Families USA Has an Excellent Report on Price Transparency — Really
Families USA, a leftist advocacy outfit often criticized in this blog, has published an excellent — not perfect — report on price transparency. Maybe it’s just because I’m feeling generous going into the last long weekend of the summer, but I think this report deserves a shout out from our side:
Prices for the same health care service can vary drastically across providers, and it is difficult for consumers to get information to compare providers based on both price and quality.
Making information on health care prices and quality accessible will help consumers compare costs, choose high-value providers, and anticipate their expenses.
Perhaps in the same way that it took Nixon (a Republican) to go to (communist) China, it took Obamacare (with its high deductibles and co-pays) to bring the left to appreciate that patients as consumers can drive costs down and quality up – but only if they are responding to prices.
What is the role for government? Families USA’s most convincing recommendation is so commons-sensical that it’s hard to believe it does not exist in every state:
Guaranteed, binding estimates: A consumer’s health plan cannot charge more than the estimated out-of-pocket costs unless the consumer requires additional unexpected services during the course of treatment that have separate cost-sharing. Providing this type of individualized, binding estimate will ensure that consumers have reliable information that they can trust when comparing providers.
This is what I’ve called a solution “rooted in the law of contract” which does not require a huge government intervention. It is standard in other transactions.
The report does share some of the big-government approaches favored by the Pacific Business Group on Health, but they come below the consumer-driven proposals.
The apparently emerging consensus that prices are important for patients is a very welcome development.
We need to give most people credit for the ability to compare pricing for most goods; cell phones, TVs, computers, gas, food, etc. Why can’t they do it for health care?
“Health care is different!!!”
It is no doubt that consumers need to know about prices
It’s gratifying to see a paper like this from a liberal think tank.
I note, however, that it didn’t address the issue of the cost of care that must be delivered under emergency conditions when price shopping impossible. We need special rules for that situation. My own recommendation is to limit allowable charges to between 115% and 125% of Medicare if the patient is uninsured or out-of-network.
We also need to get rid of the confidentiality agreements between insurers and providers some of which even preclude insurers from disclosing contract rates to their own members. It’s also critical that doctors gain access to actual contract rates for all providers to whom they refer patients so they can identify the most cost-effective high quality providers in real time and send their patients to them. Obviously, such information needs to be available in a user friendly format so doctors and staff personnel can access it easily and quickly. Reference pricing where it makes sense would also be extremely helpful in my opinion.
I like the idea of a binding estimate of out-of-pocket costs for specific procedures including surgeries and imaging. Let providers assume some risk here and get their act together to serve the financial information needs of patients as well as their medical needs.
Yes, true emergencies are different. However, the ERs are full of patients who could be more appropriately treated elsewhere.
True emergencies are not what is driving up health costs.
I’m sorry, but you lost me at “Families USA” and “excellent report.” Those two phrases are mutually exclusive in my opinion. Families USA has never encountered an entitlement it doesn’t support — even if that entitlement is funded by taxing… families!
We used to have a process like that in many dental plans (dating back to the 70’s and 80’s). Whenever the charge > $200, you could (sometimes were required) to get a “precert” so as to confirm what the plan would pay, and your out of pocket. Dentists often wanted the confirmation more than patients.
where voluntary, people used it infrequently. Few found it to be of value – because they had already selected their provider (and who wants to change dentists, anyway).
Then, whenever the procedures changed or the charges were greater or the reimbursement didn’t meet expectations, the next step was sometimes a trip to the bar – the plaintiff’s bar.
You need to change consumer and patient behavior. To successfully change consumer behavior, you probably need something more akin to “reference pricing” and “balance billing” – set reimbursement rates, apply them in and out of networks, “balance billing” of any excess. In that way, you define what the plan will pay to create financial incentives for price/quality comparisons. Always met with resistance – soon to be met with new government regulations (probably supported by Families USA) and for sure, litigation (both by participants and probably providers themselves).
We all readily adjust our consumer behavior everyday. We do it consciously/unconsciously as we walk down the aisle at Krogers. We snap judgements, adjust meals and purchase as we go. Ground Beef now $5+ a pound, buy chicken, pork, or go meatless for a day. Snap, snap, snap. It is why CPI is not a very good measure of inflation – because consumers change their market basket of goods, many times without much conscious thought.
Just posting prices and quality indicators won’t change behavior unless consumers are at risk and spending their own money. So, without reference pricing, you can’t expect the consumer to change behaviors once the deductible is satisfied, or the out of pocket expense maximum is reached … particularly once the consumer takes on their other role of patient (described above as those who are in an emergency room).
The article suggests people would be/should be accountable. OK, when they introduce new regulatory limits on “reference pricing” and “balance billing”, let’s see what position Families USA takes.
Thank you. We are big fans of reference pricing and are now undertaking research to examine the regulations that inhibit its widespread adoption. Thank you for bringing it up.