Price transparency in healthcare benefits businesses by reducing the costs of care. It also encourages accountability for providers, who may need to reduce their prices or improve the quality of services to stay competitive.
However, providing plan members with price transparency data alone can lead to bad decisions, especially if the tool does not link cost to quality measures. That is why tools prioritize relating price to quality for shoppable healthcare services.
The promise of price transparency in healthcare empowers consumers and drives down healthcare costs, encouraging patients to shop for the most cost-effective options. Yet consumer engagement and literacy have been challenging, primarily because highly complex pricing data has yet to be available in formats digestible to the public.
This is especially true for medical billing, which is notoriously difficult to decipher, resulting in surprise billing and lack of payment among patients. To combat this, healthcare pricing transparency vendors offer tools that help patients understand what their bills should look like before a procedure, leading to improved revenue cycles and patient satisfaction.
Additionally, the new price transparency rules mandated by CMS provide payers unprecedented visibility into their peers' pricing strategies during bilateral negotiations, driving down prices and enhancing patient outcomes. This is also useful for self-insured employers pursuing reference pricing strategies, in which they pay providers a set rate for certain services based on Medicare rates plus a percentage.
Healthcare price transparency act promotes a competitive market by enabling consumers to shop for providers based on price and quality. Patients can easily compare and choose the most cost-effective options, which motivates healthcare providers to lower costs and offer better service value.
Moreover, price transparency reduces medical debt by empowering consumers to make intelligent financial decisions and negotiate prices with their providers. This, in turn, promotes more disciplined pricing and billing practices, thereby mitigating overall healthcare costs.
While these benefits of price transparency are clear, they could be more widespread. As a result, many consumers must know that their health plans must provide pricing information for covered items and services, as required by the No Surprises Act (KFF tracking survey). The good news is that employer awareness programs can help improve consumer adoption of existing healthcare-related apps, like drug-pricing tools, which are becoming widely used in the retail industry.
The most effective price transparency tools combine cost and quality data. They offer employees meaningful access to expected out-of-pocket costs and outcomes before or at the time of care. These tools can also reduce surprise billing and improve consumer engagement.
New price transparency tools have sparked various responses from employees and employers alike. Some have adopted new tools quickly, while others need education and one-on-one support. Employers that offer their workforce a combination of mobile, desktop, and print tools coupled with personalized advice will see improved adoption and empower their employees to make the right decisions about their healthcare.
Price transparency needs to focus on "shoppable" products and services." For example, a procedure's annual cost or the cost of its components should be communicated to consumers rather than unit prices. It can be augmented by linking pricing data to quality or health outcomes.
Historically, medical billing has been complex and confusing. This lack of transparency leads to surprise medical bills, a primary driver of healthcare debt.
Price transparency empowers consumers to participate in healthcare decision-making by providing comprehensive cost information for various services and treatments. In addition, it allows individuals to make financial plans and negotiate pricing with providers.
For payers, price transparency promotes value-based purchasing and drives competition to lower costs. It also facilitates collaboration between providers and payers by making understanding each other's pricing models easier, leading to better reimbursement rates and contracts.
However, not all price transparency tools are equal. Many only report list prices, which may reflect something other than insurance-negotiated or self-pay prices. Moreover, some of these tools don't link pricing to quality measures. Fortunately, tools combine price and quality data to empower healthcare consumers to shop smarter for their healthcare.