March 28, 2018

The federal government has turned the spotlight once again on the issue of price transparency in healthcare, with a bipartisan group of senators reaching out to a large swath of stakeholders for input and Secretary of Health and Human Services Alex M. Azar II naming it as a pillar of an agenda to increase value and lower costs for consumers.

The key word here is “consumers.”  Though there is no consensus at present on how to achieve price transparency nor agreement on its feasibility or the extent to which efforts to promote it can actually benefit patients, it’s a key player in the shift toward healthcare “consumerism” spurred by the rapid growth of high deductible health plans and other trends.

Proponents argue that, as patients shoulder more of their healthcare costs, they should be able to “shop” for healthcare services much as they do now for retail goods and other services, and that this “comparison shopping” will empower patients and drive down costs.

The government appears determined to nudge the healthcare industry in this direction.  “There is no more powerful force than an informed consumer,” Mr. Azar said in a recent speech to the Federation of American Hospitals.  “Especially if we want to move to a system where we put patients more in charge of their own healthcare dollars, providers and insurers have to become more transparent about their pricing.  And if that doesn’t happen, we have plenty of levers to pull that would help drive this change.”

At the same time, Senators Bill Cassidy, MD, Michael Bennet, Chuck Grassley, Tom Carper, Todd Young and Claire McCaskill announced a bipartisan initiative to increase healthcare price and information transparency in a letter to the American Medical Association, American Hospital Association, Federation of American Hospitals, Blue Cross Blue Shield, Association of Health Insurance Plans, the Commonwealth Fund and several other organizations.  The letter asks the organizations for recommendations and the benefit of their “real world experience” in helping to determine the best course forward.

“Nearly two-thirds of Americans say it is too difficult to find out what medical care costs,” the letter states, citing the results of a Kaiser Family Foundation survey.  “In virtually every other industry, consumers are able to price shop, compare quality, and then decide what product best fits their needs.  In healthcare, the lack of information and the inability to access it hurts patients and prevents normal market forces from driving competition, lowering prices and improving quality.”

The Washington, D.C.-based Alliance for Site Neutral Payment Reform applauded the bipartisan initiative in a letter urging the lawmakers to incorporate changes in current site neutral payment policies into efforts to increase price transparency and empower patients.  The organization contends that higher reimbursement rates in hospital outpatient department settings “encourage the acquisition of office-based physician practices, further restricting patient access to care in the lower cost community setting,” and that “unless steps are taken to stem consolidation in the health care marketplace through the advancement of site neutral payment policies, health care spending will continue to increase while patient access to community-based care will decrease.”

However, in comments to the Senators, the American Hospital Association discussed the complex array of forces that influence pricing for medical care and why consumer shopping for healthcare services remains a challenge.

“Efforts to date have not shown much success,” the AHA stated.  “Patients have not used much of the data that already is available” through either public or private initiatives.  As little as seven percent of medical care is “shoppable” by patients, the AHA said, in part because “treatment for the same condition will vary based upon the severity of the case, any compounding comorbidities, and a patient’s genetic makeup.  In addition, the need for health care often arises suddenly, and patients do not have time to compare price and quality information before seeking care.”

The AHA said it is prepared to work with lawmakers to support innovative efforts at the state level and to share information that will help patients make more informed choices.