Price Transparency In Healthcare & Why It Is Important
Health care costs have ballooned for many decades without the smallest signs of coming down.
While it may be impossible to reduce rising medical bills drastically, patients can have the upper hand when they can predict and negotiate their medical bills. Such is possible with healthcare price transparency.
Healthcare price transparency allows patients to leverage readily available information regarding healthcare prices to compare between healthcare providers, thus selecting that which suits their needs and budget.
Below, we have highlighted some reasons why healthcare price transparency is important for customers and patients.
What is Healthcare Price Transparency?
Home buyers look for best places to buy a house that fit their budget because they have access to information regarding the prices of homes.
That way, they can compare various houses based on their prices and go for that which suits their budget and taste. Such an initiative has been introduced in the healthcare industry, and it is called healthcare price transparency.
Healthcare price transparency refers to readily available information regarding the price of healthcare services, thus making it easier for patients to compare healthcare providers and better anticipate their healthcare costs.
In recent years, governments have leveraged healthcare price transparency to increase competition among healthcare providers and reduce costs while also boosting the quality of healthcare. Price transparency has many forms, but the general goal of this initiative is to raise consumer knowledge of health care prices.
According to the National Conference of State Legislators, the theory of transparency is ” knowledge is power,” where if a patient has enough understanding of how much they are to pay for healthcare services before receiving care, they can go for high-quality services at an affordable rate.
However, to leverage the full benefits of this government-backed initiative, its important customers and patients learn about price transparency in healthcare and its importance.
What is the Importance of Healthcare Price Transparency?
A typical family budget comprises food, housing, utility, healthcare and miscellaneous. Among these bills, healthcare is ranked second, after housing.
While it’s quite easy to predict the prices of houses, foods, and utilities and plan based on the prices, people often don’t have that luxury when it comes to the healthcare system.
Studies by health affairs show a huge variation in hospital prices, across hospitals and even with hospitals, for the same medical procedure carried out by the same physician.
Because of this, many Americans are often surprised when presented with their medical bill. By introducing healthcare price transparency to the healthcare system, patients can predict their bills and plan ahead.
Here are some of the importance of healthcare price transparency:
1. Affordable Healthcare Costs
What’s the first thing you do when you want to purchase a car? Shop around, right?
With healthcare price transparency, you can do likewise when seeking healthcare services. By shopping around for healthcare services, patients can encourage or force healthcare providers to reduce their costs, making them affordable.
Of course, healthcare price transparency wouldn’t have been possible with the government’s help. To help promote this initiative, government rules have recently taken effect and will keep on unfolding in the future.
2. Predictability in healthcare costs
Wouldn’t you like it if you could predict your healthcare cost? That is what healthcare price transparency aims to achieve!
Many individuals aren’t aware that they can negotiate their medical bills, and almost 93% of those who are aware and negotiated their bills had it cut down or dropped altogether.
By upgrading price transparency, customers and patients can create an accurate budget for their medical bills and shop around for healthcare that suits that budget.
Plus, with the understanding of the prices of different healthcare providers, customers can negotiate their bills with ease.
3. Transparency Regulation in the Future
Over the past decade, many rules have been passed to improve healthcare price transparency to enable customers to predict the cost of their medical care.
Regulations like the Hospital Price Transparency in Coverage are aimed at hospitals and insurers, encouraging them to showcase the costs of goods and services in an accessible way.
4. No Surprise Act
The No Surprise Act, which took effect in January 2022, is designed to protect customers or healthcare patients from surprise billing. And what is a surprise billing?
Surprise billing can occur when a patient gets out-of-network services during an emergency visit or from a provider at an in-network hospital without prior notice.
This law prevents providers from giving patients bills that are more than the in-network cost-sharing amount in these circumstances. It also allows customers to appeal arguments over coverage of surprise medical bills to an external reviewer.
Who Would Benefit From Price Transparency?
By now, you should have a good understanding of healthcare price transparency. However, you may be wondering, who would benefit from this initiative? Will this initiative benefit insured customers? What about individual customers?
You see, most price transparency concepts have targeted customers with the clear aim of providing individuals with price-related information that enables them to negotiate better and receive more affordable healthcare services.
There is some reason, though, why customers might take full advantage of transparent cost information.
Individual customers often care about the amount of out-of-pocket payment which they are responsible for. For those who have insurance, the price they pay for healthcare is only a small amount of the total cost, with insurance covering the rest,
Two different customers with diverse deductibles and copayments could face different out-of-pocket costs for similar-priced services, depending on the plan.
Besides, when a patient gets to the hospital, the out-of-pocket limit for many insurance policies may have been achieved, making the patients less bothered about the price.
Being able to predict the cost of services gives you an upper hand in negotiation, and enables you to compare different offers to find that which suits your budget.
Healthcare price transparency enables you not only to negotiate your medical bills but also to predict and compare healthcare costs. It is left for you to shop around, research available healthcare costs, and compare.
When fully leveraged, healthcare price transparency can serve as a powerful tool in the hands of customers and patients.