Most people wouldn’t think of buying an expensive item, such as a car or house, without performing extensive research and price comparisons. Yet, when it comes to healthcare services – a major expense for many – comparison shopping has historically been non-existent. This is due, in part, to a lack of transparency in healthcare.
If you requested a written estimate for a medical procedure, many doctors and healthcare facilities would consider it a nuisance. Worse, due to the lack of coordination and transparency between service providers, insurance companies and other key players in the industry, they probably couldn’t provide an accurate estimate even if they wanted to.
The Push for More Transparency
Transparency in healthcare began to change with the advent of healthcare consumerism. Healthcare consumerism is a movement designed to make the delivery of healthcare services more efficient and cost-effective. Some healthcare providers have started to provide pricing and other information to consumers; however, doing so remains the exception rather than the rule.
With the recent signing of an executive order by President Trump, increased transparency in healthcare could become standard. The executive order mandates that healthcare providers publish the cost of medical procedures before consumers receive them. The President’s actions could bring about a significant overhaul of the healthcare industry.
How the Executive Order Could Transform Healthcare
Healthcare consumerism strives to make the delivery of healthcare services more efficient and cost-effective; it does so by putting the purchasing power and decision-making in the hands of patients. When people become fully involved in their healthcare decisions, it places the same pressures on healthcare service providers that exist in virtually every other industry: to deliver the highest quality at the lowest price.
Up to now, healthcare service providers haven’t faced that pressure. Consumers (patients) had very little access to cost information prior to making healthcare purchasing decisions, and as a result, they could not compare prices. Currently, most patients learn the actual cost of a doctor visit or medical procedure when they receive bill; the bill usually arrives weeks after buying the healthcare service. Trump’s executive order is designed to change the way the healthcare industry operates by lowering prices and giving patients more healthcare spending power.
If enforced, the order will ensure healthcare consumers can get information about pricing before visiting their doctor or receiving other medical services. This includes:
- Cost of a procedure
- Price negotiated by their insurance company
- What they will be required to pay out of pocket
By knowing the cost of a medical service up front, patients can make more informed buying decisions.
Big Changes Ahead for the Healthcare Industry
In the traditional healthcare delivery model, patients tend to pay little attention to the cost of services. To develop more responsible healthcare consumers, key stakeholders – including healthcare, tax and benefits professionals and employers – are starting to provide the information, financial incentives, and decision-making tools patients need to make educated decisions. To comply with Trump’s executive order, healthcare providers will also begin providing easily accessible information about the cost of their services.
Healthcare providers could get support from the executive branch. The Trump administration is looking to help providers develop tools that give patients more access to healthcare prices; it will also improve quality of service measurements and make them public. In addition, the Department of Health and Human Services (HHS) has been tasked with researching other barriers to transparency in healthcare costs, including developing regulatory steps to address “surprise” billing.
For example, many hospital emergency rooms are staffed with out-of-network doctors. Patients who go to an in-network hospital (as designated by their insurers) may not realize they’re getting treatment from out-of-network physicians. Following treatment, patients are shocked when they receive a bill for thousands of dollars more than they expected to pay. Part of HHS’s research will focus on making sure consumers can get information that will help prevent “surprise billing.”
Bipartisan Support for Lowering Costs
From a political standpoint, the high cost of healthcare is a bipartisan issue; lower costs and increased transparency both receive strong support from many Democrats and Republicans. The executive order has also been well received by most in the healthcare industry, with advocates believing it will enable consumers to choose lower-cost healthcare services.
The executive order could face push back from large service providers and makers of medical products. When the Trump administration announced it would require drug companies to disclose the price of their prescription medicines in TV commercials, three pharmaceutical giants – Amgen, Merck, and Eli Lilly – jointly filed a lawsuit against the requirement. Many transparency advocates believe the executive order may face similar resistance from big business.
Why Transparency Is So Important
As transparency in healthcare increases, everyone from patients to physicians to insurance providers will benefit from:
- Higher quality medical care
- Improved patient outcomes
- Lower operating costs for hospitals, medical practices and individual physicians
- Better control over the spiraling costs of healthcare insurance
- More efficient administrative process, such as billing and patient record-keeping
Transparency for consumers
Today’s healthcare consumers must contend with high-deductible health plans and higher out-of-pocket expenses. Transparency equates to having ready access to information about quality and cost. With this information, consumers can compare service providers and choose the best services at the best price.
To improve consumer transparency, insurance providers are starting to make it easier for patients to determine costs. Many now provide a cost estimator application on their websites for patients to estimate treatment costs up front. Health systems have also begun publishing quality information on their websites so consumers can make quality-of-service comparisons before choosing a provider.
At the same time, Health Savings Accounts (HSAs), Flexible Savings Accounts (FSAs) and Health Reimbursement Accounts (HRAs) provide consumers with tax-advantaged financial tools which get them more involved in their healthcare decisions. Using these accounts to pay for healthcare expenses enables consumers to gain a better understanding of their healthcare costs.
Transparency for physicians
In the traditional healthcare model, physicians have no financial responsibility for the quality of care delivered by their referral partners. With more emphasis on accountable care, physicians are becoming liable not just for the quality of services they provide, but also those delivered by their referral partners. As a result, physicians – especially those participating in value-based contracts – now want to know which potential referral partners have the best patient outcomes.
Transparency between payers and providers
The shift from a fee-for-service reimbursement system to value-based care – a delivery model in which healthcare providers are paid based on patient health outcomes – requires payers and providers to start working as allies rather than adversaries. Previously, both sides closely guarded their proprietary information to gain the upper hand during price negotiations. Transparency means providing access to previously withheld information and jointly tracking agreed-upon quality, efficiency, and patient satisfaction metrics.
Transparency within healthcare organizations
For hospitals and large medical practices, transparency relates to more accessible information about resource costs, patient outcomes and internal quality improvement initiatives. It also means improved communications and collaboration between all departments within the organization.
In hospitals, determining costs within a specific area, such as an operating room, can be challenging. Within individual practices, doctors often have trouble seeing what other doctors are doing; many also don’t know how their own performance contributes to the overall process. In response, many hospitals and practices have started making changes by investing in new technologies and team building efforts in order to improve efficiency and quality, reduce costs and improve patient outcomes and satisfaction.
Greater Transparency in Healthcare
Recent efforts by elected officials and the move to healthcare consumerism represents a major cultural shift. Everyone involved – government, healthcare providers, insurance payers, and patients – wants the same outcome: higher quality medical care at a lower cost. More transparency and healthcare consumerism could be the combination that gets us there.
DataPath, Inc. is a leading provider of cloud-based benefits administration solutions for FSAs, HSAs, HRAs, and COBRA accounts.