Despite legislation in more than half of the U.S. states and provisions in the Affordable Care Act mandating price transparency, provider organizations still aren’t making it easy for patients to obtain estimated costs for care. In fact, a study by Transunion Healthcare found that fewer than one-third of hospitals in the U.S. currently provide billing estimates – despite 80% of patients saying they assign the same importance to billing accuracy as they do to a clinician’s attitude or approach to care.
One often-cited reason for the sluggish adoption of price transparency is concern that revealing what many consider to be proprietary information will reduce healthcare to a commodity, with patients shopping for care primarily by price instead of quality and outcomes. That excuse is a non-starter, however, in light of a recent study in Health Affairs which found that the majority of patients (71%) did not correlate cost with quality.
Others argue that price lists, such as those issued by the Centers for Medicare and Medicaid Services (CMS), are irrelevant because contracts between providers and payers, charity care discounts and other price variances mean few patients pay the published costs. Further, some say, price information is meaningless to patients facing complex procedures, seeking emergency care, or who are located in small markets where competition is limited.
These objections have led some healthcare organizations to take what can be considered a passive-aggressive approach to transparency. The Pioneer Institute reports that it took more than 15 minutes to get a complete price from 57% of the hospitals it surveyed. Estimates could not be obtained from 14 out of 54 hospitals despite multiple calls, and the vast majority of hospital websites did not provide easy access to price information.
Healthcare’s continued reluctance to provide patients with estimates is perplexing, considering the body of evidence supporting price transparency. Research indicates that 80% of patients who receive accurate costs estimates will pay their bills in a timely manner. That is significant, considering half of all patient payments ($150 billion annually) go uncollected and patient payment liability was expected to increase by 68%, from $250 billion in 2009 to $420 billion in 2015.
Patients are now the second largest payer group in healthcare, behind only the Centers for Medicare and Medicaid Services. So great is their demand for more and better price transparency that the Aite Group, a research and advisory firm focused on the impact of business, technology, and regulatory issues on the financial services industry, has identified it as a new healthcare market. In Price Transparency in U.S. Healthcare: A New Market, the firm projected that companies supporting price transparency would see revenues increase to $1.9 billion by this year and that the total market for price transparency products and services will increase from $540 million in 2012 to $3.09 billion.
Continuing to ignore patient demands could come at a very high price. The majority (51%) of patients surveyed by Transunion said they would change providers if it meant access to greater pricing transparency. To help hospitals maximize the effectiveness of price transparency initiatives, the Healthcare Financial Management Association (HFMA) has identified the essential elements of price information for insured patients. More vendors are also entering the market with tools that streamline and personalize the estimating processes to ensure it benefits patients and providers alike.
Part two of this series will focus on the support available to healthcare organizations seeking to launch new or enhance existing price transparency initiatives, including a closer look at the HFMA’s “Essential Elements of Price Information and the unique combination of tools made possible by the recent acquisition of StatPayMD by SwervePay Health.