Economics

8 ways to improve health care price transparency

Patients are becoming active consumers of health care services, but a lack of transparency regarding the cost of those services hinders their ability to make true value-based decisions.

Related Coverage

Doctors vote for improved data, price transparency measures

That was a message the AMA recently sent to a bipartisan group of six U.S. senators seeking recommendations on improving price transparency.

How transparency can empower patients

“The lack of complete, accurate, and timely information about the cost of health care services prevents health care markets from operating efficiently,” AMA Executive Vice President and CEO James L. Madara, MD, wrote in a letter to the senators.

“Achieving meaningful price transparency can help lower health care costs and empower patients to make informed care decisions,” Dr. Madara added. “The AMA supports price transparency and recognizes that achieving meaningful price transparency may help control health care costs by helping patients to choose low-cost, high-quality care.”

The AMA has outlined eight ways to increase health care price transparency to spur value-based decisions:

  • Address patient confusion and poor health literacy by developing resources that help patients understand the complexities of health care pricing and encourage them to seek information regarding the cost of health care services they receive or anticipate receiving.
  • Require all health professionals and entities to make information about prices for common procedures or services readily available.
  • Physicians should communicate information about the cost of their professional services to individual patients, taking into consideration the insurance status of the patient—such as self-pay, in-network insured, or out-of-network insured—where possible.
  • Health plans should provide plan enrollees or their designees with complete information regarding plan benefits and real-time, cost-sharing information associated with both in-network and out-of-network provider services or other plan designs that may affect patient out-of-pocket costs.
  • Health plans, public and private entities, and other stakeholder groups should work together to facilitate price and quality transparency for patients and physicians.
  • Entities promoting price transparency tools should have processes in place to ensure the accuracy and relevance of the information they provide.
  • All-payer claims databases should be supported and strengthened.
  • Electronic health records (EHR) vendors should include features that assist in facilitating price transparency for physicians and patients.

“The lack of transparency in health care pricing and costs is primarily the result of a health care financing system that depends largely on the complex arrangements between and among employers, third-party payers, providers and patients,” Dr. Madara noted. “These arrangements can make it difficult to identify accurate and relevant information regarding costs associated with specific medical services and procedures. For example, contracts offered by payers to providers frequently delineate contracted rates as proprietary information.”

It is also hard for patients to determine whether a physician or other provider is in-network because of outdated directories or confusion about multiple plan contracts.

Pricing also varies based on where the service is performed, which can affect the cost, along with patients’ out-of-pocket costs.

Meanwhile, value-based care decisions require not only cost but quality information. But integrating cost and quality information in a useable format in transparency efforts it a hard task, and many health care services still lack relevant metrics of quality.