Online Tools Shed Some Light on Out-of-pocket Costs
How much will it cost? It’s a surprisingly complex question, and the ability of patient access employees to answer it is becoming increasingly important. Concurrently, new online price comparison tools are appearing everywhere; yet, those tools carry questionable value.
“There are several limitations to current price shopping tools,” says François de Brantes, MS, MBA, senior vice president of the commercial group at Norwalk, CT-based Remedy Partners. Some recent developments:
• Some nonprofits offer state-focused pricing information based on data from insurers. The Maryland Health Care Commission recently unveiled a website allowing people to compare costs of four common procedures, revealing wide variation in charges.
“It’s not a comprehensive shopping resource — at least not yet — but it serves an important purpose,” says Ben Steffen, executive director of the Maryland Health Care Commission. This is to educate consumers that price and quality vary, sometimes substantially, at hospitals throughout the state. For example, the site’s data show that hip replacement differs by up to $20,000 depending on the hospital. “Our goal is to encourage providers, insurers, and employers to work together to make prices more widely available to the public,” Steffen says.
• More states provide pricing information based on databases of insurance claims. Other comparison sites are following suit, including AHRQ.gov, BetterDoctor.com, HealthGrades.com, DrScore.com, and other academic or commercially driven websites.
• Increasing price transparency is part of an agenda for transforming U.S. healthcare into a more competitive, value-based system that costs less, Health and Human Services Secretary Alex Azar announced recently.1 Pricing transparency is “one of Secretary Azar’s signature initiatives, and he is pushing hard for hospitals to report prices to the public,” de Brantes says.
About half of patients have tried to discover the cost of healthcare before going to get care, according to a recent survey. However, 63% of respondents said there wasn’t enough information available.2
• There are an increasing number of reference pricing programs, which use financial incentives to encourage consumers to shop for healthcare based on price and quality. “These will place a significant burden on the consumer to understand healthcare prices in advance of using services,” de Brantes says.
Price comparison shopping tools represent a symbolic step toward providing consumers with data to inform their healthcare decisions. “But the affect so far has been uninspiring. The vast majority of consumers do not use them. Those who do typically do not spend less,” says Sally Rodriguez, chief of staff at the Washington DC-based Health Care Cost Institute (HCCI).3 Here are some common issues with existing tools:
• Only the price of individual services are listed, not the entire episode of care. “That can lead to potentially bad decisions,” de Brantes says. Patients can see only a portion of their total costs.
“While procedure-specific costs are easier to calculate, cost estimates for episodes of care are more meaningful to patients,” Rodriguez says. This is because healthcare events typically comprise facility and physician fees for multiple services. Therefore, price comparison tools “may not provide a full picture of what patients can expect to pay,” Rodriguez adds.
• Only average prices, or average charges, are listed. “Neither of these provide the consumer with a reasonable estimate of the actual price that will be paid,” de Brantes offers. It really says nothing about the specific out-of-pocket portion for which the plan member will be responsible.
• The tools are buried in organizations’ websites and difficult to find. “One of the more important barriers for all these tools is getting the tool to the consumer at the right time and the right place,” de Brantes says.
• The tools are difficult to navigate. Patients are forced to choose from a list of highly specific procedures corresponding to CPT codes. “With so many options and little explanation of their intricacies, even the savviest consumers may struggle to correctly find the procedure they will be receiving,” Rodriguez says.
• Only charge data are provided, which doesn’t account for negotiated prices. “Charges bear little resemblance to the amount paid by both the patient and the insurer,” Rodriguez notes.
Even prices calculated from negotiated prices can be potentially misleading. For many price comparison shopping tools, the price is an average or median price for a given service and provider.
“However, the amount that an individual can expect to pay for a given service or episode of care at a facility may vary greatly depending on that patient’s insurer and benefit design,” Rodriguez adds.
• Only facility fees are posted, which doesn’t include physician fees. Provider-specific estimates can vary widely based on the payer’s negotiated rates for in- vs. out-of-network providers. Benefit design information becomes critical here. “It dictates what out-of-pocket spending is likely to be and, importantly, whether specific providers are in their network,” Rodriguez explains.
What would be really meaningful to patients? According to Rodriguez, “Only price shopping tools that offer provider-specific estimates of out-of-pocket spending, based on an individual’s current insurance benefit design.”
With growing momentum toward price transparency, there are signs of legislative change on the horizon. This is happening both at the state and federal level. “Some members of Congress appear to be interested in price transparency as part of a broader focus on healthcare affordability,” Rodriguez says. HCCI recently responded to a bipartisan group of senators’ request for input to help them develop legislation to improve price transparency.4 Some key recommendations:
- There is a need for improved national standards in how price and quality information is collected, calculated, and presented to consumers. This includes agreed-upon definitions of concepts such as price, out-of-pocket price, and cash price.
- National and state all-payer claims databases can play a key role in promoting price and quality transparency, but they require additional federal funding and support to do so.
- The federal government should relax restrictions on the use of already-available data, and work to make additional data more available.
“Perhaps the more likely arena for action on transparency is at the state level,” Rodriguez suggests, noting that several states are considering transparency-related bills.
HCCI is creating a facility-level price transparency tool for Florida. “Seven states already operate a variety of similar tools, including New Hampshire, Maryland, and Colorado,” Rodriguez adds.
Soon, de Brantes expects to see an increase in the number of states adopting all-payer claims databases, increasing focus on price transparency, and better tools. “We’ll see what we have seen in all other industries when consumers are the decision-makers,” he says. “Applications will be developed and deployed in such a manner that makes them very useful and valuable to consumers.” Steffen expects to see more states providing cost and quality websites. “We’ll see consumers become more aware of why the cost matters to them in terms of their premiums and out-of-pocket costs,” he says.
As patients become more engaged and aware, hospitals with significantly higher prices will have to consider their costs more closely. “It won’t happen overnight, but that’s where this movement is headed,” Steffen adds. As for patient access employees, de Brantes says they’ll need to be conversant in the terminology used on the price comparison sites. For example, some patients will want explanations of language such as “episodes of care” or “healthcare events.” Patient access also needs to keep in mind that patients are coming from a different perspective. They’ll want to know more than just the hospital charges. “Patients need a comprehensive understanding of all the costs associated with a procedure or inpatient stay,” de Brantes says.
REFERENCES
- Azar, AM. Remarks on value-based transformation to the Federation of American Hospitals. Delivered March 5, 2018, Washington, DC. Available at: https://bit.ly/2I4h3w7. Accessed June 1, 2018.
- Schleifer D, Silliman R, Rinehart C. Still searching: How people use health care price information in the United States, New York State, Florida, Texas, and New Hampshire. A report by Public Agenda, April 2017. Available at: https://bit.ly/2J7uXgW. Accessed June 1, 2018.
- Desai S, Hatfield LA, Hicks AL, et al. Offering a price transparency tool did not reduce overall spending among California public employees and retirees. Health Aff (Millwood) 2017;36:1401-1407.
- Health Care Cost Institute. Letter to Congress, March 23, 2018. Available at: https://bit.ly/2sulusY. Accessed June 1, 2018.
How much will it cost? It’s a surprisingly complex question, and the ability of patient access employees to answer it is becoming increasingly important. Concurrently, new online price comparison tools are appearing everywhere; yet, those tools carry questionable value.
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