Richard L. Clarke, DHA, FHFMA
President and CEO, HFMA
Politicians, policy wonks, economists, and consumer advocacy groups are beating the drum of price transparency in health care. But achieving meaningful transparency is not just a matter of replacing the walls of the business office with glass.
In a consumer-directed health care system, consumers have more financial stake in their care decisions. And in order to make an informed decision, consumers must have understandable and comparable information on quality and price.
For most products and services, price information is fairly easy to communicate. Retailers advertise their prices, and through experience, word of mouth, and independent sources, consumers can judge the quality of the products and services they purchase. They can make a value assessment (that is, the relationship of price to quality) using readily available information.
In health care the model breaks down because understandable, comparable quality information is not readily available. And pricing is a mystery even to those of us who work in the field.
Some states have mandated that the price of certain procedures or diagnosis codes be published to facilitate consumer decision-making. This approach, however, ignores the very important impact of third party payment, deductibles, and co-insurance on the final bill. What the consumer wants and needs to know is the amount they will eventually pay for the services they receive.
So price transparency is not so much about the underlying charges for a service or episode of care, as it is about the total payment expected from the consumer after all other payments, adjustments, and discounts are applied.
