Four Challenges to Healthcare Price Transparency

By HealthPriceCompare - March 13th, 2021

This post examines four challenges to healthcare price transparency.

Challenge #1 - Patients are often unaware of existing price transparency tools or do not use them. However, evidence suggests that most individuals do not seek pricing information even when tools are available, and when they do, most do not compare providers.

There are two reasons for this. One, tangible insurance specific prices were never available until hospital price transparency rules went into effect January 1 of this year. Two, there was no reason to develop an application that delivers insurance plan specific prices because of the first reason.

Challenge #2 - Many healthcare services cannot be planned in advance.

True. Some estimates find that roughly 30% to 40% of health spending is for services that can be scheduled in advance. Many services, however, cannot be planned in advance and will typically be an emergent or urgent situation. Regardless, episodes of care that fit this characteristic will frequently be high dollar items that will immediately exceed plan deductible of cost sharing limits. The Centers for Medicare & Medicaid Services has estimated that $4 trillion was spent on healthcare in 2020 so 30-40% of that total represents a significant amount of spending that can be schedules in advance (i.e. shoppable).

Challenge #3 - Knowing the price of a given health service might not inform patients of how much they owe.

Until this year, patients were completely in the dark regarding how much they might owe for healthcare services. Regardless, nearly half of all participants in employer-based health plans are in high-deductible health plans and the majority of participants in these plans will never reach their plan's deductible limit. This means that for the majority of these individuals will be on the hook for all upfront costs. This makes that knowing their cost sharing responsibilities beyond their plan's deductible limit is largely a moot point.

Challenge #4 - Shopping for care based on price leaves gaps in accounting for the quality of care

Current federal price transparency requirements do not require reporting on quality alongside price. There is debate on how to factor in quality of care into pricing, since higher prices do not necessarily correlate with improved quality of care or outcomes. Additionally, quality can be difficult to measure and compare across providers, and quality metrics might not capture the characteristics of providers that patients may be interested in. For example, common quality metrics at the hospital level include mortality rates, cesarean sections, or hospital re-admissions. Such metrics, while important, might not be the most relevant for patients shopping for certain non-emergency services.