University of Utah: Price Transparency and the Case for Sharing Cost and Quality Information

The most critical point of price transparency is disclosure, not a price. The fact that patients have to make health care choices without knowing their financial liability should not continue. In fact, health care price transparency is clearly overdue.

Yoshimi Anzai, MD, MPH, et al
University of Utah
January 29, 2020

A University of Utah survey of 5,000 patients, 600 physicians, and 500 employers identified affordable out-of-pocket cost as what they value most when accessing health care. Yet knowing the cost of care in advance from any given provider requires a great deal of effort.

Writing in the Journal of the American College of Radiology, Anzai et al from the University of Utah take a close look at the complex subject of price transparency in health care and share the University of Utah’s approach to the issue for its patients.

In framing the problem, they note that accessing price and quality information for health care is not easy and that people routinely make significant health care purchases without knowing how much they will pay.  The authors share that two out of three bankruptcies in the United States are related to health care, and more than 530,000 families file bankruptcy each year because of the inability to pay medical bills.

Health economists expected to see patients shopping for health care with the rise of high-deductible health plans (HDHPs), in which health benefits do not begin before patients incur between $2,000 and $7,000 in health care costs. The nation’s largest payor, CMS, required hospitals to post their list prices beginning on Jan. 1, 2019, and Seema Verma asked patients to report to her via the Twitter hashtag #WheresthePrice if they can’t find the prices. This has not helped for five reasons outlined by the authors:

  1. There is a big gap between the hospital retail or list price and the price paid by the insurance company or the patient’s out of pocket. The charge listed on the chargemaster is meaningless because it is not what the patient pays.
  2. More than 15,000 line items of procedure code, such as CPT codes, and additional medical jargon, such as MCC for major complication, comprise the hospital chargemaster, and patients have limited understanding of what they are getting and how it is coded.
  3. Chargemaster price disclosure is at the individual supply level (eg bandages and contrast material) not the procedures level (eg hip replacement), which is what patients want.
  4. Patients are less interested in the price that their insurance company pays and more interested in what their out-of-pocket cost will be.
  5. Quality overrides price in high-acuity care, so the authors cite the lack of quality information as the biggest problem with the current solution to price transparency.

In situations in which price and quality information are available, as with pharmaceuticals, price information can be a powerful influence. Imaging is often used as an example in which there is significant price variation, but quality information that is transparent to the patient is lacking.  The authors suggest that if that quality information were readily available, referring physicians could be helpful in helping patients modulate the sometimes-competing concerns for cost and quality.

University of Utah Price Transparency

To make price transparency meaningful, the University of Utah Health determined that price estimates and disclose out-of-pocket costs were essential, so the institution developed an interactive online price estimation tool to calculate a patients OOP expenses for 600 procedures and tests, ranging from vaginal births to CT scan of the abdomen with contrast.

The tool requires the patient’s type of insurance, amount of unmet deductible, and whether or not the patient has co-insurance. The estimates for private insurance are based on historical averages for commercial insurers. The average allowable Medicare price is used for Medicare patients. If patients access the tool through the health systems EHR, that information is pre-populated. The tool includes procedures with little variation in price, but others with considerable variation, like bypass or transplant, are not included. A disclaimer notes that the prices are estimates only and not a contractual agreement.

Since the online tool debuted in September of 2016, it has had 17,572 times. The average time to calculate an estimate was 2m 30s.

The authors do not harbor the same hope as health economists that price transparency will have the effect of lowering the nation’s health care expenditures, primarily because 5% of patients account for 50% of care.

They do, however, believe that price transparency provides patients with a much-needed sense of control over costs and also improves patient satisfaction. Radiologists, they believe must devise quality metrics that are meaningful to patients, referrers, and employers.

“The most critical point of price transparency is disclosure, not a price,” they concluded. ”The fact that patients have to make health care choices without knowing their financial liability should not continue. In fact health care price transparency is clearly overdue.”

 

 

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