Price Transparency in Healthcare

The Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS), is issuing rules that take historic steps to increase price transparency to empower patients and increase competition among hospitals, group health plans and health insurance issuers. Price transparency can change the affordability of healthcare, improve customer satisfaction levels, place an emphasis on value in healthcare, and more.

According to the Association of American Medical Colleges, price transparency in healthcare is defined as “readily available information on the price of health care services that, together with other information, helps define the value of those services and enables patients and other care purchasers to identify, compare, and choose providers that offer the desired level of value.” Price transparency allows consumers to assess the value of the services they get from their medical providers and their satisfaction with those services.

Medical providers are used to having patients who are preparing for procedures ask about the cost of the services. Without price transparency tools, patients must wait until they receive a bill after their procedure to understand what their out-of-pocket costs are going to be. Price transparency allows providers to inform patients of the cost of procedures before they are performed. For providers, it may be difficult to determine those costs prior to service, for many reasons. Overall costs are often dictated by the insurance carrier. Areas in the country, and even neighborhoods within those areas can also determine rates. Providers and insurance carriers will need to work closely together to provide accurate estimates. Providers need to consider obtaining and implementing the technological tools necessary to provide the price transparency information without increasing their workload, such as cost estimators.

The Affordable Care Act has made it mandatory for all hospitals to provide a chargemaster or CDM, which contains the prices of all services, goods, and procedures for which a separate charge exists. This causes hospitals to have to compete with comparable health clinics in the region based on price, which drives down prices and promotes affordability. This allows patients to review the costs and choose affordable care options. Unfortunately, some adverse health outcomes can occur because of patients choosing not to have a procedure due to the cost or postponing it while they save for the procedure.

Another unintended impact of price transparency is the competitive advantage it provides to larger organizations. Prices can be significantly lowered as a marketing tool to draw in customers. Then when smaller organizations, who cannot afford to operate at a loss, are driven out of business, the larger organizations can raise their rates. The long-term effects could result in larger organizations absorbing all the smaller ones.

Patient satisfaction rates are also impacted by price transparency, or a lack of it. When patients are planning MRIs, CAT scans, surgeries, and other large cost procedures they are looking for transparency. A lack of trust with their provider, poor communication, and mediocre customer service regarding information about their financial responsibility, will create lower satisfaction rates, as they may feel they are wasting money. Cost estimators will help providers to improve their customer satisfaction rates if their patients feel they know the full financial costs to make health care decisions prior to receiving the services.

Providers must also consider the value in price transparency. As we stated earlier, some patients will opt not to have procedures completed once they know the cost, because they feel unable to afford it. Providers who offer payment plans or sliding fee schedules provide patients with an option to work within their budget. This demonstration of concern for their patients provides a patient with a better sense of value in the care they provide. Price transparency in healthcare is tied to providing value, and procedures that are more costly require an effort by the provider to justify the cost. Communication with the patient is key to ensuring they understand the benefits of the procedure they will receive, less pain, more movement, etc. If they understand the benefit to them of improvement to their quality of life, they will perceive the cost at a higher value.

Price transparency will change the affordability of healthcare, improve customer satisfaction levels, place an emphasis on value in healthcare, and more. Genesis Medical Management is committed to providing their clients with the information needed to sustain growth within their industry, and to meet the ever-changing government regulations in healthcare.