Because care purchasers' information needs and sources vary, different price transparency frameworks should be used for different care purchaser groups.

Recommendation 1. Because health plans will in most instances have the most accurate data on prices for their members, they should serve as the principal source of price information for their members.
In today’s healthcare marketplace, health plans have the most comprehensive understanding of price, and are best situated to provide price information to their members. Accordingly, health plans should serve as the principal source of price information for their members.

Many health plans have already developed or are in the process of developing web-based or telephonic transparency tools for their members.

These tools have the potential to benefit both patients and health plans, providing patients with needed information while strengthening the health plan’s value to its members. Employers with self-funded health plans have the option of working with health plans (which often serve as third-party administrators for self-funded plans) or other vendors in developing transparency tools for insured employees and their dependents.

Recommendation 2. Health plans and other suppliers of price information should innovate with different frameworks for communicating price information to insured patients.
Health plans and other transparency tool vendors should continue to innovate with different transparency frameworks to see which are the most effective in communicating with patients.

Recommendation 3. Transparency tools for insured patients should include some essential elements of price information.
Building on the features of existing price transparency tools, essential elements of price information for insured patients include the total estimated price of the service, the provider's network status, and the patient’s estimated out-of-pocket responsibility, along with other available provider- and service-specific information.

Total estimated price of the service. This is the amount for which the patient is responsible plus the amount that will be paid by the health plan or, for self-funded plans, the employer. The amount will necessarily be an estimate for several reasons. The patient, for example, may use additional services not included in the estimate or the physician may code and bill for a service different from the service for which the patient sought an estimate.

The price estimate for in-network services is a communication between the health plan and the insured patient and should follow the form of an explanation of benefits, representing the total estimated price (i.e., the plan’s negotiated rate for the service) as a dollar amount, not as a percent discount from charges, to avoid confusing the patient. For services received from out-of-network providers, because the provider’s pricing information is not available to the health plan, the health plan can only provide information about the benefit structure for that type of out-of-network care (e.g., a 20 percent co-insurance obligation).

Network status. The tool should provide a clear indication of whether a particular provider is in network and information on where the patient can try to locate an in-network provider, such as a list of in-network providers that offer the service. (A provider has a similar and important responsibility to alert patients or potential patients if the provider knows it is not in the patient's network.)

Out-of-pocket responsibility. Another essential element is a clear statement of the patient’s estimated resulting out-of-pocket payment responsibility, tied to the specifics of the patient's health plan benefit design, including coinsurance and the amount of deductible remaining to be met (as close to real time as possible).

Other relevant information. Information related to the provider or the specific service sought (e.g., clinical outcomes, patient safety or satisfaction scores) should be included where it is available and applicable. This information should clearly communicate what has been measured and to whom the measurement pertains (e.g., to the facility, the physician, etc.)

Recommendation 4: Insured patients should be alerted to the need to seek price information from out-of-network providers.
The price of healthcare services for an insured patient can vary significantly depending on whether the services are provided by an in-network or an out-of-network provider. If a provider is out-of-network, the patient may face a higher coinsurance payment or be responsible for the out-of-network provider’s entire bill, depending on the patient’s benefit design. This issue can arise in a variety of situations, as described in the sidebar

Out-of-Network Care

Out-of-network care can be classified into three types, each with different implications for price transparency.

Intentional. If a patient seeks care from an out-of-network provider (based, for example, on that provider’s reputation) and contacts the health plan for assistance, the health plan should continue to clearly explain what percentage (if any) of out-of-network provider charges the plan will cover, and describe any other significant out-of-network benefit plan issues (e.g., a "reasonable and customary rate of reimbursement" limit on what the health plan will pay). The health plan should also inform the patient that—if the patient intentionally seeks care from an out-of-network provider— it is the patient’s responsibility to independently obtain price information from that provider. 

Inadvertent. In another situation, a patient may schedule a procedure at an in-network provider but receive services as part of that procedure from an out-of-network provider. A typical example is a patient who chooses an in-network hospital or ambulatory surgical center for the procedure but receives services from an out-of-network provider (such as a pathologist, radiologist, or anesthesiologist). In this case, the in-network provider should, to the extent possible, inform the patient of the need to also check the network status of physicians who will be involved in the procedure. 

