Spotlight Exclusives

Out of the Spotlight: “Price Transparency in Health Care: A Report from the Field”

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The pricing of medical services has historically been dubious, with patients having little insight on the intricacies of medical services coding and billing, and insurance companies complicating the process further by not detailing the specific coverages of services needed to improve patient health. For years, calls to change the pricing scheme in America have been made to policymakers, and have grown louder thanks to the COVID-19 pandemic.

On October 18, the American Enterprise Institute (AEI) hosted a discussion on the topic of price transparency titled “Price Transparency in Health Care: A Report from the Field”. AEI Senior Fellow and Milton Freedman Chair James Capretta and CEO of Turquoise Health Chris Severn discussed key concerns around the policy changes around price transparency and how healthcare providers can use these changes to help improve access to healthcare.

When discussing the history of policy changes in the space, Severn remarked that there is a “B.C. and A.D. to price transparency,” where the key turning point in the space was in January 2021. This was shortly after the passage of The No Surprises Act, which would shield patients from unexpected bills from providers who were out-of-network or performed other services that were medically necessary.

The two then discussed hospital compliance towards price transparency, whereby Severn noted how the standard for compliance misrepresents the number of hospitals that are meaningfully compliant in providing price transparency.

“A lot of press narratives on hospitals are based on a pass-fail system for price transparency, showing only 14% compliance. But if you grade them on a less pass-fail system, 65% of hospitals are meaningfully transparent.”

From there, the discussion centered towards key challenges that providers face when trying to achieve transparency. Severn explained that medical coding and billing, especially in relation to insurance providers, is a complicated process which has negative implications to the average consumer. He added that services and their rates are not standardized among insurers and providers, and that many physicians are not literate in healthcare pricing, resulting in consumers overpaying for services that could have been covered.

However, Severn remains hopeful that transparency will be more prevalent among providers in the future. Severn noted that physicians will soon be able to access tools that can help to list out and compare costs of services to ensure that services provided are medically necessary and cost-effective for the patient.

Citing the work to streamline healthcare done by his company Turquoise Health, he said, “Once you have that great experience in healthcare, where you are able to get a transparent cost without extra charges and schedule your services, it becomes a standard. Your experience on the provider website could change towards this and be more pervasive.”

Capretta rounded out the discussion with a final question, asking Severn how policymakers can contribute to advancing price transparency in healthcare. Severn responded by saying that the laws in place, including The No Surprises Act, create market incentives for price transparency. Continuing this behavior, while also providing direct incentives to companies who price their services transparently would be helpful to make transparency more mainstream.

To watch the recording of the discussion, as well as access relevant materials from the American Enterprise Institute, click here. For more information on AEI and its work on health policy and other socioeconomic issues, visit www.aei.org. For more information on Turquoise Health, visit www.turquoise.health.

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