Cost Transparency in Healthcare: The Challenges and Benefits

Cost Transparency in Healthcare: The Challenges and Benefits
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In the United States, it is estimated that that 1 in 4 Americans forgo medical treatment or purchasing medication/prescriptions due to high costs.[1]  In addition to increasing inflation on medical services, another factor that contributes to people forgoing medical care is the lack of cost or price transparency regarding service costs. Cost transparency, as defined by the Association of American Medical Colleges (AAMC) is “readily available information on the price of health care services that, together with other information, helps define the value of those services and enables patients and other care purchasers to identify, compare, and choose providers that offer the desired level of value.”[2]

Often, after a person seeks medical care, they are hit with surprise bills from out-of-network costs, as well as marked-up charges for services or materials used during treatment. In addition, cost transparency is opaque due to the structures that create it, such as billing codes and competitive pricing with special considerations depending on the payer. There are many challenges to fight cost transparency in healthcare; however, there are several solutions to increase cost transparency, as well as rich benefits from providers offering clarity on their services.

The Challenges Faced When Creating Cost Transparency

 In theory, the road to increasing cost transparency in healthcare may seem just a few policy changes away, but it is multifaceted and there are numerous other barriers. For example, medical providers negotiate prices with payers (both private and public) and may include third parties to reach an agreeable price in a competitive market. However, as there is no standard for setting costs, this can result in the same procedures and treatments having wide-ranging costs, such as a commercial cost brain MRI being four times the public insurance amount.[3]

Another hurdle is the legality of sharing cost transparency. When revealing how rates are determined between providers and payers, one could accuse either party of colluding with the other to set rates that would take advantage of the consumer.[4] To mitigate this, the Federal Trade Commission (FTC) enforces antitrust laws that prevent businesses from practices that would prevent consumers from benefiting from lower costs and innovation in a competitive market.[5]

The Benefits of Cost Transparency in Healthcare

A major benefit to increased transparency in healthcare costs and pricing is consumer freedom and choice. With providers revealing the prices of their services, consumers have a better understanding of maximizing their benefits, and can choose accordingly. In addition, it is theorized that with increased cost transparency, high-cost providers will lower their prices while still offering quality care, thus creating market competition and innovation to keep up with competitors, thus helping to control healthcare costs.[6]

Another benefit of cost transparency is that consumers might not be hesitant to prolong or defer medical care. Knowing prices ahead of time allows consumers to seek quality, affordable care in a timely fashion, as well as seek medical care early before conditions worsen or become chronic. As mentioned, consumers are likely to forgo medical care if they are unsure of the cost. The longer care is deferred, the more likely expensive treatment will be for more aggressive or chronic conditions.[7]

The Solutions to Cost Transparency Moving Forward

As mentioned, the road to cost transparency has many challenges; in recent years however, there has been much activism and growth in efforts to expand cost transparency. Recent legislation and rulings, such as the Consolidated Appropriations Act of 2021 and the Transparency in Coverage Rule, have come forth to ban surprise bills from out-of-network services while receiving care at in-network facilities and to increase awareness on service and item cost before care.[8][9] Additionally, several companies have come forth to offer healthcare navigation services and tools that can help insurance members explore providers, compare costs, and get the most out of their coverage.

Since opening for business in 2004, Airrosti has continuously worked towards the utmost level of cost transparency with patients. Before a patient’s first appointment, Airrosti verifies benefits and provides an out-of-pocket cost. This transparency method helps ensure Airrosti patients have a great care experience. As a first step to total cost transparency, Airrosti offers a complimentary VIP Chat that allows anyone to speak with an Airrosti provider at no cost and no obligation to schedule. This program ensures patients are in the right place for care and avoids unnecessary expenses. If you and your company want to offer comprehensive in-network MSK care for your employees and members, contact Airrosti and request a demo.

For more information, or to schedule a meeting or demo, click here.

 

 

[1] https://news.gallup.com/poll/395126/four-americans-cut-spending-cover-healthcare-costs.aspx
[2] https://www.aamc.org/system/files/c/2/450000-pricetran_commondefs.pdf
[3] https://collaborativeimaging.com/2022/02/08/wide-variation-in-imaging-prices/
[4] https://www.ama-assn.org/sites/ama-assn.org/files/corp/media-browser/public/about-ama/councils/Council%20Reports/council-on-medical-service/issue-brief-strategies-increase-health-care-price-transparency.pdf
[5] https://www.ftc.gov/news-events/topics/competition-enforcement/health-care-competition
[6] https://www.rwjf.org/en/library/research/2016/03/how-price-transparency-controls-health-care-cost.html
[7] https://journalofethics.ama-assn.org/article/how-might-patients-and-physicians-use-transparent-health-care-prices-guide-decisions-and-improve/2022-11
[8] https://www.cms.gov/nosurprises/Ending-Surprise-Medical-Bills
[9] https://www.cms.gov/healthplan-price-transparency

 

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