Less than one-fifth of U.S. adults know the cost of their healthcare products and services prior to receiving them, according to the results of a new Gallup poll. The results were released this month — more than three years after CMS began enforcing its price transparency rule for hospitals, and more than a year after payers were also required to publicly disclose their rates.
CMS said that the goal behind its price transparency legislation is to help patients become aware of their care options, understand the associated costs and potentially drive down overall healthcare costs through increased competition and educated consumer choices.
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Becaause of this legislation, healthcare pricing data is now available — but that doesn’t mean it makes any kind of sense to the average American given the way it’s presented to them on payer and provider websites. One might argue that the legislation was first about shedding light on the very opaqueness of the industry. Now that has been achieved to a degree, and the ball is in the court of healthcare software companies who need to create easy-to-use, personalized tools.
What has happened since the legislation took effect?
Price transparency experts agree that we’re still a long way away from living in a world where consumers can easily plug some information into a Kayak.com-style tool and receive an instant, accurate price estimation for their healthcare. However, they do think the industry has taken the first step toward a future like that.
“The data coming out was a big first step. The data improving and continuing to improve is another important building block,” said Marcus Dorstel, vice president of operations at Turquoise Health, a price transparency software startup.
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He also pointed out that both hospitals and payers have reached widespread compliance with CMS’ price transparency requirements. This wasn’t always the case — especially among hospitals, which initially struggled greatly to publish the highly complex billing data.
Part of the reason hospitals and payers have improved has to do with the fact that CMS became stricter about issuing fines for price transparency noncompliance last year, he noted. Another part of it stems from hospitals’ desire to represent themselves accurately to the public, Dorstel pointed out.
“We’ve seen that organizations within the U.S. healthcare system are actually using this data and accessing these files to make business decisions and negotiate new contracts. So you need to make sure you have accurate and usable information and that you’re being represented to other organizations in the right way,” he declared.
Unpacking the intent of the legislation
While consumer awareness about CMS’ price transparency rules is not where it needs to be, it too seems to be improving, not unlike how compliance from providers has gotten better.
Dorstel’s employer’s site — which compiles, cleans and displays the pricing data that hospitals and payers publish — had about 10,000 monthly users around the time CMS’ hospital price transparency rule went into effect, but now that figure is close to 50,000 or 60,000, he said.
But when you think about how many people receive care under our country’s healthcare system, that figure isn’t very big at all. It remains true that most Americans are unaware that providers and payers are required to post their prices, but that doesn’t mean that CMS’ price transparency regulations have failed, Dorstel pointed out.
In his view, price transparency regulations seek to do more than help consumers shop for care. When CMS began requiring hospitals and payers to post their cost data, the agency was trying to bring shadowy prices into the light for the whole industry, he noted.
“The intent of the legislation was for companies — software companies, health tech companies, as well other entities in healthcare — to use that data to inform better decision making and bring economic forces into play. Before, the price of healthcare was unknown, and so there could be no economic forces influencing those prices. Now with prices being transparent and out there, you have more and more organizations making business decisions based off of that data,” Dorstel explained.
To him, price transparency legislation seeks not only to help consumers save money, but also to lower overall healthcare costs. If payers and other businesses chose not to partner with a provider whose prices are higher than its competitors on the market, then that provider could very well be forced to lower their prices — over time, the increased instance of these types of scenarios could lead to lower costs across the healthcare delivery ecosystem, Dorstel remarked.
Amanda Eisel — CEO of Zelis, a healthcare payment technology company — agreed with Dorstel that CMS’ vision for the future of price transparency legislation was never a situation in which consumers visit a hospital website, download a mammoth file, and then scroll down to Row 3,986 to locate the price of a procedure they are undergoing. CMS’ intention was to get pricing data out in the open so that technology companies could step in and get to work on cleaning that messy data and building tools to help consumers understand it, she declared.
“The government said ‘We know this data in its raw form is just inherently not useful. You can’t understand it. We’re trying to free the data so that entrepreneurial companies can figure out how to use it so that consumers actually can have that price transparency,’” Eisel said.
It will probably take another five to 10 years until healthcare pricing data actually becomes useful for the American public, she added.
What the future could look like
Creating state-of-the-art software to process high complex data in a consumer-friendly way isn’t a task that hospitals or providers are well-equipped to handle. On the price transparency journey, the main role of these two groups is to make their data transparent and available — not understandable. As we embark on the next phase of the journey, it looks like software vendors and other tech companies will need to do some heavy lifting, Eisel predicted.
In order to build tools that consumers can eventually interact with regularly, there are a few key steps that health tech vendors can begin taking, she noted. For starters, she said that health tech companies need to start grouping pricing data for billing codes that are commonly used together in episodes of care.
“Part of the challenge with this raw data is that when you go in for any sort of procedure, you’re likely not going in just for one CPT code — but that is how the data is released. You’re going in for an episode of care, so that requires looking at the historic data and showing that when someone goes in for this, it actually results in these 15 codes that have to be grouped together, and that based on a high probability, this is going to be the cost of care,” Eisel explained.
For example, a person who needs a hip replacement may look at the CPT code for their arthroplasty and think they have suitable price estimation. But in reality, they need to be looking at a variety of different codes for services that are bound to be delivered during the episode of care, such as preoperative evaluation, anesthesia administration, wound care, physical therapy, medication, imaging and lab tests.
Healthcare software developers should also be aware of the importance of personalization, Eisel pointed out.
“When you think about it, what does a consumer care about? What they really care about is the price transparency data in the context of their health insurance. This isn’t like any other industry where a price is a price. In healthcare, you have to think about deductibles, copays and which providers are in-network and out of network for the price to be relevant,” she explained.
Future price transparency tools need to consider all those factors before they can be truly useful for consumers, Eisel declared.
Another price transparency expert — Hal Andrews, CEO of healthcare analytics company Trilliant Health — pointed out that the billing codes used in healthcare are a foreign language to most Americans. With these codes at the center of the pricing data released by hospitals and payers, tech companies need to use generative AI to help translate those codes and other medical pricing jargon in easily digestible terms, he declared.
“Maybe the best use for ChatGPT in healthcare is to translate Medicalese into English,” Andrews remarked.
How employers can help
Should health tech vendors create easy-to-use price transparency tools for consumers in the next few years, that still wouldn’t be enough to get Americans to use pricing data to shop for their care, Eisel of Zelis argued. In her view, the healthcare industry needs to dedicate more effort to increasing Americans’ awareness of price transparency initiatives and trust in publicly available pricing data.
Employers are going to have to get more involved in increasing this awareness and trust, Eisel declared.
Andrews also believes employers should take on a bigger role when it comes to increasing consumers’ interaction with price transparency data, as this data is most useful to the commercially insured population.
“I think the only place where you can really have consistent utility is when the employer makes it easy for the employees to see the information, to understand the information and to make better choices based on the information,” he explained.
To him, it’s naive to assume consumers will voluntarily search for their healthcare prices. However, Andrews thinks people may search if encouraged by their employer. Some actions employers can begin to take include deploying emails letting employees know what tools are available to them, providing employees with resources that help translate medical jargon, and offering workshops on how to navigate pricing data and estimator tools, he explained.
Andrews thinks price transparency data will remain mostly useless for consumers for at least another five years. But now that the groundwork has been laid, healthcare software companies have their work cut out for them.
Photo: AlisLuch, Getty Images
