Empower employees through price transparency.
Would you pay $400 for a Band-Aid at the doctor’s office?
Most people wouldn't hesitate to answer no. $400? For a Band-Aid?
What if you went to the doctor, got the Band-Aid, then received a bill in the mail weeks later? $400? For a Band-Aid?
A $400 Band-Aid might seem like a far-fetched analogy, but it’s not all that unusual when you replace “Band-Aid” with “certain medical test, treatment, or procedure.” Not knowing costs until you get hit with the bill has been business as usual in the health care arena for decades.
The fact that you could be charged $400 at one location and a fraction of the cost at another, with virtually no visibility as to why this discrepancy exists, has contributed to not only exorbitant health care costs, but also a deep mistrust of the system.
Times, though, they are a-changin’. Consumers are demanding transparency.
More price transparency from providers and insurance companies
There’s a lot we can’t control when it comes to our health: sudden injuries or illnesses, for one. (No one plans on tearing their ACL, cutting their finger and needing stitches, waking up with a mystery rash, or battling an infection.) When it comes to how much we pay and the quality of care we receive, that’s another story.
The Centers for Medicare and Medicaid Services (CMS) federal price transparency requirement was a move in the right direction. The rule went into effect in January 2021, requiring hospitals to post discounted cash and secret negotiated rates on their websites. According to Fortune, some hospitals chose not to comply, some posted “meaningless cost estimates in lieu of real prices,” and some hid pricing information from consumers. A separate price transparency rule requires insurers to publish negotiated rates and claims data. “Price disclosures have the potential to change how payers and providers are negotiating and contracting for services,” says Trevor Fast, Surest chief actuary. The hope is that it will accrue to the benefit of employers, and ultimately, to consumers.
But the federal rules don’t solve for all transparency issues. Even with the availability of cost-estimator tools, you don’t always know where to look or what to look for. The language can be confusing, the information can be overwhelming. The average consumer isn’t a clinician, equipped to make complicated decisions about diagnoses and treatments based on pricing and data analytics. And requiring the disclosure of negotiated rates, while serving as a catalyst for cost calculations, doesn’t factor in costs of services being performed, practitioners involved, or which drugs or medical supplies will be used. What you get with that model is an estimate, not an exact cost.
“You’re inevitably showing someone a range of prices at a location, in some cases a wide range, and you won’t be able to guarantee anything,” Fast explains. This can lead to a “mismatch in expectations for the consumer.” Without understanding these price variations, consumers might opt for the most costly service when a more cost-effective service would work just as well (or sometimes even better). It’s a vicious cycle: Claims can skyrocket, which can lead to higher health care expenses for employers, which can lead to higher employee monthly premiums and deductibles.
Beyond transparency to price certainty
Most employers want to keep costs in check without pushing health care expenses onto their employees, and most employees don’t want to get stuck with narrow provider networks, inadequate coverage, higher deductibles, or higher monthly paycheck premiums.
The market is crowded with new insurance companies claiming their benefit plans are something different. But how many of these health insurance plans are making a real and lasting impact?
Transparency—and price clarity—is more important than ever. So is ease of use. Research shows that deductibles and coinsurance don't do much of either. As part of a health plan design, the math is confusing and largely ineffective at curbing costs. Instead, according to the Health System Tracker, these not-so-consumer-friendly cost-sharing features can lead to medical debt, care avoidance and more expensive issues down the road.
With the Surest health plan, there is no deductible or coinsurance. And to make costs as clear as possible, there is one price for a common episode of care, and that price is clearly shown before services are rendered (the way consumers buy nearly everything else in life). “Our design allows us to go beyond transparency to price certainty—the price a consumer sees for an office visit, or a complex surgery is the price they’re responsible for paying,” Fast says.
Moving the dial
According to a report by the price transparency task force of the Healthcare Financial Management Association, price data alone isn’t enough to move the dial. It should be supplemented with “other relevant information related to the provider or the specific service,” relevant information like clinical outcomes, safety scores and patient satisfaction. These other indicators can play an important role in helping consumers assess value.
“Price is just a piece of it,” says Fast. “Think about it as value-based transparency, not just price transparency. It takes a broader vision around quality and outcomes and provider practice patterns, along with transparency of cost, to really help people find the best high-value outcomes.”
That information doesn’t do any good, though, if consumers don’t take the time to look at it.
It’s a different story when lower costs indicate high-value care. Research shows that consumers choose differently armed with this information.
“We look at not just the complication or readmission rates after surgery, but also: How often does the surgeon try conservative treatments first? Quality can’t just be ‘I do this procedure well when I cut people open.’ You actually want surgeons to cut people open less often,” Fast comments. “When you look at the data, you see that many services are over-utilized or misused. That’s not an assessment of quality.”
The rationale is that providers with improved outcomes should cost less. They should be rewarded for helping people get better faster. And consumers should be aware that the decisions they make about the providers they select and health services they choose can affect their premiums and out-of-pocket expenses. Consumers have choices, and those choices have the potential to make a difference.
When transparency is done right, the market responds. “We have providers who are saying they want to re-contract for their services because their value-based copay isn’t showing up as favorably as they’d like,” Fast explains. “They’re willing to give us a better rate.”
This shift in consumerism and getting health care to operate like a true marketplace, is a direct result of consumers doing their research, shopping around, knowing what they’ll spend (and save) in advance, and understanding the financial and behavioral implications of all available options. Empowered consumers are revising their health care stories on their own terms, helping improve health outcomes and lower health care costs across the board.
Now that’s empowering.