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Price Transparency is Not the Silver Bullet to Fixing the Healthcare System

Unless you’ve been living off the grid this year, the words “price transparency” are most likely ringing in your ears, even as you read this. The topic is hot – and it’s ubiquitous: commentators are waxing poetic on the radio on your way into the office, a handful of articles are waiting in your inbox, and it’s on the evening news.

As healthcare continues to command centerstage of the political debate, price transparency has gained traction this year as a solution to our country’s chronic battle with the ever-rising cost of healthcare. For many in the public sphere, price transparency is being treated like the long-awaited silver bullet America has been waiting for: If lawmakers and patients could just get a glimpse behind the curtain, there will be no more surprises, no more befuddled patients, and we can make our country healthy again.

There have been several paths toward price transparency proposed – and mandated.

Chargemaster
The Centers for Medicare and Medicaid Services stipulated that hospitals publicly post their pricing list, but it wasn’t enforced until the beginning of this year. And while this chargemaster mandate, in theory, aims to achieve a laudable ideal, the business of delivering healthcare, much like life, just isn’t that simple.

It’s the intricacies of market dynamics, contracted rates and health plan minutia that can send even the most seemingly well-informed patient down an unintended path toward higher bills. So, it may be true that your hospital charges more for a specific procedure than your nearest competitor, at the end of the day, the patient still pays less if your negotiated allowable rate is lower than your neighbor’s. Plus, reviewing the prices of more than 10,000 individual items on the chargemaster doesn’t really tell any of us anything.

And if poor outcomes come into play based on choosing a “cheaper” provider with quality issues…well, now a decision based off the “menu” that was intended to save a few hundred bucks ends up costing the patient thousands of dollars more. Walmart’s latest moves to prod its employees to use high-quality imaging providers based on diagnostic accuracy, not price, is a great example.

Surprise Billing (aka Balance Billing)
In an effort to protect patients from unexpected and often crippling medical bills, lawmakers on both sides of the aisle agree that surprise billing needs to be a thing of the past. Any bill a patient didn’t expect to receive is of course a surprise, but the surprises lawmakers and the administration are taking on are the ones considered beyond a prudent patient’s reasonable expectations of billing.

Lawmakers, regulators, and media take issue with the unexpected bill for the out-of-network anesthesiologist that put you under while you were getting [fill-in-the-blank] surgery by your in-network surgeon at your in-network hospital, or the out-of-network ED doctor serving patients at an in-network hospital. It’s the out-of-network provider’s bill for the balance owed for the anesthesia or ED care in this scenario that’s the problem because the patient doesn’t know – or influence – the network status of every provider or vendor that plays a role in their surgery.

There are already dozens of state laws regulating balance billing practices, but they aren’t moving the needle. Lawmakers and advocacy groups are calling for federal regulation on surprise billing that relieves patients’ financial burden, and they aren’t the only ones. Health plans are driving the movement, and they have a single message – end “surprise billing.” Naturally, some providers have responded by calling for restriction on “surprise coverage.”

For the Blues Plans, regulation isn’t enough. The Blue Cross Blue Shield Association has called for a federal ban on balance billing. They are lobbying for federal legislation to include a clear “one-size-fits-all” pricing benchmark. This will cap payments at a percentage of Medicare, on out-of-network providers associated with surprise billing across the board. It isn’t hard to imagine the impact this would have on negotiations for physicians to stay in-network.

While it’s unclear if any legislation as proposed by the President (rumors are swirling about an impending executive order) or the health plans will make it through this year, the issue is playing out in the court of public opinion. The implications place providers on the defense. It’s hard to look good when you’re fighting “patient protections.”

Providers position themselves as their community’s guardians of health. And as we know, the delivery of healthcare is holistic – not one sided. So instead of just throwing up a chargemaster online without context to meet a mandate, providers would do well to get creative about how they are educating patients about just what the price of healthcare services means to them – and what it doesn’t necessarily mean. Think about ways to protect patients from the weight of crippling medical bills by offering an accessible financial solutions service and encourage the conversation of payment plans as early as possible – before the procedure.

In the modern era, price and affordability and financial issues play a huge role in perceptions of a hospital brand. Providers must engage on issues of price and affordability rather than apologizing for them.

As the transparency debate continues to play out, it will be important for providers to get out in front of the price transparency debate both within the halls of Congress, on Main Street, and in the hands of the hospital.

April 10, 2019
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