Did Your State Score an “F”? Demand Transparency in Healthcare!

Cost transparencyAs high deductible health plans become more prevalent and employers shift more of the premium cost to employees, employees are faced with higher out of pocket expenses.   Since more of the financial burden is being shouldered by  employees, employees need to know how to make sound choices when it comes to finding the best value for their care.  Most consumers face a lack of any real quality or cost information when they are seeking healthcare services and therefore do no have the necessary tools to help them make the best decisions surrounding their care.

The fundamental problem that exists is the issue of dramatic price variation for the same service within a similar geographic location. For example, why does one hospital charge $58,000 for spine surgery and another hospital 10 miles away charge $36,000 for the same procedure while the lower cost hospital delivers just as good of an outcome for the patient? This dramatic price variation occurs across a multitude of services from highly complex surgical procedures all the way down to a simple MRI.

Decisions around treatment should involve not only cost considerations but information around quality as well. Studies have shown that there is not a direct correlation between cost and quality. Just because a provider charges more for a procedure has no bearing on the outcome or the quality of care. Consumers need the proper tools to help them evaluate cost and quality when choosing where and who they want to provide their care.

Not only will employees benefit from transparency tools with lower out of pocket expenses, but employers stand to benefit from transparency tools as well. If employees are making better decisions that are resulting in lower costs, the overall claims cost of the health plan should also be lower.

An outcome of the widespread adoption of consumer transparency tools would likely impact the provider community as well. Not only would top quality providers be recognized, these providers who practiced at the highest level with a competitive price would likely see a growth in their practice. Fundamentally, this could help reduce price variation in the system.

Unfortunately, the country is still behind in achieving transparency. Most states score an “F” when it comes to transparency with the exception of Massachusetts, where health insurers are required to provide cost estimates so patients are able to compare. Having an employer mandate in Massachusetts, has most likely pushed a demand for transparency.

New Massachusetts Law Requires Insurers, Providers to Give Consumers Cost Estimates for Their Medical Care 
"[Massachusetts] health insurers have been required since October to provide their members with cost estimates -- within two working days -- for specific tests, procedures, and office visits. That means, for example, insurers must tell members how much an MRI of the knee costs at an individual hospital, imaging center, or doctor's office, so that patients can comparison shop. The quote will include how much of the total price members would pay based on their deductibles and co-payments. And by next October, insurers will have to provide this information instantaneously. By January, hospitals and doctors will be required to provide their own cost estimates to patients." (The Boston Globe)

To address this issue, several of the largest health insurers have developed transparency tools, many of them “free” of charge to their members. Additionally, new companies like Castlight and Compass are also gaining popularity with employers as they help employees navigate to the highest quality, lowest cost doctor. For additional information on price transparency, view this brief from The Leapfrog Group.