Tuesday, 09 June 2015 21:49

Transparency in Healthcare

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G AdamsOne question that often gets asked is this – Can healthcare transparency really be achieved, and more importantly, can it promote high-value care?

As we all know, the price for healthcare services is often not really the price, with Medicare and Medicaid paying fixed rates and commercial payors primarily paying case rates, per diems, or using a fee schedule. There is often little or no correlation between providers' charges and the amount that ultimately gets paid. Couple this with insurance covering most of the bill, and it's easy to understand why there was no real push for transparency in the past. But it now seems that we have hit a tipping point, as patients have become responsible for a far greater portion of their healthcare costs.

Consumer groups and employers argue that if consumers were armed with price and quality information, they would make decisions similar to the decisions they make for other goods and services. This, in turn, would create more competition among providers, resulting in better quality and lower cost.

An interesting Congressional Research Services study was done on whether consumers would use price information to make better health spending decisions. However, the study found that early price transparency initiatives did not lead to changes in consumer behavior. Speculation is that this may be due to patients still having the bulk of services costs covered by health insurance – and a perception that lower cost means lower quality.

That being said, there are numerous transparency initiatives continuing to gain momentum. Payors are getting involved and beginning to help consumers by providing price information to their members. Aetna does so through its member Payment Estimator, which provides comparative price estimates for more than 500 common services, taking into account users' specific plan types and deductibles.

Others starting to do the same include Blue Cross and Blue Shield plans and UnitedHealthcare. In United's case, its program also allows members to see whether their physician has met quality and efficiency standards.

As would be expected, where a need is projected, private firms have entered the price transparency marketplace too. Castlight Health and Change Healthcare, both founded within the past five years, use proprietary software to analyze claims data to estimate the costs of common medical procedures. Their reports also include quality data on providers, enabling users to take into account both cost and quality. These tools are not only available to consumers, but the companies sell them to self-insured companies and health plans.

In the case of Change Healthcare, they are proactively reaching out to consumers through texts and emails on how they can save on prescription drugs and other healthcare services.

Similar to the Kelley Blue Book, commonly used for determining car values, there is a Healthcare Blue Book available free to consumers. It uses a variety of sources, including claims data, to provide pricing information to consumers. It recently rolled out a subscription-based service to employers and insurance companies that includes providers ranked in terms of value.

For now, it looks like these products are being used for comparison shopping for basic healthcare services such as lab tests, radiology exams, and medical office visits. These are services that are viewed more as commodities, with little differentiation among providers.

At the governmental level, many states have approved or proposed legislation to promote price transparency. Early efforts were primarily about publishing the chargemaster or median prices for hospital services. However, this information often had no relevance to a patient's financial responsibility. Recent efforts include New Hampshire's using its claims database covering all payors in that state to publish information on total and out-of-pocket costs. In California, hospitals are required to provide patient estimates for the 25 most common outpatient procedures. The state also provides a website with median charges per hospital stay for common elective inpatient procedures. Florida not only provides a range of prices for various procedures, but also includes data on quality such as mortality and infection rates for hospitals and surgery centers.

On a federal level, the Patient Protection and Affordable Care Act requires hospitals to annually publish a list of standard charges for their services.

The bottom line here is that access to both price and quality data continues to grow exponentially. This, coupled with the increasing number of consumers participating in high-deductible plans, the growth of retail healthcare, and a generation of consumers who use their mobile devices to book airfares, make dinner reservations, and do all kinds of shopping online will only increase the demand for transparency of healthcare prices. Providers need to be prepared to respond proactively to the new world of healthcare transparency.

About the Author

Greg Adams is the chief strategy officer for Panacea Healthcare Solutions and has over 35 years of experience in the field of healthcare, including 20 years' experience as a hospital CFO. His experience includes financial operations, managed care contracting, physician practice management, patient accounting, patient access, health information management, materials management, and real estate development. Greg is the past chairman of the National HFMA, having served as the chair of its Board of Directors in 2011-12. In that role he oversaw the services the organization provides to its 40,000 members. Greg speaks extensively on healthcare reform and the transition to a value-based payment system. His speaking engagements include national, regional, and state programs. He has previously served as a member of the National Board of Directors for the Healthcare Financial Management Association from 2002-2005 and as president of the New Jersey chapter in 1997-98. He has also served as a member of the Board of Trustees and chairman of the Finance Committee at St. Ann's Home for the Aged, Jersey City, N.J.

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Greg Adams is the Chief Strategy Officer for Panacea Healthcare Solutions and has over 35 years of experience in the field of healthcare including 20 years experience as a hospital CFO. His experience includes financial operations, managed care contracting, physician practice management, patient accounting, patient access, health information management, materials management and real estate development.  Greg is the Past Chair of the National HFMA, having served as the Chair of its Board of Directors in 2011-12. In that role he oversaw the services the organization provides to its 40,000 members. Greg speaks extensively on healthcare reform and the transition to a value based payment system. His speaking engagements include national, regional, and state programs. He has previously served as a member of the National Board of Directors for the Healthcare Financial Management Association from 2002-2005 and as President of the New Jersey chapter in 1997-98. He has also served as a member of the Board of Trustees and Chairman of the Finance Committee at St. Ann’s Home for the Aged, Jersey City, New Jersey.