Unveiling the Cost of Care: How Transparency Changes the Patient Perspective

As the pressure to cut costs increases and patients shoulder more of the burden of paying for care, healthcare price transparency has become an unavoidable issue for hospitals, health systems and other providers.

calculatorIn March, journalist Steven Brill got Americans talking about pricing with his TIME cover story, "Bitter Pill: Why Medical Bills Are Killing Us," which investigated hospital billing practices. Then, in May, CMS released hospital chargemaster data to the public for the 100 most common Medicare inpatient diagnostic related groups. In June, the agency also published data from calendar year 2011 on hospital-specific charges for the 30 most common ambulatory payment classifications, or APCs, for hospitals paid under the Medicare outpatient prospective payment basis.

Policymakers have also added their voices to the chorus calling for more price transparency. In August, North Carolina Gov. Pat McCrory signed legislation into law requiring hospitals in the state to post prices on 140 of their most common procedures.

On top of all that, employers are increasingly shifting more healthcare cost responsibility onto consumers through high-deductible health plans.  In 2013, 20 percent of covered workers were enrolled in HDHPs with savings options such as a health reimbursement account or health savings account, up from 13 percent in 2010, according to the Kaiser Family Foundation 2013 Health Benefits survey.

Health insurers have taken notice of the transparency trend, and one of them – Highmark Inc., a Blue Cross Blue Shield-affiliated company – has created an online tools to help patients figure out how much their treatment will cost and compare different providers. 

The Highmark Care Cost Estimator launched in April and has had about 35,000 visits since then, says Matt Fidler, Highmark's vice president of consumerism and retail marketing. Drawing from a database of more than 100 million claims from all national Blues plans, it takes into account the user's specific health insurance plan as well as provider rates to give people a personalized price tag for healthcare services, he says. In the end, consumers get a start-to-finish out-of-pocket cost calculation for a certain procedure.

As healthcare cost consciousness continues to rise, Highmark expects even more people to use the tool. Mr. Fidler says the increased transparency surrounding both prices and quality ratings will likely change people's perspective and behavior when it comes to picking a healthcare provider.

"It's not a great stretch of the imagination to understand, in a matter of time, consumers will be looking at select medical procedures under the same lens they would look at a patio set " he says.

How cost estimation leads to a new patient perspective
Based on the feedback Highmark has received from people using the tool, Mr. Fidler says it's helping patients gain a much better understanding of their fiscal responsibilities and obligations.

"They really understand what they're going to be accountable for when they walk in and show that card and receive that service," he says.

As a result, he says they have the ability to make better healthcare decisions. In addition to the cost estimator, the insurer has also launched patient experience reviews, a rating system that allows Highmark plan members to provide feedback on provider quality measures such as timeliness and bedside manner. While only members can submit reviews, everyone can view them online.

The insurer has also gathered information on awards providers have received for quality service. Overall, the quality comparisons and cost estimates give people everything they need to make informed choices — and to shop around, Mr. Fidler says.

He expects people will soon view going to the physician like they look at taking their car to a mechanic to get the brakes fixed. They will want to know the cost up front, and they will likely evaluate various providers to see who will give them the best deal.

"Now that we've been able to provide these folks with this tool, will there be folks who are making different healthcare decisions?" Mr. Fidler says. "We're trying to affect that behavior for sure. We need to create these tools so consumers can choose the path they want."

Provider reactions and the inevitable transition to transparency
Highmark's provider relations team has heard both positive and negative feedback from healthcare providers that patients can compare using the cost estimator. Mr. Fidler says some are enthusiastic about publicizing their costs and quality measures, while others have suggested the insurer is overstepping and interfering with the provider-patient relationship.

In response to the less favorable feedback, Mr. Fidler says the information on cost and quality would be available somewhere — for instance, from the ratings company Healthgrades — even if the insurance company didn't provide it. He says the insurer has worked with providers to make them aware of the cost estimator tool and the larger marketplace shift toward disclosing prices.

"What we're working for at the end of the day is consumer transparency," he says. "There obviously will be some resistance…but the tide is coming. We can choose to embrace it or not. Either way it's going to happen."

More Articles on Cost Transparency:
Providers, Patients and Finances: New Guidelines Offer a Roadmap for Communication  
Opening Up: How Pricing Transparency Will Change Hospital Benchmarking  
North Carolina Hospitals Must Post Prices for 140 Procedures 

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