What Does Price Transparency Have to Do with Patient Empowerment?

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One of my board members recently asked what I thought about a new federal proposal to increase price transparency in health care. The proposal specifically relates to the public disclosure of negotiated rates between providers and insurers and would go one step further than the Affordable Care Act’s requirement that hospitals publish their standard charges to the public, which just went into effect this January. I wish I could have given a simple response, such as: “I think it’s great—this would empower patients to make more appropriate choices and drive down health care costs.”

But of course, like almost everything else in health care, this complex issue does not lend itself to an easy answer.

COMPLEXITIES AND RISKS

In general, greater transparency in health care is a worthy goal that most people can support, including policymakers on both sides of the aisle. Indeed, when enough useful information is available, increased transparency can lead to greater patient empowerment. But there are numerous steps between greater price transparency and a more empowered patient, and several risks can emerge along the way. One major concern is that responsibility and accountability for choices may be pushed down to the patient, without providing the appropriate knowledge, tools, and support to make informed decisions.

PERPLEXING PRICE LISTS

For the most part, hospital price lists—even if they are insurer-negotiated rates and not standard charges—do not match how health care is used from a patient perspective. A patient generally experiences hospitalization as an episode of care, such as a hip surgery procedure or treatment for a bout of illness like pneumonia. In contrast, a bill for one of these hospitalizations comprises dozens, if not more, of individual line items that patients have no way of deciphering or predicting ahead of time. Further, even if the total price were foreseeable, the patient would also need to know about the provider’s quality of care before making an informed decision. And here, patients may encounter yet another dimension of complexity: what they define as “quality” is not necessarily what we in health care are currently measuring and reporting. A comprehensive 2017 study by United Hospital Fund found that most publicly reported quality measures were not precise or meaningful enough to consumers and their families to adequately inform health care decisions. And of course, price and quality information for patients is only useful for decision-making if there is time to make a decision—clearly, not in the case of common reasons for hospitalizations like heart attacks or strokes.

UNINTENDED CONSEQUENCES

Greater price transparency may also lead to unintended consequences. For instance, proponents assume that consumers will choose the lower-priced provider if there are no apparent differences in quality. However, this may not always be true, particularly if the patient’s health insurance plan design largely guards against price differences or diminishes their impact, especially after a deductible is met. In addition, in the absence of other information, patients may sometimes use prices as a proxy for quality. Likewise, when providers see how much payers are reimbursing competitors, they might attempt to increase prices to match their peers rather than lowering them to attract patients. These potential unintended consequences warrant careful study as price transparency efforts continue to gather steam.

This is not to say that greater price transparency is not desirable—it certainly is, but we should temper our immediate expectations. Further, we should acknowledge that hospital price transparency is only one step along the path to patient empowerment. There are fortunately other areas in health care decision-making that yield a clearer, more direct way forward.

POST-ACUTE CARE DECISION-MAKING

UHF recently completed a study that highlights one such area, decision-making around post-acute care. Even though one in five hospital patients require medical care after discharge, large gaps in information and decision support prevent patients and families from making the best choices about post-acute care. The potential health and financial consequences are significant. Much of this information is, in fact, readily accessible and considerably less complex than hospital prices; the challenge is that keeping patients and families actively engaged and providing them with useful, timely information means working across multiple stakeholders and overcoming communication breakdowns and other systemic problems. Sometimes, guidance around these difficult decisions is not only needed, but welcome. And perhaps this is the lesson: although transparency may be desirable, it is not enough to achieve patient empowerment and more informed health care decision-making.

 
Published
April 12, 2019
Copyright
2019
Focus Area
Quality and Efficiency
Initiatives
Quality Institute