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As healthcare consumers pay a greater portion of their costs out of pocket, they have an urgent need for meaningful and transparent price information. They also have more motivation than before to bring up questions about the cost of medical treatments and services when speaking with a
Although industry stakeholders are hopeful that implementation of widespread price transparency can enhance the value of health care, the path to such an outcome is difficult. Current tools have not gained widespread utilization or made much of a dent in healthcare shopping habits, in
part because consumers lack experience at interpreting the information and using it to make high-value choices.
In this edition of the Healthcare Challenge Roundtable, representatives of the healthcare finance, clinical medicine, and health plan segments discuss the challenges and opportunities that have arisen in the push to be more transparent and forthcoming about prices.
Participating are Aaron
Crane, CEO of Propel Health in Portland, Ore., and formerly CFO of Salem Health in Salem, Ore. (and a 2016-19 Board member of HFMA); Nathan Foco, senior director of market research and consumer analytics with Priority Health in Grand Rapids, Mich.; Mary Anne Jones, CFO and senior vice
president for operations with Priority Health; and Wynn Hunter, MD, resident physician in the Department of Medicine at Duke University Health System and a frequently published researcher on the topic of out-of-pocket healthcare costs and their impact on medical decision-making.
Aaron Crane: One of the current problems in the industry is that data is siloed across multiple sources. This problem is compounded by the misalignment of incentives among these sources. It’s hard for the consumer to understand what they really owe when you talk about transparency because different parts of the pie have different pieces of information. It’s not shared, it’s not easily
digested. It’s not that people don’t want to give you a straight answer—they honestly don’t really know, and it’s not a priority to figure it out.
When I look at what we’re trying to do at Propel, in a value-based business model one goal is to align incentives of the patient, insurance companies, and the provider. The idea is to manage the patient’s needs in the lowest-cost setting to optimize their health. This hopefully puts
all the information in fewer places and makes it easier for patients to understand what they need to make decisions. It does try to make it simpler, but it’s something that’s still being built.
Wynn Hunter: The
biggest change I’ve seen over the past few years has been in the way that physicians are being trained to deal with healthcare costs. With greater appreciation of our country’s unsustainable healthcare expenditures, and the rise of advocacy groups and campaigns like
Choosing Wisely, there has been greater emphasis on identifying and eliminating unnecessary testing, procedures, and medications. Additionally, as the health systems are focusing more on quality metrics like readmissions, we are working even harder to improve
adherence to medications and ensure follow-up.
Excessive healthcare costs and resulting financial distress are barriers to adherence and optimal treatment, so we find ourselves discussing out-of-pocket costs and affordability with our patients on a routine basis. As a result, many of us younger physicians are becoming comfortable with
discussing out-of-pocket costs with patients, and we embrace the importance of preventing financial distress.
Nathan Foco: We’ve
been on this journey for almost three years now. It has been slow to start. We’re not only providing our members with a tool that can help in their decision making, but we’re also making them aware that they have the option to do so. That’s part of the process that we’ve gone through over the last few
years—helping our members to understand that this is even an issue and that they have solutions.
We have obviously gone through a number of different targeted marketing approaches, general awareness. But we also reach out to people on almost a one-on-one basis. We’ll send people direct information even after they’ve had a particular procedure to let them know that they essentially
could have saved a little money had they actually used some of these tools.
Overall, about 10 percent of our eligible population has used our
cost estimator, which is a couple of times greater than the national averages that we’ve seen.
Mary Anne Jones: Our
cost estimator tool is actually part of what we call our MyHealth hub. It’s an app that you carry around with you on your smartphone or iPad, and you can also access it on your computer. You can be shopping in real time when you’re right there with your physician as you’re trying to identify where you want to have
your service done.
We also have a rewards program that goes along with that, where we share part of the savings. If they choose a lower-cost option, they get a reward for that.
We also incorporate this into our call center, so when members call with questions about services, we have our health navigators work with the members to educate them. Every opportunity we get to talk with our members about their health, we make sure that they are aware of what their
Hunter: Over time, physicians can identify patterns in terms of what insurance plans are most common among the patients that they see on a daily basis. Further, it is possible to find out which medications and tests are preferred, or covered well, on these patients’ formularies. Accordingly, from interactions with
patients and from documents detailing these formularies, a physician may be able to start prescribing medications and tests that have equal efficacy but lower out-of-pocket costs. That can be a very difficult task, though, and many physicians do not have the time or bandwidth in the context of their busy
clinical schedules to track down formulary documents or recognize lower-cost alternatives.
