Price transparency must offer clear information that is readily accessible to patients and enables them to make meaningful comparisons among providers. It will also require a collaborative effort among providers, care purchasers, and payers to identify and develop the information and tools that will be most useful to patients. The following statements represent the Price Transparency Task Force's consensus on basic principles that should guide efforts to achieve these goals and informed the task force's recommendations.

1. Price transparency should empower patients and other care purchasers to make meaningful price comparisons prior to receiving care. It should also enable other care purchasers and referring clinicians to identify providers that offer the level of value sought by the care purchaser or the clinician and his or her patient.
Price transparency is most immediately relevant for healthcare services that can be scheduled in advance, enabling identification of providers, therapies, or treatments that offer the desired combination of price and quality. But price transparency is ultimately relevant for all healthcare services.

Different audiences have different information needs.

  • A patient may be seeking a particular service within a particular budget (with parameters such as a deductible, copayment, or individual financial resources). 
  • An employer may be trying to identify providers that can consistently deliver a desired level of value to an insured population. 
  • A referring clinician may be seeking to identify a provider that can best meet the particular clinical needs of the patient within the parameters of the patient’s insurance coverage or ability to pay.

2. Any form of price transparency should be easy to use and easy to communicate to stakeholders.
The way price information is communicated can have a significant impact on how it is used. For example, individual patients, may equate low price with low quality. In one study of 1,400 adult employees, price information that was presented through the number of dollar signs (with "$" representing low price and "$$$" representing high price) led a significant number of employees to use low price as a proxy for low quality. But when a star ranking system was used to rate providers as "being careful with my healthcare dollars," employees in the study were significantly more likely to choose a lower price provider.

3. Price transparency information should be paired with other information that defines the value of services for the care purchaser.
Price alone is not sufficient to enable care purchasers to make an informed choice of providers. Information on quality—comprising a wide range of factors—is needed to ensure that a provider offers the desired level of value.

4. Price transparency should ultimately provide patients with the information they need to understand the total price of their care and what is included in that price.
The fee-for-service payment system has led to fragmentation of healthcare delivery, and a unit of care is typically provider-specific. Patients may need to purchase units of care from multiple providers to treat a condition or have a procedure done. They may also need to pay separately for pharmaceuticals or medical devices. As a result, it can be difficult for patients to obtain price estimates for everything that will be needed as part of the treatment or procedure.

New payment and care delivery methods are beginning to reshape how a unit of care is defined. For example:

  • The Center for Medicare and Medicaid Innovation's Bundled Payments for Care Improvement initiative asks providers to define a single price for a set of services that make up an episode of care.
  • Other initiatives, such as the Pioneer Accountable Care Organization model, are moving toward population-based payment, which will pay providers in the ACO a certain amount per assigned Medicare beneficiary to manage the care of the ACO's assigned beneficiary population.
  • Commercial health plans are developing similar models for bundled and population-based payment.

5. Price transparency will require the commitment and active participation of all stakeholders.
The healthcare payment system is complex. There are many different sources of price and quality information, many different benefit designs for patients that are insured, and an increasing variety of payment models and quality indicators. Given these complexities, providers, payers, patients, and other care purchasers should work together to define and provide the price and quality information that care purchasers need to make informed provider choices. Transparency efforts should also remain flexible to adapt to changing healthcare payment and delivery models.

If successful, these models should provide care purchasers with significantly greater clarity on both the services included within a unit of care and the total price for those services.

In the meantime, health plans and providers have major roles to play in providing price information.

Price information will likely take the form of an estimate or price range, given that unexpected complications may increase the price of care.

All care purchasers have a strong interest in better understanding total price of care. Comparable data on price, quality (including readmission and complication rates), and utilization can help identify high-quality, cost-effective providers to help inform patient choice, benefit design decisions, and clinical referrals.

How to Factor in Clinical Complications

Providers should make clear that they are providing estimated prices for a standard procedure or service, describe what is included in the estimate, and indicate who will pay for any services related to unexpected complications. Some providers have begun to distinguish between avoidable complications, such as a hospital-acquired condition, and unavoidable complications, such as a complication arising from a comorbidity that was not evident prior to a procedure, covering the price of care related to treatment of an avoidable complication.

As providers grow more sophisticated in their pricing capabilities, they should ideally be able to identify common complications associated with a procedure or service, the likelihood of such complications, estimates of the price for treating any such complications, and information on the process by which any significant deviations from the price estimate will be reconciled. In some emerging payment models, such as bundled payment or population-based payment, the risks and associated costs of complications will already be built into the price of care.

Publication Date: Tuesday, March 10, 2015