I came across this ad on my run to the beach in LA, and I couldn’t help but smile ear to ear. In a city where billboards are an eyesore in nearly every square mile, this one stood out and made me stop for a doubletake. So what exactly is it referring to?
Well, it’s a given that we love feeling a sense of ownership in everything we buy. But when it comes to our healthcare we often don’t have the option to choose; whom we see, what services we get, nor how much we pay. New legislation intends to make healthcare pricing more transparent which should drive competition that reduces costs and increases quality. Price transparency in healthcare is about making us, consumers, feel more prepared, involved, and informed in our healthcare.
I wrote an article explaining why the business model of healthcare is unlike any other industry. The main reason for this is that the prices of healthcare were withheld as ‘trade secrets,’ preventing any healthy market competition. But this new legislation is set to shake up the way business has been run till now.
To help consumers improve their understanding of costs, The Centers for Medicare and Medicaid Services (CMS) issued legislation that requires both hospitals and insurers to share their prices online that are accessible to the public. These prices need to be reported as:
- (Provider Requirement) Machine-readable files containing gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.
- (Payer Requirement) Consumer-friendly Display of Shoppable Services that contain plain language descriptions of the services and group them with ancillary services.
I have my speculation of what this may mean for competition in the marketplace. According to presentations by industry leaders that I attended at America’s Health Insurance Plans (AHIP) conference in June ’22, hospital machine-readable files vary widely in usability and only about ~20% of the market has put it out there. Despite that, in some cases, we’re already seeing this impact on contract negotiations range from -20% discounts to +8% rate increases, whereas before it was typical to see a +2% to +4% rate increase (rarely ever a discount). So we’ll see how this shakes out. You may be thinking, cool story but how does this impact me?
So what does this mean to us, as healthcare consumers? It means that we now have access to these reported charges. Start with a web search listing your provider’s hospital name + ‘price transparency.’ Then consider a third-party tool, like Turquoise Health. But always expect frustration. It’s still clunky to access and understand this data. So while there is information out there, it’s not consumer-friendly. In due time, I plan to shop for my healthcare much as I shop for e-commerce; research costs and reviews before I purchase.
When we have access to know better, we can do better. When we feel we have ownership in our decisions, we’re more likely to respond in a way that yields the best outcome for ourselves. So above all else, I think that’ll be the game-changer with this new legislation.
