It's Time for Price Transparency In Health Care

It's Time for Price Transparency In Health Care

Imagine you’re in the finest restaurant in town, celebrating a special occasion. The waiter walks you through the house special and it sounds so enticing your heart pounds at the prospect of enjoying this culinary experience. He never mentions the price and, considering the environment, you’re not comfortable asking. Then you get the bill and the dinner cost $1,000.

There is a chance you might think that due to the occasion the meal was worth $1,000. Most likely if you knew the cost ahead of time, you would have wanted to know your alternatives.

For too long the health care industry has exploited this societal reluctance to ask “how much?” When a patient seeks healthcare services, the focus historically has been on the cure or treatment – not the cost. It has been accepted that insurers negotiate rates and providers ensure that quality remains a top priority. “Privacy concerns” in healthcare contributed to the “don’t ask and providers won’t tell” mindset. HIPAA regulations as well often focused on protecting patient privacy limiting access to information. For businesses and individuals, it is only fair to know the cost of a service before it is purchased.

Advocates for health care price transparency have worked diligently with some success. However, the environment changed when President Trump signed an executive order on price transparency in health care in June 2019. Its goal is to lower rising health care costs by showing prices to patients. This is a move that advocates and leaders on both sides of the political aisle must support. 

When individuals can shop around, market forces will drive down costs, in particular relating to services and prescribed medications. Health and Human Services Secretary Alex Azar told reporters the order is aimed at making sure patients can access an explanation of their benefits ahead of a medical visit – including the cost of a procedure, the insurance-company negotiated price and what they will pay out of pocket. As it stands, most patients only learn the actual costs weeks afterward, when they're billed.

Resistance to this transparency trend is misdirected. There’s a hunger for information and patients want more of it regarding healthcare – medically and monetarily. Yet in today’s society, pricing for healthcare services has remained relatively opaque. However, the transparency trend has now reached a turning point.

At the start of this year, the Center for Medicare and Medicaid Services required hospitals to post basic “Chargemaster,” or standard cash prices, online. It’s both a big deal and, at best, a beginning. The goal of pricing regulation, therefore, is to make costs more transparent to patients/consumers nationwide. This was done to allow patients to understand what the “potential” cost will be if their insurance company didn’t cover the service.

Physician practices are exempt from this new rule, which should be changed. Patients can’t figure out their personal insurance or out-of-pocket cost. Doctors need to ask “what’s the right thing to do?” Professionals and practices should comply with the new regulations voluntarily or take other positive steps.

As the COO of Allied Physicians Group, a pediatric physician group with 150 doctors and 32 offices, and CEO of Adjuvant.Health, I, along with other providers must decide pricing disclosure policies. We have made the leap and have started to put cash payment pricing online. This pricing is specifically for cash paying patients who do not have insurance. Additional information will be added as soon as disclosure criteria and rules are finalized.

Transparency – not uncertainty – should be the name of the game. All providers should take action now and work with insurance companies as well as the government to shed light on pricing.  Business owners and HR executives need to work with benefits and insurance providers to establish portals for sharing this information. Health insurance provided through employers is working well.  Price transparency benefits negotiations relating to health plans and policies.  With a greater understanding of what employees will pay for care, procedures and medications, employers can make more informed decisions.     

A patient and a patient’s family should know before going in for a visit what to expect. While the cost of tests will likely remain a wildcard, when a patient goes in for a regular check-up, a flu shot or strep throat test, he or she should know what they will pay. Pricing should be offered upfront – and much more when asked.

Insurers and medical practices need to give patients what they must have to fairly assess what they are getting into and what they will owe. Some fear this information may play a factor in patient choices, but quality practitioners should have no worries.

Detractors decry that price transparency is misguided. Polls indicated more than 90 percent of hospitals were not happy about the change. They said the basic or “Chargemaster” rates are not exactly what insured patients pay. However, this is still, at a minimum, a basic pricing framework. If this is not enough, then we should do more, not less.

Transparency in all aspects of healthcare, when possible and permitted, should be encouraged. We spend about 19 percent of our gross domestic product on healthcare, compared to an average of 11 percent in the rest of the developed world, according to the Kaiser Family Foundation.

At Allied Physicians Group, we are dedicated to quality as well as commitment to fair and transparent pricing. I recently examined three hospitals in our market for a level three visit vs. the normal sick visit in a physician’s office. We found that the hospitals charge, on average, 73 percent more for this type of visit vs. a similar visit to one of our offices. In terms of vaccinations, a code we use often, the cost for a cash paying patient is, on average, over 84 percent more when visiting a hospital.

With such large differences in pricing and with limited information available, it is only fair that providers should offer pricing to patients. We know that an informed consumer is good for health care and good for business.

This article has been provided by Etan Walls, COO of Allied Physicians Group a premier primary care independent physician group with more than 150 doctors who work out of more than 32 locations throughout the New York metropolitan area. These locations see thousands of patients each week. Etan Walls can be reached at .