Nevertheless, it is possible to help patients avoid financial distress by providing contingency plans in case a medication is particularly expensive. For example, certain inhalers for patients with asthma or COPD can be several hundred dollars each month depending on the nuances of
insurance coverage. If the patient has had insurance-coverage issues before, the physician can write a second prescription for a similar inhaler for the patient that could be filled if the first option is too expensive.
Foco: Ultimately our members, the patients, want to be able to have the conversation at the point of care. That’s really the ideal place, and it’s starting to shift. We’re starting to see that, but this is another one of those long journeys that we’re
on—trying to help give physicians the tools and information they need so they can help take care of not only the health of their patient, but even their financial health.
Hunter: In our research, we analyze full transcripts of conversations between doctors and patients in outpatient clinics. We found that discussions about out-of-pocket costs were happening more frequently than previously thought—in about a third
of visits. Although it’s difficult for physicians to identify an exact amount that a patient would pay for a given medication, they were often able to give a ballpark estimate of how much it might cost. For example, some physicians were familiar with medications on the Walmart $4 list. They were also familiar with
the newest and supremely expensive medications that often cost patients several hundred or thousands of dollars.
It is important for physicians to recognize that even general discussions about patients’ out-of-pocket costs can mitigate financial distress or nonadherence. Simply asking patients, “Do you ever have trouble filling your medications?” can lead in to very helpful conversations about
patients’ capacity and willingness to pay for important medications.
Jones: We actually engage with that—not only with our integrated health system, Spectrum Health, but also with our other providers within our network. Over the three-year journey that we’ve been on, we started out having a lower number of procedures that were in the cost estimator tool, and then we’ve expanded that
to include labs, physical therapy visits, and recently the drug pricing, and so forth. Every time we make these adjustments, we’re out educating the providers and providing them with opportunities to understand what’s available to their patients.
Crane: Maybe there’s also some protection that we need to give providers. They can provide a price, but it is not a guarantee—they can’t be responsible for the unknowns. There are complications and there are risks, so part of the conversation includes
sharing these risks in the context of likelihood and cost impact, and the patient needs to understand that if one of those things happens, the patient shouldn’t expect the fee to be the same, or the outcome.
The expectation on the payer or the financier is to communicate X, Y, and Z. The expectation on the patient is to understand that this is not a factory and that there are dynamics in play that make this completely unguaranteeable or not fully predictable, so there’s always an
asterisk to any information you get.
Hunter: This is a huge issue that I wish we had more time to discuss. Hypothetically, it could be helpful for patients to have an app that provides real-time information about out-of-pocket costs of medications, imaging, or procedures. However, I’ve never
seen or heard of such a thing, which likely indicates the difficulty of creating such an app. Of equal importance, though, is that the patient and physician would need to be willing and able to integrate this seamlessly into their conversation about the risks and benefits of various treatment options at
the point of care. We have a hard enough time navigating the electronic health record while working with our patients in the clinic, so it is hard to imagine such an app making its way into routine practice.
A more reasonable option may be for insurance plans to work together with electronic health record companies to provide instant price information to physicians when they attempt to order a particular medication, procedure, or imaging test. Then the physician would be alerted to potential
high costs immediately and could share the information with the patient and choose different treatment options if needed.
Jones: We would love to be able to publish more quality information on our tool. The unfortunate reality is that there isn’t really consistent, reliable quality information that is specific to procedures. We would love to get the provider community to have that level of data that we could share on the tool for our
members. We haven’t found where that’s available yet, but I think that’s the next big push that providers should make available.
The other thing that is really important—even for myself from a consumer perspective—is that the wide range of pricing that’s out in the marketplace is very shocking. That’s information to really get people engaged. They just don’t realize how much of a price differential is out there, and I
think that once people see that and their awareness is perked, then they’re more apt to go out and use the tool more often.
The other thing that’s really valuable is when we can highlight what other options are available. In our drug-pricing transparency, you go out and look at one of your drugs, and then we say, “Did you know that there’s a lower-price alternative?” In the pharmacy space, the industry has
been experiencing double-digit or sometimes 100 percent price increases in certain drugs. I think the call to action to make pharmaceutical costs accountable for the cost of care is to get this information out into the public and get that level of public awareness of the price disparities that take place.
Crane: I really think that whoever is acting on the patients’ behalf to negotiate rates for the care they get ought to be responsible for explaining it to them. The idea that you call up the hospital and say, “How much is my delivery going to cost?” is
not reflective of how our system works. Instead, the patient should call the insurance plan, because they’re the ones who have purchased that service from us and have divvied responsibility between the patient and the plan. They’re the ones who should be talking to the patient about this.
