Just three states earn an 'A' grade for price transparency in new report

Some states collect pricing data that they don't share publicly

Read Advisory Board's take on this story.

The vast majority of states earned an "F" grade for failing to publicly disclose health care price information, according to a new report from the not-for-profit Health Care Incentives Improvement Institute (HCIII) and Catalyst for Payment Reform (Barkholz, Modern Healthcare, 7/26).

The fourth-annual report evaluated states on four criteria:

  • Using rich data sources, such as an all-payer claims database;
  • Providing "meaningful" price information to consumers, not just so-called charge prices;
  • Including information for different scopes of procedures and services, such as inpatients versus outpatient; and
  • Having an accessible, high-quality, public website to provide pricing information.

Only three states received an "A" grade this year:

  • Colorado;
  • Maine; and
  • New Hampshire.

Only four other states received a passing grade: Oregon received a "B" grade, up from an "F" grade in 2015; Vermont and Virginia received "C" grades; and Arkansas received a "D."

The remaining 43 states received an "F" grade.

François de Brantes, a report co-author and executive director of HCIII, said many states failed to make the leap from collecting data to achieving price transparency. "Real health care price transparency for consumers is dependent on rich data sources that provide meaningful price information on a wide range of procedures and services," he said. "But that's not enough. It must be presented on an accessible, publicly available website."

This year, 12 states collected the necessary price transparency information to share with consumers but failed to share the information publicly, according to the report.

In a commentary published in Health Affairs, de Brantes, along with co-authors Suzanne Delbanco, and Judith Hibbard, said price transparency was increasingly important to consumers. "Without price transparency, consumers and their physicians cannot predict their medical bills or alter their behavior to choose high-quality, low-cost care," they wrote. "High deductible health plans—which now account for 24 percent of insured lives—can't function properly without public pricing information."

Moreover, de Brantes said that it was important for states to share such information because industry cannot be relied upon to do so. "For many consumers, the trustworthiness of information that emanates from health plans isn't very high," he said (Japsen, Forbes, 7/26; Barkholz, Modern Healthcare, 7/26; Delbanco et al., Health Affairs, 7/26; Report Card on State Price Transparency Laws report, July 2016).

Advisory Board's take

Leslie Schreiber, Managing Director

As high-deductible health plans become increasingly common, more and more patients are comparison shopping for health care. In fact, a recent study from Public Agenda found that 56 percent of Americans now actively look for pricing information before getting care.

This increase in health care shopping has significant consequences for hospital revenue. Advisory Board research found that a four-hospital system can see swings in revenue of $16 million to $40 million due to its price transparency strategy—or lack thereof. The potential financial impact makes it critical for providers to share concrete pricing information prior to service to steer patients away from competitors. Unfortunately, more often than not, hospitals traditionally aren't well situated to discuss price with patients—and, as evidenced by the preponderance of states receiving a failing grade in the new report, most institutions haven't adapted to this market imperative by creating easy-to-access, transparent patient pricing.

We've found that the most progressive organizations are getting ahead of the competition by developing a robust consumer pricing strategy, informed by market analyses; consumer, employer, and referring physician surveys; accurate charge and rate benchmarking; and an objective view of their patient financial experience.

For more information about crafting a consumer pricing strategy in the face of external market pressures, download our new playbook and learn how progressive organizations are getting ahead of negative media coverage with a robust consumer pricing strategy.


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