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Price transparency initiatives for patients

Health Factors: Quality of Care
Decision Makers: Local Government State Government Grantmakers Healthcare Professionals & Advocates Nonprofit Leaders Public Health Professionals & Advocates
Evidence Rating: Some Evidence
Population Reach: 50-99% of WI's population
Impact on Disparities: No impact on disparities likely

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Description

Price transparency initiatives make pricing for hospital procedures and other health care services publicly available. Most patient-focused initiatives use websites, online databases, “report cards,” or similar tools to report local hospital charges, show price variation across providers within a region, offer patients out-of-pocket cost estimates, and reveal available lower cost alternatives. Price transparency initiatives can provide comparisons to national benchmarks and include data on health care quality outcomes. Price transparency efforts can also be designed to be used by physicians, employers, health plans, and policymakers.

Expected Beneficial Outcomes

Reduced health care costs
Increased health literacy

Evidence of Effectiveness

There is some evidence that patient-focused price transparency initiatives that include lower cost alternatives and quality indicators change consumer health care decisions and lead consumers to choose lower cost providers (Wu 2014, Whaley 2014). Such initiatives may also foster competition between providers, reducing health care prices and costs (Wu 2014, Mathematica-Tu 2014). However, additional evidence is needed to confirm effects.

Online price transparency tools (e.g., United Healthcare’s myHealthcare Cost Estimator) are associated with greater use of high quality and cost efficient physicians (Kamrudin 2014). Price transparency initiatives that also include quality data can support consumer selection of high value care, though providing these data can be challenging (Hibbard 2012, Mathematica-Tu 2014, Tynan 2008). Overall, successful price and quality transparency initiatives engage and collaborate with providers from the outset, present information in easy to understand, user-friendly formats, and give providers detailed feedback on performance (Tu 2009, Hibbard 2010). Price transparency alone may be a less effective means of influencing consumer behavior than providing price transparency and quality data together, as consumers frequently associate high costs with high quality and low costs with low quality (Hibbard 2012, Mathematica-Tu 2014, Tynan 2008). 

A New Hampshire-based study suggests that consumer use of price transparency websites remains low, possibly due to low awareness of these sites. Among consumers who visit price transparency sites, radiology services, office visits, and emergency room visits are most commonly searched (Mehrotra 2014). Low hospital response rates to requests for price estimates, non-comparable price estimates between providers, and price estimates for uninsured patients that exceed typical Medicare reimbursement can be challenges to developing price transparency initiatives that help consumers identify quality, low cost health care (Farrell 2009).

Broadening the audience for price transparency initiatives that include data on quality outcomes and lower cost alternatives to include physicians, health care providers, health plans, employers, and policymakers can greatly increase the potential cost savings of these initiatives (Mathematica-White 2014). Surveys suggest that physicians are not always aware of the costs, reimbursements, and charges associated with the care they deliver (Broadwater-Hollifield 2014). Information about lower cost alternatives and quality outcome data are also needed to affect provider decisions (Durand 2013).

Implementation

United States

As of June 2014, price transparency legislation has been enacted in 28 states. This legislation supports price transparency initiatives in several ways, for example, by mandating the release of price information data; mandating the creation of reports, consumer guides, or websites that disclose price information to consumers; requiring that price quotes are available for insured and uninsured consumers prior to treatment; or requiring facilities to provide patients with itemized bills upon request (NCSL-Transparency).

The Catalyst for Payment Reform (CPR) and the Healthcare Improvement Incentives Institute have reviewed recent legislation in a report card that examines consumers’ access to health care price information in all 50 states. Most states receive failing grades in this report, though there are signs of progress. New Hampshire earns an “A,” Colorado and Maine earn a “B,” and Vermont and Virginia earn a “C.” Connecticut and New York are in the process of developing all-payer claims databases and consumer-facing websites, Washington State enacted new laws, and Maryland is beginning a new effort to publish prices for health care services (CPR-Transparency 2015).

As of 2012, there were 62 state-based health care price transparency websites (Kullgren 2013). CPR considers New Hampshire’s NH HealthCost website an excellent model of a consumer-friendly price transparency site (NHID-NH HealthCost, CPR-Transparency 2015). All-payer claims databases are another way to provide public access to health care quality and cost data; such databases are in use in Kansas, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, Utah, and Vermont (CWF-Love 2010).

There are also organizations working on a national scale to increase health care price and quality transparency in the US, for example, the Agency for Healthcare Research and Quality (AHRQ-Profile), Aligning Forces for Quality (AF4Q-Measurement and reporting), and the Leapfrog Group (Leapfrog).

Wisconsin

Wisconsin enacted legislation supporting price transparency in 2010, 2011, and 2013 (NCSL-Transparency). The Wisconsin Hospital Association also has a website that shares price and quality information with consumers to support well-informed decisions about their health care (WHA-Transparency). 