Now, the self-pay patient has absolutely every right in the world to go to the hospital and say, “Look, I don’t have insurance, I’m paying for this out of pocket. If I have my delivery at your hospital, what’s it going to cost me?” That conversation belongs there.
If we could establish who’s accountable for sharing that information, we could then maybe even put some standards around what we think minimum communication looks like, and timing, etc.
There’s a role for IT and technology companies, too. The data’s there to be aggregated. Algorithms can be created that improve the information provided to patients. The solution doesn’t have to require lengthy conversations. We make it complex because there are so many different
policy-plan designs, etc. But answers can be created with computers and delivered online if the right people or companies are willing to make this a priority.
Jones: It’s an ongoing process with us, and we are regularly engaging with our providers to understand where they are positioned with respect to market-based pricing and help improve their awareness as they’re making their own decisions. Certainly,
within just the last few years, the level of awareness has been raised that there is a market price for health care.
I think that for many, many reasons, the healthcare industry has been shielded from the basic economic laws of supply and pricing and price elasticity, and in today’s world, providers’ eyes are more open to that. They’re making more conscientious decisions to make their pricing more
market-based. We’ve seen that the level of variation that existed three years ago has actually shrunk down somewhat.
Jones: We needed this level of disruption to take place in the industry to get people to focus on the realities of what was taking place in healthcare economics. We’ve seen savings resulting from the implementation of this tool—about $6 million—and we
are now able to reduce our premium prices accordingly. Those savings that we have with the cost-curve bend now turn around to trying to keep premium increases closer to a cost-of-living level of increase.
I’m hopeful that as this continues to expand into the area of drug pricing that we will see that also taper down, in terms of the level of trends that we’ve seen in past years. It’s completely unsustainable. Drug pricing is 20 percent of the total cost of health care today. People need to
understand what’s been happening in pricing in that space, and we need to make that more manageable.
Hunter: If price transparency does improve, and physicians become facile in discussing out-of-pocket costs with patients, I think we will be better able to identify therapies that are optimal from a medical sense and do not cause undue financial distress. Treating a patient’s disease but driving them into
bankruptcy, financial hardship, food insecurity, etc., is not necessarily a success.
The question of whether we’re actually going to bend the cost curve is more difficult. If you’re my patient, my duty and responsibility is to you, not your insurance company. If I identify a therapy that is optimal from a disease standpoint, and affordable to you, then I’m not going to consider
what the overall price will be to your insurance company. It is not my job to ration health care, so I’m always going to do what is best for your health and well-being in that moment, even if it is expensive for society at large. I think this is absolutely critical for maintaining the sanctity and inherent
trust of the patient-physician relationship. I’m always going to advocate for you and your best interests. It is the job of politicians and economists to determine the broader impact.
So I think we can improve each individual patient’s likelihood of developing financial distress, but I’m skeptical that price transparency will bend the cost curve in general.
Crane: The fact that we can’t explain costs to someone, while it’s embarrassing and disappointing, is not the core problem. The billion-dollar problem is that the cost of our healthcare delivery model is not sustainable and the quality produced is not acceptable compared to other models around the world.
The key questions are: How do we align incentives for keeping people healthy? How do we optimize a care system so that people get the right care in the right setting at the right time? And how do we optimize health outcomes while lowering the overall cost?
I come back to the value-based system. If I can put a product on the market where someone has little to no out-of-pocket costs as long as they follow the standards of care that the evidence says they need to follow, while incenting them to be healthy, there is less of an issue
related to cost transparency.
Hunter: For those trying to work on this issue, I cannot underscore enough the importance of a team-based approach. Once you get siloed, and it’s only doctors in the room, or only hospital administrators, or insurance companies, or only industry
representatives, that’s when you start dreaming up solutions that are never going to be effective on the ground or on a societal level. Making headway on this problem will require teamwork from a lot of people with different backgrounds, experiences, and training who actually listen to each other and
have patients’ best interests at heart.
Nick Hut is managing editor of Leadership.
for this article: Aaron Crane, CEO, Propel Health; Nathan Foco, senior director of market research and consumer analytics, Priority Health; Wynn Hunter, MD, resident physician, Department of Medicine, Duke University Health System; Mary Anne Jones, CFO and senior vice president for
operations, Priority Health.
Check out previous installments of the Healthcare Challenge Roundtable:
In Pursuit of Interoperability
How to Optimize Ambulatory Care
Integrating Behavioral Health Care and Primary Care
Assessing the Value of Care
Optimizing the Preauthorization Process
Working Together to Make APMs Succeed
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