From The Editor | January 28, 2015

The Future Of Healthcare Depends On Price Transparency

Source: Health IT Outcomes
ken congdon

By Ken Congdon

Ken Congdon, Editor In Chief of Health IT Outcomes

One of the primary goals of the universal coverage mandate contained in the Affordable Care Act (ACA) is to motivate patients to practice preventative medicine by eliminating the fear of the crippling costs often associated with visiting a doctor’s office, ER, or other healthcare facility. However, as it turns out, simply being “covered” doesn’t alleviate these cost concerns for many patients. While more than 10 million Americans have become “newly insured” because of the ACA and its healthcare marketplaces (according to HHS data), a recent study confirms that healthcare-related cost concerns are still a huge barrier to creating a culture of preventative care.

A Harris Poll of 2,026 adults (1,872 of which currently have health insurance) conducted on behalf of SCIO Health Analytics shows that one in five respondents have avoided visiting a doctor within the past 12 months because of cost concerns. When you extrapolate this data and apply it to the entire U.S. population, it equates to approximately 44 million Americans evading doctor’s visits due to fear of the potential expense.

This is a huge problem. It’s well documented that failure to address medical issues early in outpatient settings often leads to complications that result in ER visits and hospital admissions — the costliest form of healthcare delivery. This is particularly true of patients with chronic diseases. If patients with chronic conditions regularly consulted their physicians, adhered to treatment plans, and proactively managed their diseases, it would drive millions (if not billions) of unnecessary costs out of the healthcare system annually. Unfortunately, health insurance coverage alone isn’t driving this behavior.

Confusion & HDHPs Exacerbate Cost Issue

One of the main reasons cost concerns trigger healthcare paralysis among insured patients is confusion — confusion about what their plan covers and what their financial responsibility will be. According to the Harris Poll, 38% of those surveyed do not have a good understanding of the healthcare services covered under their current plan, 41% do not know what their out-of-pocket costs for prescription drugs is, and 61% don’t know their out-of-pocket costs for urgent care or walk-in clinic visits.

Another element perpetuating this behavior is the fact that, even with insurance, out-of-pocket healthcare costs are still a huge financial consideration for most patients. Moreover, these costs are often shrouded in mystery by healthcare providers. For example, while the ACA has motivated more Americans to purchase health insurance, many have opted for high-deductible health plans (HDHPs) that carry lower monthly premiums. Many of the long-time insured have also started moving to HDHPs in an effort to manage ever-increasing premium costs. Therefore, while the ACA is ensuring patients have the coverage necessary to keep medical-expense-induced bankruptcy at bay, it has also caused many to become more cost conscious because of the added upfront costs that are incurred under HDHPs. And, it bears repeating that many patients (and providers) are unclear about what these expenses ultimately will be.

Use Technology To Drive Education, Price Transparency

Beyond insurance, better education, and most importantly, price transparency will be necessary to reduce cost concerns that lead to healthcare avoidance. Information technology will be instrumental in both efforts. For example, business intelligence platforms can help health providers and health plans collect, aggregate, and analyze specific patient data (e.g. demographics, socioeconomic status, communication preferences, geographic access to care, etc.). With this information, providers and payers can customize educational material and messages on coverage, costs, and care, and deliver these communications via the most effective medium(s). Through these efforts, healthcare organizations can help improve the knowledge base of their patient populations, increase patient engagement, and drive better utilization of healthcare services.

Big data will also be crucial to establishing price transparency in healthcare. While virtually nonexistent today, some healthcare leaders are beginning to leverage big data to lay the groundwork for price transparency. For example, as referenced in my article Moving Beyond The EHR, the Wisconsin Hospital Association (WHA) has worked with its members to develop a website called PricePoint. Through this initiative, WHA members upload their charge data to an online repository where it is aggregated. Healthcare consumers can then use this website to gain insight into what certain medical procedures cost at different health providers throughout Wisconsin. While the data stored in PricePoint represents the amount billed after a service was delivered, it’s a huge first step toward upfront price transparency in healthcare. For instance, many of the WHA providers involved in the program are currently analyzing the cost data of their facilities and comparing it to neighboring providers in an effort to establish fixed pricing for certain medical procedures in the near future.

As elements of the ACA continue to roll out, price transparency will become more and more imperative to ensuring a successful transformation of the U.S. healthcare system. Budget-conscious Americans covered by HDHPs need to know how much necessary medical treatment will cost, so they can manage their finances and make informed purchasing decisions. We simply can’t do this today. For most, medical expenses are still an unknown until an invoice or EOB shows up in our mailbox weeks later. This (combined with confusion surrounding coverage and patient responsibility) is why insured patients continue to avoid the doctor. This needs to change, and it needs to change soon.