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Cost Transparency in Healthcare

Imagine pulling up to the gas station, filling your car tank, leaving, then finding out months later what the cost of that visit was. This scenario applies to the way medical care is dealt with today. Patients are usually unaware of their medical care costs, which prevents them from being able to compare costs and quality of treatment between healthcare providers. In one study, 75% of people reported that they were unaware of how to compare costs to find cost-effective treatment. This is where healthcare transparency steps in: defined as the practice of healthcare providers making cost and quality data available to the public, healthcare transparency ensures that patients are able to choose the best option for their medical needs as well as budget. However, educating patients isn’t the only benefit of healthcare transparency. With the increase of healthcare transparency, the cost of healthcare itself can be lowered. Examples of this are seen in states like Kentucky, where public employees saved more than $13 million, and in New Hampshire, where the cost of imaging was cut by 33% because of transparency.

The growing awareness of the benefits of cost transparency has led to action being taken. On January 1st, 2021, the Centers for Medicare & Medicaid Services (CMS) under the United States Department of Health issued the Price Transparency Rule:

  • Requires healthcare providers to publish the pricing for at least 300 shoppable services in an easy-to-read accessible format

  • Requires hospitals and insurers to disclose their negotiated prices

Shoppable services are defined as services that are scheduled beforehand. The Rule requires the prices of at least 300 shoppable services to be published, including the prices of 70 mandatory services that the Rule outlines. The rest of the services should be decided based on utilization. Failure by a hospital to follow these rules will result in a warning. If the hospital does not abide by the rules after that, a corrective plan will be requested. In the case that a hospital still does not publish their pricing, they will be monetarily penalized with an announcement of the penalization on the CMS website. This will allow patients to become aware of the prices that different hospitals are offering--prices can vary widely depending on location. A report from the Blue Cross Blue Shield showed that a hip replacement in Austin can cost anywhere from $30,000 to $93,000. Even the cost of blood tests can be drastically different, costing anywhere from $13 to $952. With the introduction of the Price Transparency Rule, the price that hospitals charge for their services will become more accessible for patients.

The Rule addresses one of the main concerns that had arisen regarding cost transparency. America’s Health Insurance Plans (AHIP) created an issue brief for cost transparency in healthcare. AHIP outlines three main concerns:

  1. The definition of “cost” will fluctuate based on who is paying- the employer, the patient, the provider, or the insurer.

  2. The availability of price information.

  3. Public interest in transparency.

The Price Transparency Rule addresses the issue of availability by requiring hospitals to publish prices- patients will be able to access that information when needed. However, the issue of public interest is one that has proven difficult to resolve. In one study, respondents were surveyed and only 52% were aware of the prices beforehand. Only 13% of respondents compared prices between providers. Although the cost of treatment may be available to the public, the public may not utilize that opportunity and thus will not be able to save money to evade financial dilemmas.

As the number of cost-transparent healthcare providers increases, the number of patients saving money and becoming more aware of their treatment grows as well. Cost transparency brings not only educational, but economic growth in medicine as well. The public is beginning to see changes in this field with the Price Transparency Rule, and we hope to see more changes in the future that will enable more patients to take greater charge of their treatments.

Thank you for reading!

Sejal Kaushik



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