Monday, September 25, 2023

How the Healthcare Price Transparency Act Impacts Patients and Providers

Two years after implementing a Trump Administration rule requiring hospitals to disclose pricing information, there are still many challenges and limitations. This legislation fixes these issues and improves the transparency rule’s requirements.

Price transparency empowers patients to shop smart and save money. Here are just a few of the key ways that this legislation will benefit patients and providers:

Patient Informed Decision Making

In theory, price transparency empowers consumers to be smarter shoppers and drives healthcare prices down as providers compete for market share. In reality, however, patients with high-deductible health plans or who pay out of pocket often find medical bills challenging to understand and even harder to budget.

A simple solution would require hospitals to publish their negotiated service rates in a machine-readable format. Unfortunately, several factors prevent this, including legal restrictions and the fact that the pricing data does not reflect the status of a consumer’s cost-sharing under their health benefit plan.

This bill improves a Trump Administration rule by adding clarity and usability standards to the disclosure requirements while expanding the scope of what’s considered a shoppable service. In addition, it holds hospitals accountable to ensure they comply with this vital regulation. Until this is done, we cannot hope to see the full benefits of this policy.

Increased Patient Loyalty

For patients with high-deductible plans and out-of-pocket costs, the healthcare price transparency act allows them to shop around for providers offering services at affordable prices. Moreover, it empowers them to budget accurately for medical expenses and reduce resource usage paid by their healthcare insurers.

The bill improves on the Trump Administration’s hospital pricing transparency rule by requiring hospitals to publish their payer-specific, negotiated charges for all inpatient and outpatient items and services, including DRGs and bundled services. Moreover, it extends price transparency to outpatient providers such as ambulatory surgery centers and diagnostic imaging providers.

In addition to the public, consumers who can benefit from price transparency include self-insured employers and their workers. However, it is essential to note that consumer empowerment through price transparency cannot solve the problem of healthcare cost growth on its own. It needs to be complemented by other policy instruments that leverage supply-side incentives and encourage market discipline. In particular, a more rigorous analysis is required to understand the effectiveness of transparent pricing rules and whether they promote competition among hospitals.

Reduced Out-Of-Pocket Costs

Patients informed of their costs are better equipped to negotiate with providers and health insurance companies. They can also make wiser decisions about which services to seek and which to avoid, leading to a more balanced healthcare system.

However, more than price transparency is needed to give people access to more affordable care. For it to work, it must be paired with various other data sets in an easy-to-understand format.

This includes information on doctors’ locations, specialties, and expertise; quality data; and claims and negotiated prices from the hospital. To maximize the impact of the TiC rules, transparency initiatives should focus on products and services that are genuinely shoppable—including drugs, diagnostic imaging, and hospital admissions. They should also group data into units that are easier for consumers to understand, such as episodes of care or procedures. Finally, they should include information on the estimated cost to the consumer based on their specific health plan coverage.

Increased Efficiency

Patients are a powerful lever for generating greater efficiency in health care. However, transparency efforts must focus on products and services that are genuinely shoppable and must include quality data to empower consumers.

Consumers can use price information to make smarter provider choices that shift volumes away from high-cost hospitals toward more efficient or higher-quality providers. The result is that superior providers can increase capacity and improve patient satisfaction without raising prices, while lower-performing providers are forced to reduce costs or improve quality to compete.

To maximize the benefits of pricing transparency, it is essential to distinguish between hospital-level prices and negotiated prices, which are often subject to substantial discounts. Furthermore, to engage consumers, the best way to present price data is in terms of unit pricing for episodes rather than individual procedures or services. This will align with how consumers think about and shop for health care. It will also make it easier to understand and compare prices across providers.