As efforts intensify to rein in the soaring cost of healthcare, greater attention is being paid to the cost-control potential of price transparency. Initially envisioned as a consumer-driven dynamic, price transparency beckons physicians to consider much more seriously the cost impacts of their diagnostic and treatment decisions.
The U.S. Department of Health and Human Services (HHS) regards price transparency as an important weapon in its armamentarium of “value-driven” approaches to drive down the cost of healthcare. By unleashing the energy of the savvy shopper and empowering consumers with the ability to compare the price and quality of healthcare services, they can make informed choices of their doctors and hospitals. In turn, HHS hopes to motivate the entire system to provide better care for less money.
That “empowered consumerism” principle is the guiding impetus for the Affordable Care Act’s state-regulated health insurance exchange apparatus, which, beginning in 2014, will present a side-by-side comparison of health plan choices, premium costs, and out-of-pocket copays in a way that is designed to help consumers shop for better-value health plans.
Some health plans are using price transparency to nudge consumers to choose lower-cost healthcare service options. Anthem BlueCross BlueShield, for example, has launched the Compass SmartShopper program (www.compasssmartshopper.com), which gives members in New Hampshire, Connecticut, and Indiana $50 to $200 if they get a diagnostic test or surgical procedure at a less expensive facility. Anthem notes that the cost for the same service can vary greatly. For example, hernia repairs range in price from $4,026 to $7,498, and colonoscopies range from $1,450 to $2,973.
New price transparency tools also are available (HealthCareBlueBook.com and FairHealthConsumer.org, for example) to help consumers who face high deductibles or out-of-pocket costs to find “fair prices” for surgeries, hospital stays, doctor visits, and medical tests—and shop accordingly.
Despite these developments, however, there is limited evidence that the “empowered consumerism” approach to price transparency will spur consumers to choose lower-cost providers. Some experts note that many consumers equate higher-cost providers with higher quality, and caution that healthcare cost-profiling initiatives might even have the perverse effect of deterring them from seeking these providers.1 Cost measures, they argue, must be tied to quality information in order to neutralize the typical association of high costs with higher quality.1
There are healthcare price transparency initiatives that address the supply side of the healthcare cost equation. These initiatives seek to educate physicians about the ways in which their clinical decisions drive cost and affect what patients pay for care. Some believe that this approach has the potential to make a much bigger dent in cost containment than the empowered-consumerism approach.
“Ninety percent of healthcare cost comes from a physician’s pen, but a lot of that spending doesn’t help patients get better,” says Neel Shah, MD, a Harvard-affiliated OBGYN and executive director of Costs of Care (www.costsofcare.org), a nonprofit aimed at empowering both patients and their caregivers to deflate medical bills. The challenge, he adds, is making physicians aware of how their decisions can inflate costs unnecessarily, and giving them the training and tools they need to take appropriate action.
“Just as the patient-safety movement helped caregivers think about how to prevent unintended harm, a new movement is needed to educate doctors, nurses, and other caregivers about the cost and value of their decisions, so they can avoid waste and protect patients from unintended financial harms as well,” Dr. Shah says.
Costs of Care recently launched its Teaching Value Project, which employs Web-based video education modules to help medical students and residents learn to optimize both quality and cost in clinical decision-making.