By Anne M. Burton
The 2024 ASHEcon conference in San Diego started off with a thought-provoking opening plenary entitled, “Medical Price Transparency from Insurers: Where Are We and What is Next for Policy Makers and Entrepreneurs?”. Chaired by current ASHEcon President Steve Parente, the plenary featured Cynthia Fisher, chair and founder of patientsrightsadvocate.org; Theo Merkel, Director of the Private Health Reform Initiative, Senior Research Fellow for the Paragon Health Institute, and prior Special Assistant to the President for Economic Policy at the National Economic Council; and Jeff Wu, Acting Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services. Medical price transparency is a topic that has been around for decades starting with cash payments but has recently gained more traction with a 2019 Executive Order compelling government agencies to find rules and regulations to permit hospitals to publicly display prices online for consumers.
The panelists explained that the push for medical price transparency came about as a way to put downward pressure on prices. The Affordable Care Act in 2010 gave the government the authority to take this kind of action on the regulatory front, which was done first with the charge master (list of all billable items) data across all payers, and then with negotiated rates provided by all commercial insurers. A big motivating factor for transparency, from both a business and consumer perspective, was that prices couldn’t be seen in advance of the point of care. A key goal of the Executive Order was to have both a consumer-facing product that was very user-friendly and a robust and comprehensive dataset available to researchers, employers, payers, providers, and others to make these data accessible in a way that payers don’t usually provide.
Price transparency is also about making the market for health care more functional and competitive. Without price transparency, consumers and employers don’t know why premiums are rising year over year, and people who suffered serious illnesses or injuries could be left financially ruined even with health insurance. There is anecdotal evidence that knowing what prices are can lower health care costs, with stories of companies and unions that were able to obtain their claims data, reverse engineer prices, and redesign their plans and premiums to lower costs by 30 to 50 percent in just three years. Another success story has to do with ACL (a major knee ligament) repairs, where price-transparent providers are able to do the same surgery for only $7,000 compared to a nearby hospital charging $46,000 for insured patients (and only $9,000 for uninsured patients). That being said, one panelist noted that getting the rule out is just the beginning. After that, you may have to deal with litigation, and even after the dust settles, any major program will require waves of tweaks and reform; implementation is a years-long path.
Two years in, the panelists are cautiously optimistic about the short-term success of this new policy, despite there being a lot of work left to do. Price transparency survived litigation by many industry groups, allowing it to go forward. Perhaps more surprising is the success of the rule despite a change in presidential administrations and the onset of the COVID-19 pandemic, both of which could have derailed or delayed the implementation of the policy. Another challenge in implementing price transparency is that the market for healthcare services is not a national market involving a commodity that everyone has perfect information on—it’s the exact opposite. Health care is a highly fragmented market, with many participants on the provider and payer sides. Nobody expected changes to happen overnight, but the initial progress is encouraging, especially with how these changes are iterating in response to feedback from various stakeholders.
One challenge has been with the price data itself: the machine-readable files that have been put out thus far are not primarily consumer facing. Further, harmonizing the data across providers has been a big challenge, as providers use different terminology or may be categorizing variables differently, especially when it comes to what they actually charge. Having standards and ensuring data integrity will be crucial going forward. A bigger challenge has been in advertising this knowledge to consumers: how many people and employers know that they have the right to see these data on prices? Or that they don’t have to sign a blank check without getting a price up front.
Going forward, maintaining this progress on price transparency will be key, through both strict enforcement and the expansion of available data. Part of that progress could be transparency on prescription drug prices and claims data. Another part will be enforcement of the new rule through fines for non-compliance to ensure that hospitals are actually posting their prices. It’s no secret to health economists that the U.S. spends a lot on health care. Price transparency appears to be one promising solution to mitigate growing health care costs.