Without Quality, Health Care Price Transparency is Incomplete

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By Bill Kampine and Scott Paddock

The health care industry’s recent and upcoming moves toward greater price transparency are important and laudable. They are steps in the right direction. But for those who have been studying the complexity and impacts of opaque pricing, costs and quality — and for the American public who just want to get the best care at the most affordable cost — these regulations are clearly not enough.

Consider the Hospital Price Transparency Final Rule, which went into effect on January 1 of this year, and requires hospitals to publish online the prices on five types of standard charges, including prices negotiated with insurance companies or other third-party payers. So far we’ve seen spotty compliance with the rule at best, and the information isn’t particularly helpful for cost-shopping consumers because it doesn’t really represent the actual amount they’ll pay for a service. A hospital’s expected third-party payer negotiated rate excludes out-of-pocket costs based on a patient’s specific insurance plan, anesthesia and physician fees billed separately from the hospital, or the patient’s eligibility for assistance through discounts or charity care. 

Moreover, the rules only apply to hospitals and not potentially lower cost sites of care for common outpatient procedures, like ambulatory surgery centers and imaging centers.

Next, provisions of the No Surprises Act and Transparency in Coverage Rule will take effect in 2022 and 2023. In particular, the Transparency in Coverage Rule will require health plans to offer an online shopping tool that will allow consumers to see the negotiated rate between their provider and their plan, along with a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services.

No doubt, having access to real-time, personalized health care cost information will help consumers better shop for services before receiving care. However, the issue of quality is conspicuously missing from the conversation.

Without data on the quality of care, how can anyone know if the price is right?

At the macro level, we know poor quality has a financial and human cost, and we know the price and quality of health care services are not correlated. Without access to outcomes-based quality information, patients can unwittingly choose poor performing doctors or facilities — based on price, convenience or anecdotal information — increasing their risk of complications, readmission and death. Nonetheless, consumers make these choices each day completely in the dark, with no visibility into risk-adjusted quality and complication statistics of their facility or physician.

To truly drive value in our health care system we must marry complete price across all sites of care with quality data and make that information easily accessible to the public. If consumers, employers, researchers and other third parties have the ability to view, analyze and extract meaning from that information, there will be new opportunities to develop innovative solutions that support not only health care decision making, but value-driven improvements in care delivery. This kind of data liquidity, free from the conflicts that can arise for intermediaries between providers and consumers, has the power to drive real change in the market.

As lawmakers and CMS begin to make headway on health care price transparency, now is the time to bring quality into the conversation. 

Bill Kampine is the Chief Innovation Officer and Scott Paddock is President and CEO of Healthcare Bluebook, which uses objective quality and price data and claims-driven ROI reporting to deliver healthcare value insights to consumers, employers, healthcare providers and payors.

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