Healthcare Cost Transparency Today – Illuminating or Humiliating? - Cover

Healthcare Cost Transparency Today – Illuminating or Humiliating?

Proud dad right here.

When our youngest was born, he was by far the largest of our six kids (yes, six), weighing in at 9lbs 10oz. Now two years old, he checks in at the ninety-ninth percentile for height and the ninety-fifth percentile for weight.

But looking back, we can see that his impressive birth statistics (and growth) are unfortunately only part of what we remember. Poor experiences, confusing pricing, and unexpected bills still plague our memories. 

Like the other 43% of Americans in 2017, I was on a high-deductible health plan. This essentially means you pay 100% of the out-of-pocket costs before insurance kicks in. Knowing this, and attempting to be a good healthcare shopper, I told my wife, Kristin, to ask what the costs would be when she was selecting a doctor for prenatal care.

"No, you don't do that," she promptly replied.

I had thought that was easy information to ask for. But perhaps like most other folks, my wife found the request daunting, maybe even a bit socially awkward. Undeterred, however, I decided to ask the question myself when we attended the first prenatal appointment together.

The way the clinic responded was not what I was hoping for. As I learned that day, the seemingly canned (and required) approach was to commit patients to a payment plan—like what would happen if you had taken out credit for a large purchase and then just expected to pay it off over time.

But we hadn’t made a large purchase; we hadn’t even had our baby yet! Maybe I’m crazy, but not even knowing whether the doctor would be present when our baby needed to be delivered made a payment plan unattractive. I used a gentle but firm voice to push back, letting the clinic know that we wouldn’t be committing to a payment plan for services that hadn’t yet been delivered.

That got me into trouble. They sent me from the accommodating and cheery-looking front-desk area into a back room where they walked me through how I was creating problems and asking for things they didn’t do.

As consumers, we often feel punished or looked down upon for trying to understand healthcare costs. Intentional or not, that approach creates an environment of fear, uncertainty, and mystery. But what if you and I felt empowered to choose, and what if the healthcare system engaged with us as consumers, not as patients?

Current State of Healthcare Cost Transparency

Sadly, compared to most other industries, the lack of cost transparency in healthcare stands out like a sore thumb.

Consider the experience of buying a car. Before the internet, you used to just go to a dealership and negotiate what you hoped was a good price. (Remember spending the entire day there?) Well, in today’s world, apps like TrueCar® can show consumers what other people have actually paid for the model of the car you’re looking at, and that’s without even ever talking to a human.

I get it. People are not cars, and healthcare isn’t that simple. But industry differences aside, shopping for healthcare shouldn’t have to be as difficult as it is. When you or I need a healthcare service, it is usually a service or procedure that has been provided before at least a few times, but more likely dozens or thousands (or even millions) of times

2019 CMS regulations require hospitals to publish their prices. In theory, that sounds like a good idea, but what is available is just list prices. Keep in mind, too, that CMS requires hospitals to post costs only in machine-readable format, making the information largely useless to the everyday consumer.

Most folks are not keen to try to read a hospital chargemaster list or make sense of bewildering medical codes on hundreds (or thousands) of unknown and oddly labeled items. In short, for most consumers, the information is not illuminating; if anything, it’s probably more humiliating.

By the time you get to specific and actual prices, as I (finally) did before choosing our caregiver and services for prenatal care visits, you somehow are made to feel just dumb.

New Proposed CMS Rule

Some of these issues may be addressed in the recently proposed mandates from CMS. Released in July 2019, these new rules would mean that hospitals would have to disclose the actual negotiated prices in a consumer-friendly format. If you look into the issue, you’ll see that there’s plenty of controversy surrounding it.

Think of this on a personal level, not on the whole healthcare system level. Take MRIs for example. Pricing for this now fairly commoditized service varies dramatically, perhaps from $500 or $600 to three or four times that cost (or more). Yes, the price often varies that much for the same thing!

I would drive an additional 30 minutes to save $500—if I knew I could. Most people probably would. But sometimes you don’t even need to go more than 5 or 10 minutes away. Until have you have the needed information and pricing on the choices, you’re lost. When asked to pay $1,000 or more for that MRI, you may not even have known you could have gotten it for much less.

Now, if the system were working in the customer’s favor (i.e., working to serve and attract the consumer), there likely wouldn’t have to be a huge push for government legislation to require healthcare organizations to publish their prices.

The Bottom Line

I’m not a caregiver, and I don’t think I could do the work of a doctor or a nurse. I give kudos to our caregivers for doing exceptional work in providing great healthcare and kudos to the healthcare organizations serving their communities to the best of their ability.

But we can deliver great care and create great cost transparency, can’t we?

It is fascinating that when people pay more for a healthcare service, they perceive the service to be better—but not necessarily so, studies show. Yes, paying more for something might give us the sense that the results are better, and yes, we may be willing to spend more in order to feel safer. But until we know what other options there are, how much they cost, and what kind of quality they actually provide, we’re in the dark.

What healthcare organizations—and vendors—will lead out on changing the status quo?