Implementation Resources

AF4Q-Cost and efficiency 2011 - Aligning Forces for Quality (AF4Q). Lessons learned in public reporting: Crossing the cost and efficiency frontier. May 2011. Accessed on January 27, 2016
HFMA-Transparency - Healthcare Financial Management Association (HFMA). Price transparency: Making price information accessible. Accessed on January 26, 2016

Citations - Evidence

Broadwater-Hollifield 2014* - Broadwater-Hollifield C, Gren LH, Porucznik CA, et al. Emergency physician knowledge of reimbursement rates associated with emergency medical care. The American Journal of Emergency Medicine. 2014;32(6):498-506. Accessed on January 27, 2016
Durand 2013* - Durand DJ, Feldman LS, Lewin JS, Brotman DJ. Provider cost transparency alone has no impact on inpatient imaging utilization. Journal of the American College of Radiology. 2013;10(2):108-113. Accessed on January 26, 2016
Farrell 2009 - Farrell KS, Finocchio LJ, Trivedi AN, Mehrota A. Does price transparency legislation allow the uninsured to shop for care? Journal of General Internal Medicine. 2009;25(2):110-114. Accessed on November 19, 2015
Hibbard 2010* - Hibbard JH, Greene J, Daniel D. What is quality anyway: Performance reports that clearly communicate to consumers the meaning of quality of care. Medical Care Research and Review. 2010;67(3):275-293. Accessed on January 27, 2016
Hibbard 2012* - Hibbard HJ, Greene J, Sofaer S, Firminger K, Hirsh J. An experiment shows that a well-designed report on costs and quality can help consumers choose high-value health care. Health Affairs. 2012;31(3):560-568. Accessed on January 27, 2016
Kamrudin 2014 - Kamrudin S, Shah M. A comparison of myHealthcare Cost Estimator users and nonusers: Effect on provider choices. UnitedHealthcare; 2014. Accessed on February 2, 2016
Mathematica-Tu 2014 - Tu H, Gourevitch R. Moving markets: Lessons from New Hampshire's health care price transparency experiment. Princeton: Mathematica Policy Research (MPR); 2014. Accessed on January 26, 2016
Mathematica-White 2014 - White C, Ginsburg PB, Tu HT, Reschovsky JD, et al. Healthcare price transparency: Policy approaches and estimated impacts on spending. Princeton: Mathematica Policy Research (MPR); 2014. Accessed on January 26, 2016
Mehrotra 2014 - Mehrota A, Brannen T, Sinaiko AD. Use patterns of a state health care price transparency web site: What do patients shop for? The Journal of Health Care Organization, Provision, and Financing. 2014:1-3. Accessed on November 17, 2015
Tu 2009* - Tu HT, Lauer JR. Designing effective health care quality transparency initiatives. Center for Studying Health System Change. 2009;(126):1-6. Accessed on January 26, 2016
Tynan 2008 - Tynan A, Liebhaber A, Ginsburg PB. A health plan work in progress: Hospital-physician price and quality transparency. Washington DC: Health Care Systems Change; 2008: Research Brief No. 7. Accessed on January 27, 2016
Whaley 2014* - Whaley C, Chafen JS, Pinkard S, et al. Association between availability of health service prices and payments for these services. The Journal of the American Medical Association. 2014;312(16):1670-1676. Accessed on November 17, 2015
Wu 2014* - Wu S, Sylwestrzak G, Shah C, DeVries A. Price transparency for MRIs increased use of less costly providers and triggered provider competition. Health Affairs. 2014;33(8):1391-1398. Accessed on January 27, 2016

Citations - Implementation

AF4Q-Measurement and reporting - Aligning Forces for Quality (AF4Q). Improving health & health care in communities across America: Measurement & reporting. Accessed on January 27, 2016
AHRQ-Profile - Agency for Healthcare Research and Quality (AHRQ). AHRQ profile: Fact sheet. AHRQ Pub. No.14-P002-EF. 2014. Accessed on February 2, 2016
CPR-Transparency 2015 - Catalyst for Payment Reform (CPR), Health Care Incentives Improvement Institute. Report card on state price transparency laws. 2015. Accessed on November 17, 2015
CWF-Love 2010 - Love D, Custer W, Miller P. All-payer claims databases: State initiatives to improve health care transparency. New York: The Commonwealth Fund (CWF); 2010. Accessed on January 27, 2016
Kullgren 2013 - Kullgren JT, Duey KA, Werner RM. A census of state health care price transparency websites. The Journal of the American Medical Association (JAMA). 2013;309(23):2437-2438. Accessed on January 27, 2016
Leapfrog - The Leapfrog Group. Who we are: An employer-based coalition advocating for improved transparency, quality, and safety in hospitals. Accessed on January 27, 2016
NCSL-Transparency - National Conference of State Legislatures (NCSL). Transparency and disclosure of health costs and provider payments: State actions. 2014. Accessed on January 26, 2016
NHID-NH HealthCost - New Hampshire Insurance Department (NHID). Compare medical care prices in New Hampshire: The NH HealthCost website was developed to improve the price transparency of health care services in New Hampshire. Accessed on November 17, 2015
WHA-Transparency - Wisconsin Hospital Association (WHA). Health care issues: Transparency. Accessed on January 27, 2016

Page Last Updated

November 18, 2015

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