This summer, price transparency advocates finally made progress with a new executive order on “Improving Price and Quality Transparency in American Healthcare to Put Patients First”. In a RevCycleIntelligence article, several hospitals warned that prices may actually increase with such an order — not surprising, in that reforms many times have unknown ramifications due to the nature of market forces.
[The executive order] directed HHS to propose a regulation within 60 days that requires hospitals to publicly post standard charge information, including charges and information based on negotiated rates in a patient-friendly format.
The executive order also included directions for making out-of-pocket cost information available to patients, addressing surprise medical bills, and empowering patients to gain greater control over their healthcare resources.
The goal of this change: increase competition by requiring hospitals to release actual costs of care, resulting in lower costs for patients and the system overall.
A new study from the Harvard T. H. Chan School of Public Health seems to indicate that the industry’s attitude toward increased price transparency may be misplaced.
A new RevCycleIntelligence post reports:
Published in the September 2019 edition of Health Affairs, the study examined healthcare price transparency efforts in Massachusetts, which makes data available on actual prices negotiated between payers and providers.
Using a unique data set from a state agency that contains prices by procedure, payer, and provider for 291 predominantly outpatient medical services, researchers found that Massachusetts could save between 9.0 and 12.8 percent if policymakers and payers use the price information to steer patients to lower-price providers or set ceiling prices for services.
“The simulations suggested greater potential savings from steering than from price ceilings—because steering would reallocate services to providers with prices along the price distribution, whereas price ceilings would increase the number of providers paid the seventy-fifth-percentile price,” they wrote in the study.
The strategy is, of course, based on the belief that greater healthcare price transparency will empower patients to select low-cost, high-quality providers, generating greater value.
Which way do you think costs will go — up or down? Whether you agree or disagree, a Mad*Pow survey found that 61% of patients are confused by medical bills, and over 49% said they were unsure if the total owed was correct. This is an underlying problem!
What’s the solution? Providers need to cater to patients with new tools to easily track and reconcile their options. For the revenue cycle, electronifying paper-originated remittances will ensure that payment and remit data is accurate and available downstream for patients.
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