As a follow-up to our trends in healthcare consumerism post, we dive deeper into the growing trend of price transparency as healthcare becomes increasingly consumer-centric. Healthcare consumerism is meant to empower the patient (who may also be known as the “consumer” in a business setting) with information so they can make informed decisions about their health.
The United States spends more on healthcare per capita than any other country in the world and does not have the positive results to show for it. Despite increased spending, Americans have the shortest life expectancy, the highest chronic disease burden and obesity rate, and the highest number of preventable hospitalizations than any other country.
Even with these poor outcomes, our costs continue to grow. The Centers for Medicare and Medicaid Services (CMS) estimates that healthcare spending in the U.S. increased by 4.6 percent in 2018, which averages out to just over $11,000 per person. It would appear there is little to no correlation between healthcare spending and the quality of care that patients received in the U.S.
To help combat rising prices and poor patient outcomes, CMS issued its final Price Transparency Rule in 2020, which will require hospitals to disclose their rates for medical care. In 2020, CMS released further guidance that will require payers and certain outpatient settings, such as primary care, to disclose their rates as well.
Why Price Transparency?
In addition to helping curb high costs, price transparency arms patients with the knowledge to engage with their care. It is estimated that 53 percent of consumers avoid seeking any type of healthcare because they are worried about costs, which can lead to hospitalization or even death from preventable diseases. When patients clearly understand deductibles and insurance pricing, uninsured patients may be incentivized to seek health insurance.
Sixty percent of patients report going to doctor appointments despite being unsure if they can afford it. Even if insurance covers the cost of the initial visit, patients often don’t understand what their out-of-pocket costs will be or if they will receive a surprise bill from an out-of-network physician.
Finally, as evidence to show that price transparency works as intended, the White House cited a study showing that transparency yielded a 19 percent-per-service savings. Patients saved more on average for these procedures because they were able to “shop around” for services. Ultimately, price transparency is meant to help align quality of care with cost.
Price Transparency in Primary Care
Consumer desire for price transparency is so strong in the primary care setting that studies found 74 percent of patients would prefer to pay a $50 copay rather than not know the cost of their primary care visit.
Ultimately, price transparency benefits both physicians and patients. Physicians will have a much more accurate estimate of how much a procedure will cost a patient. In turn, patients are inclined to trust their physician, schedule appointments, and pay their bills on time.
When the price transparency requirements take effect, the administrative burden on physicians to provide the required information will be significant. Physicians can prepare for the upcoming price transparency requirements by:
- Finding a partner. It’s far easier to navigate changes in the healthcare landscape when physicians work together. Management services organizations (MSOs) can support physicians in this transition to price transparency by keeping them informed of what they should expect and helping them prepare for any mandatory changes. Physician networks are an excellent resource for physicians looking to manage their practices more effectively and work with like-minded healthcare professionals.
- Consider joining an ACO. Physicians in accountable care organizations (ACOs) were already ahead of the curve when CMS announced its new price transparency rule. CMS provides ACOs with a set amount of money they are allowed to spend per patient, which is their benchmark, and rewards physicians with additional compensation if they spend under that benchmark for the year. ACOs force physicians to be accountable for unnecessary healthcare expenditures and consider cheaper alternatives.
Although much of the price transparency rule focuses on health plans and hospitals, the move toward value-based care is rapidly expanding in the healthcare industry. Primary care physicians, specialists, and healthcare providers should prepare for price transparency requirements by conducting diligent research and maintaining clear communication with their patients. With the potential to align quality of care with cost, physicians may be able to help improve their patients’ outcomes while reducing costs over time.