Medical costs: Delivering ‘no surprise’ experiences with price transparency in health care

Providing patients with prices of health care services so they can make more informed decisions: It sounds like a great idea, but the challenge has been in reaching agreement on how best to achieve this goal.

As the U.S. government issues and clarifies overlapping regulations designed to bring about price transparency in health care, providers, health insurance companies, and self-insured employers must overcome confusion, complexity, and outright concerns just to comply.

The first challenge is understanding the requirements related to price transparency. There are some final rules, such as Transparency in Coverage regulations issued in 2020 and the rules enacted under the Consolidated Appropriations Act of 2021 (HR 133–No Surprises Act). Then there are proposed rules that address the topic, such as the 2022 Outpatient Prospective Payment System, released this summer for comment. And to clear up a few implementation questions, the government has issued additional guidance and FAQs, which further clarify deadlines and possible future rulemaking.

Beyond compliance, the second challenge relates to the complex nature of health care, especially how services are priced and paid for in the United States. Full transparency would require hospitals and payers to disclose negotiated contract rates, which the American Hospital Association (AHA) called “anticompetitive” and America’s Health Insurance Plans (AHIP) said would “reduce competition and push health care prices higher.” The AHA also pointed out that the complexity of hospital contracting and billing have made compliance with price transparency regulations “impractical and often impossible.”

But the goal—enabling patients to know more about their health care costs so they can make informed decisions—is something most organizations support, including the AHA and AHIP. Price transparency is appealing to most health care consumers and can be useful in decision-making. An IBM Watson Health PULSE Health Poll conducted in August found that 79% of people who successfully find pricing information about health care services use that information to help make decisions about those services.

As payers and providers focus on what price transparency rules mean for their organizations, it is a good opportunity to think beyond compliance. Focusing on improving the consumer experience around costs and billing can deliver vast benefits to the health care ecosystem overall.

Simplify experiences for consumers

When it comes to researching health care costs, most consumers are looking for a simple, efficient digital experience that enables them to engage with their own health care. They want a “no-surprise experience” where they receive transparent, complete price estimates.

For example, a surgical procedure may include separate charges from the facility, surgeon, anesthesiologist, and potentially others, depending on the course of treatment. To deliver a more meaningful experience, estimates as published need to be “bundled” to help consumers understand the full costs of their care.

Understanding how benefits apply to cost estimates is another requirement for a meaningful experience. Consumers want to have personalized price estimates to reflect their own benefit coverage and remaining deductible amounts. Payers need to help their members by addressing complexities in benefit coverage, narrow networks and reference pricing with solutions for determining consumer out-of-pocket liability.

Helping the patient to know what to anticipate when receiving a bill is at the heart of price transparency regulations. Consumers want to have consistent information throughout their health journey from their providers and payers. But consistency is hard to achieve in a dynamic environment where receiving health care treatment is more complex than shopping for a consumer good. The actual services received may differ from what was planned. Helping consumers understand the possibilities, and how this could affect their costs in a simple and understandable way, is part of the “no surprises” imperative.

Many organizations have deployed tools to help their patients and members understand costs but have been disappointed that very few people use these solutions. To drive engagement, organizations need to think about how best to surface these insights for the consumer at the right time and place. For example, organizations can design a digital experience that prompts consumers to ask about cost information when they query a virtual assistant about benefit coverage or search for a specialist.

Patients, especially those in high-deductible health plans, are seeking more information about their health care choices. Organizations that make it easier for consumers to view pricing and quality information will encourage loyalty, which is a competitive advantage.

Model revenue impacts, explore new financial models

Beyond the challenges, providers and payers have opportunities to do more with these price transparency data. The data, once cleansed and standardized, will provide a rich source for insights on reimbursement benchmarking to assess how rates compare within a market, to surrounding markets, and as a percentage of Medicare rates. Modeling this information can help hospitals understand the potential revenue impacts of market shifts owing to price transparency, and it can help payers assess competitiveness.

With change comes opportunity. For example, health care payers could explore new options for member engagement strategies, or design new types of plans that could share cost savings with the consumer.

For the providers, payers, and employers complying with the price transparency mandates as part of a larger strategy, there is the opportunity to deliver a better consumer experience, which can ultimately result in better retention and growth rates. Going beyond the mandate will help drive meaningful engagement with health care consumers and help build collaboration to help improve health care. But we all have a way to go before we get there.

Bobbi Coluni is leader, Payer Offering Management, at IBM Watson Health.