As Big Payors continue to shift more costs onto health consumers in the U.S., the importance of and need for transparency grows. 39% of large employers offered consumer-directed health plans (CDHPs) in 2013, and by 2016, 64% of large employers plan to offer CDHPs. These plans require members to pay first-dollar, out-of-pocket, to reach the agreed deductible, and at the same time manage a health savings account (HSA). In the past several weeks, many reports have published on the subject and several tools to promote consumer engagement in health finance have made announcements. This week of posts provides an update on these developments in health care transparency. This first post sets the stage discussing a report from the Healthcare Financial Management Association‘s Transparency Task Force, Price Transparency in Health Care, published in April 2014. The HFMA is the largest membership organization for professionals working in finance in health care – CFOs, controllers, accountants. In what is a health finance transparency manifesto, the Task Force offers guiding principles for price transparency:
- Price transparency should empower patients and other care purchasers to make meaningful price comparisons prior to receiving care
- Any form of price transparency should be easy to use and easy to communicate to stakeholders
- Price transparency information should be paired with other information that defines the value of services for the care purchaser
- Price transparency should ultimately provide patients with the information they need to understand the total price of their care and what is included in the price
- Price transparency will require the commitment and active participation of all stakeholders.
HFMA points to four communication channels of price transparency information to patients: health plans, to insured patients; providers, to uninsured and out-of-network patients; employers, to employees working in self-insured companies; and, referring clinicians (generally primary care providers, or PCPs), who “should help” patients make informed decisions about treatment plans beyond primary care providers. Those issues are fairly straightforward. HFMA then presents “common definitions” for “charge,” “cost,” and “price,” which in health care have been fuzzy concepts for decades. To the average consumer, these three words would fall into a thesaurus under synonyms for the same thing: what you pay. In health care, this is not the case. For example, HFMA defines “cost” to the patient as follows: the amount payable out of pocket for healthcare services, including deductibles, copayments, coinsurance, amounts payable by the patient for services no included in the benefit, and amounts “balance billed” by out-of-network providers. Premiums are separate from these costs. The price is different depending on the patient’s health financial arrangement:
- For an insured patient, the price is the rate negotiated for services between the payer and the provider, including copayments, coinsurances, and deductibles.
- For uninsured patients, price is determined first by eligibility for financial assistance, with the price reduced according to the terms agreed in the provider’s financial assistance policy. HFMA notes that patients can negotiate discounts from this charge (“haggling” for discounts, as it were).
Under each of the five principles listed above, HFMA wrestles with challenges. For patients faced with newly-managing a high-deductible health plan and HSA, Principle 4 — information needed to understand the total price of care and what’s included — is particularly challenging to access. HFMA points out several obstacles to this goal, such as fragmentation in the health system, varied and new information sources, parameters of price estimates (that is price estimates and ranges versus a set price), and lack of comparable data. Principle 5, too, will require heavy lifting: calling all stakeholders in health care to play in the price transparency sandbox. HFMA calls, first and foremost, on health plans to be the first-line of providing and communicating prices to patients. Beyond health insurers, other stakeholders are called upon, as well – providers (doctors, hospitals) and employers. I would add prescription drug plans and pharmaceutical access programs to this mix of information suppliers, as well, as consumers are faced with growing specialty drug costs that can be quite sticker-shocking (see the evolving stories about Hepatitis C drugs from NPR, and via Kaiser Health News, for example). Health Populi’s Hot Points: Understanding health insurance is a low-priority topic for consumers. “When asked, people said they would prefer to go to the gym or work on their taxes than read through their health insurance policies,” according to a Perspective from the Kaiser Family Foundation. HFMA is realistic when it concludes that “Price is not the only information needed to make these decisions, but it is an essential component.” Value in health care, as in all things, is in the eye of the beholder. However, price and cost are not equivalent to value in the eyes of consumers, when it comes to health care. We have entered an era in U.S. health care that is, ironically, called consumer-driven health care. But the tools – just for price transparency, leaving aside the crucial elements of quality, and then value – aren’t yet available to enable Patients to take on that full role of Consumers – in what is evolving to be a retail health world. In retail, would empowered consumers accept vague pricing, paying for a product after consuming it and not knowing the price? In tomorrow’s Health Populi post, the Change Healthcare Transparency Index and InstaMed’s Trends in Healthcare Payments reports will be detailed, illustrating where patients currently ‘are’ on the transparency front. Later in the week, several tools that have begun to empower consumers to be consumers will be reported.