Sam Bernstein, Daily Briefing
Like many things in health care, price transparency seems simple at first, but quickly becomes complicated. For would-be patients—and providers trying to ease their access to the care—it's tough to answer the question, "How much will that treatment cost?" It depends: Are you insured? How much of your deductible of you paid? Is the provider in-network?
As patients assume greater financial responsibility for their health care, price transparency issues are only becoming more important. That may be why policymakers are waking up to the issue: The likely Democratic and Republican presidential nominees, Hillary Clinton and Donald Trump, both call for transparency reforms in their policy platforms. And in legislatures across the country, price transparency seems to be having a moment.
State governments have their work cut out for them: In a report released last year, the Health Care Incentives Improvement Institute gave all but five states—Colorado, Maine, New Hampshire, Vermont, and Virginia—an "F" grade for price transparency.
But there is evidence of a shift, with several major pieces of state legislation suggesting hospitals and other providers will soon have to up their price-transparency game.
Take Florida, for example. Gov. Rick Scott (R) recently signed into law a bill that requires hospitals and surgery centers to share pricing information with a state agency, which will be tasked with making the information accessible on a consumer-friendly, public website. The pricing information will be based on what providers actually receive from insurance companies, no so-called chargemaster prices, which typically have little relationship to real-world payments.
In addition, according to Modern Healthcare, hospitals and surgery centers will be required to provide access to searchable bundles of services on their website, including estimated payment ranges by facility and comparisons with national and regional benchmarks.
The idea is to equip patients with better information and to promote price competition among providers. "The way patients are charged for services at the hospital should mirror a free market system," Scott explains.
Another law recently passed in Ohio goes even further. Before providing non-emergency care, health care providers in the state will soon have to offer patients a "good-faith and reasonable" estimate of:
- A procedure's total cost;
- How much private or government-sponsored insurance will pay; and
- A patient's share of the bill.
"We've over and over again tried to contain our costs by using bureaucratic rules," says Ohio State Rep. Robert Sprague (R). "We also want to use the power of the free market."
Why you shouldn't fly solo when it comes to price transparency
Devil in the details
Passing legislation is one thing; making it work can be much more difficult.
In Ohio, some worry certain providers won't be able to provide the type of pricing information the law requires by next year. Todd Baker, co-CEO of the Ohio State Medical Association, says, "The difficulty is, as it stands today, there are only small pieces of that (estimate) available" when a patient first comes through the door.
He says trying to get information on all procedures is a bit like trying to "boil the entire ocean." A better approach, he suggests, might be to focus initially on high-cost procedures.
Not being open about pricing? It'll cost you.
Understanding your local market
Regardless of whether your live in Ohio or Florida, the first step in getting your price transparency strategy right is to understand the rules and regulations in your local market—and how they will likely change in the future. More than two-thirds of states are mandating or taking steps toward mandating All-Payer Claims Databases that collect payer claims data, and over half of states having transparency-related laws.
Given the level of discussion—and legislative activity—occurring on the national, state, and local level, it's critical to act now to enact a price transparency plan, The Advisory Board Company experts tell me. Acting today will ensure you're prepared if and when legislation passes in your area.
Want to get ahead of the curve on price transparency? Download our executive update, "National trends, local impact," to learn how price transparency legislation could impact your organization.
Then, download our recent study, "A patient-centric approach to price transparency," to learn how to develop a pricing strategy that satisfies the demands of your price-activated patients.
DOWNLOAD THE STUDY
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