The health care price transparency revolution begins next month

Expedia for health care could be on its way

An HHS rule on price transparency that goes into effect next month will usher in a health care revolution, Fisher writes.  (Bill Clark/CQ Roll Call file photo)
An HHS rule on price transparency that goes into effect next month will usher in a health care revolution, Fisher writes. (Bill Clark/CQ Roll Call file photo)
Posted December 18, 2020 at 12:42pm

Coming soon to a hospital near you: price transparency. Beginning next month, U.S. hospitals will finally publish their real prices, including their discounted cash prices charged to anyone who comes in off the street and their secret rates negotiated with health insurance companies.

This sunlight on prices will disinfect the putrid swamp of special interests, middlemen and backroom deals that’s led to sky-high health care costs. Real prices will provide health care consumers with financial certainty in contrast to the status quo where they don’t know what they will owe until after their bills arrive weeks and months later. Prices will empower consumers to shop for less expensive care, putting downward pressure on costs while increasing quality.

This imminent health care revolution is the result of a Health and Human Services final rule issued last year. A separate HHS transparency rule, finalized this fall, requires health insurers to reveal patient-specific cost-sharing information beginning in 2022. Together, these rules will usher in a functional and competitive health care system that empowers patients with real prices and quality information — just as markets do in nearly every other economic sector.

 Codifying these transparency rules into law can make them even more durable, while providing a much-needed fix for Obamacare. According to multiple polls, around 90 percent of Americans support this reform.

Posted prices can’t come soon enough. A recent RAND study found that average hospital prices are 247 percent more than the rate Medicare pays for the same treatment at the same location. At some hospital systems nationwide, this price premium exceeds 400 percent of what Medicare pays. Starting next month, health care consumers, including patients and employers, will be able to identify which hospitals overbill and price gouge and choose to contract with less expensive, higher-quality alternatives.

Roughly half of Americans say crippling costs have forced them or a family member to delay some form of health care. Some Americans are even avoiding coronavirus treatments. Routine health care regularly costs four- or five -figures. Some patients, including Florida teacher Carbery Campbell, received bills for around $6,500 for their coronavirus-related testing. Such inflated bills cause more than 1 in six 6 Americans to have medical debt in collections, according to the Urban Institute. In some states, such as Texas, this ratio increases to around 1 in 4.

Forthcoming price transparency will make health care consumption resemble the market for air travel, with stated prices from various competing providers. This airline analogy is especially apt because this industry used to operate in the dark like health care does today. Prices and routes were heavily regulated and opaque. Travelers were forced to visit high-priced travel agents, who could price-gouge without consequence. 

After airline deregulation, a functional, competitive airfare marketplace emerged, reducing prices by about 50 percent while improving quality, safety and access. Travelers can now easily shop around based on prices and quality. When third-party web platforms, like Kayak and Expedia, start harnessing real price information from hospitals, patients would be able to purchase health care like they currently book travel.

With less money feeding the health care beast, patients and employers, who provide health coverage for most Americans, will have more money in their pockets and on their balance sheets to spend on more productive priorities. Businesses will have more money to revitalize battered Main Streets, rehire the American workforce and raise employee wages. 

In other words, health care price transparency will not only revolutionize U.S. health care but also turbocharge the American economy for generations to come. 

Cynthia A. Fisher is a life sciences entrepreneur and the founder and chair of PatientRightsAdvocate.org, which supports health care consumers receiving real price transparency prior to service.