shared between the employer and the employees, so everyone benefits from smart health care choices.

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