Current Health Care System Hinders Price Transparency
Medical insurers, providers, and state and federal agencies are increasingly making health care price information available to the general public or to members of specific health plans, according to a recently released report. However, the study concluded, price transparency alone may not benefit consumers or reduce costs if individuals lack clout in negotiating with providers or have insufficient knowledge to make decisions about their own care.
Written by consultant Mark Merlis and published by George Washington University’s National Health Policy Forum, the study looked at the likely effects of price transparency on consumer behavior and provider competition, and it discussed the steps that insurers, providers, and government agencies might take to improve the price information available to consumers.
The wide variations in the way hospitals, physicians, and other health care providers charge their patients greatly complicates the issue of price disclosure, Merlis observed. The actual amount a patient pays out of pocket for a given service often depends upon whether he or she is using a provider that has a contracted price for the service with the patient’s insurer or is being asked to pay the provider’s “list price” for the service. The patient’s share of the costs will also depend upon the health insurer’s requirements regarding co-payments and coinsurance.
In many cases, insurers, providers, or both are reluctant to disclose publicly their negotiated prices because these contracts are confidential, according to the report. Even if patients had access to price information, Merlis said, they may still have difficulties estimating in advance the total cost of care over the course of an entire illness episode, especially if the patient requires unanticipated treatments or receives care from multiple specialists. Patients may also be impaired in their ability to weigh their options if they are ill and their care needs are urgent, the author said.
In addition, Merlis questioned whether price disclosure would, in practice, promote competition and result in lower prices for consumers. For example, he noted, some providers might raise their prices for certain procedures in response to information about a competitor’s charges. The author also challenged the assumption that so-called “consumer-directed” plans necessarily promote greater price sensitivity, as members of these plans typically have access to negotiated network prices for their care and may incur little or no coinsurance costs after the deductible is met.
Despite these issues, price and quality transparency could prove useful in certain contexts, Merlis argued. For example, patients could be encouraged to shop around for the best deals when seeking routine services such as pediatric care or care for chronic conditions, or when purchasing commonly prescribed drugs. The author also recommended that physicians, health plans, and government agencies play a more active role in helping patients choose appropriate providers and services.
