Avoiding Pitfalls in Provider Price Transparency
By Stephen Morales and Lucy Gallop
Since the announcement of federal price transparency rules in 2020[1], providers and payers have been wrestling with how they will comply with regulations. While Optimity believes that health plan payers have an opportunity to innovate price transparency into their member experience with design thinking, providers face a different challenge. Providers need to explain the complexities of “price” in healthcare to a population that has been completely shielded from the complicated contracting and network negotiations before they are branded by competitors or upstarts. The lack of detailed federal guidelines for compliance with price transparency has created further confusion for patients. But there is an urgency for providers to incorporate price transparency into the patient experience so that the hospitals remain relevant to a growing segment of consumers.
Today, the number of patients who make decisions based in part on available price data is very small. Less than 15% of patients in 2020 used any pricing data to make decisions[2]. Most patients were unaware that price data exist, and even fewer patients trust hospital websites to give them accurate pricing information. A recent Wall Street Journal article[3] found that some hospitals’ price transparency web pages omitted programming code, which made finding pricing data through popular searches like Google more difficult.
While today few consumers seek out price transparency data, Optimity believes that the segment of “price aware patients” is likely to increase in line with other industries, like travel, where consumer knowledge of price has fragmented the consumer experience. Travel agents decades ago used to bundle prices together for family vacations, but transparency in hotel, flight, and rental car prices disintermediated them. Today, patients can seek out lower-cost imaging or post-acute rehab from competitors, possibly disrupting a hospital’s care pathway, increasing costs for care coordinators, and complicating patient data management across multiple vendors.
One of the benefits of transparent pricing for components of care is that it can improve the hospital’s and/or care clinic’s (or healthcare provider’s) relationship with patients. Let’s look again at the travel industry example. Vacation bundles that listed individual component pricing created a greater feeling of fairness and value to consumers[4]. The greatest impact of price transparency came when individual component prices were compared to benchmark prices. The experience of vacation bundles can help shift the focus of health systems from selecting compliant tools to developing brand advocates through price transparency.
Download our latest Orange Paper to explore the following three key concepts for healthcare providers engaging patients on price transparency:
1. High deductible health plans (HDHPs) members are not your only targets
2. Hospital prices need to have context
3. Price engagement needs to be tailored as part of an overall patient experience
[1] Centers for Medicare and Medicaid Services, “Hospital Price Transparency”.
[2] Kurani, Nisha, et al. “Few Adults Are Aware of Hospital Price Transparency Requirements.” Peterson-KFF Health System Tracker, 28 June 2021.
[3] Mathews, Anna Wilde. “Business Groups Sue Over Healthcare Price Transparency Rule.” The Wall Street Journal, Dow Jones & Company, 20 August 2021.
[4] Tanford, Sarah, et al. “Price Transparency of Bundled Vacation Packages.” Journal of Hospitality & Tourism Research, vol. 35, no. 2, 2010, pp. 213–234.