For example, if the in-network provider furnishes a pre-service estimate to the patient, the estimate should note that individual physician services will be billed separately and that the patient should confirm the network status of the physicians. The in-network provider may not know which individual physicians will be providing services to the patient during the procedure, but will typically know which medical groups have been engaged to provide these services. The patient should be provided with the names of these medical groups so the patient can confirm the groups’ network status with his or her health plan and understand the possible financial implications in advance of the procedure. 

Emergency. In a third situation, a patient needs emergency medical care and is taken to the nearest emergency department. The patient will have no advance opportunity to identify the network status of any providers involved in his or her emergency care. This is a situation that may need a policy solution to balance the interests of patients, health plans, and providers. 

Recommendation 5. To ensure valid comparisons of provider price information, health plans and other suppliers of such information should make transparent the specific services that are included in the price estimate.
Suppliers of price information should make sure that price estimates are accompanied by explanations of what services are included in such estimates, as well as the impact of differences in network status on such estimates, to help patients make valid comparisons among providers. For example, when comparing prices associated with receiving an imaging service, the patient should be informed if the estimate includes the facility costs associated with taking the image and the radiologist’s fee for the professional reading. 

Recommendation 6: The provider should be the principal source of price information for uninsured patients and patients who are seeking care from the provider on an out-of-network basis.
Price transparency for the uninsured is subject to a substantial and expanding number of laws at both the federal and state levels and it is the first responsibility of providers to ensure that that policies and practices adhere to these legal requirements. 

Regardless of legal requirements, however, it is in a provider’s best interest to be proactive in its approach to price transparency. A growing number of patients face significant financial responsibility for healthcare services and are becoming increasingly price sensitive. As consumer price sensitivity has intensified, so too has media attention to healthcare prices. Providers that can speak accurately and confidently about their prices will be better positioned to succeed in this environment than providers that can only refer back to their charge schedule.

Recommendation 7: Providers should develop price transparency frameworks for uninsured patients and patients receiving care out of network that reflect several basic considerations.
There are several basic considerations that providers should take into account when developing price transparency frameworks.

Clarify the limitations of the estimate. Prices in most instances will take the form of an estimate; that is, provide a price for a standard procedure without complications and make clear to the patient the services included in the price and how complications or other unforeseen circumstances may increase the price. New payment models such as bundled payment, may enable providers to set firm prices for certain procedures. Some providers are covering the price of care related to avoidable complications within the provider’s control so that the estimated price to the patient does not increase in these situations. 

Serve as the primary price information resource for these groups. Providers should clearly communicate preservice estimates of prices to uninsured patients and patients seeking care on an out-of-network basis. Federal and state laws define basic requirements for communicating prices to patients who are eligible for financial assistance. Beyond that, the provider should, at a minimum, offer clear information on how a patient can obtain price estimates and ensure that the patient can easily reach someone who can address such requests. 

Providers should consider which approaches are most useful in providing information to uninsured patients in their markets, including the possible use of web and mobile technologies to respond to queries from an uninsured patient or provide information about the price of a particular service. A national steering committee of experts including patients, hospitals, physicians, payers, and others have developed a set of patient financial communication best practices that providers should refer to when developing or reviewing their patient communication practices.

Identify inclusions and exclusions. Providers should clearly communicate to patients what services are and are not included in a price estimate. If any services that would have significant price implications for the patient are not included in the price estimate, the provider should try to provide information on where the patient could obtain this information. 

Offer other relevant information. Providers should give patients other relevant information, where available. Some states have begun to make both price and quality data available on public websites. All states are encouraged to furnish such information on providers. 

A number of public and private organizations also offer public access to data on patient outcomes, safety, and patient satisfaction or credentialing information on providers who have met certain quality benchmarks. The price estimate that a provider gives to patients can reference and provide links to various reliable websites where the provider knows relevant information is available. 

State-Supported Transparency Website Recommendations

Public, state-supported websites that provide information on the price and quality of care for providers within a state can provide a valuable resource, especially for uninsured patients who do not have access to transparency tools offered by health plans or other transparency vendors, and for patients who are seeking care at an out-of-network provider.
State-supported transparency websites should:

  • Enable patients to make meaningful price comparisons among providers prior to receiving care
  • Be easy for patients to access and use
  • Experiment with the most effective means of communicating price information to patients
  • Pair price information with other information comprising a range of factors (e.g., patient satisfaction and experience, provider compliance with clinical standards and evidence-based medicine, patient safety and clinical outcomes) to help patients identify providers that offer the desired level of value
  • Emphasize, to the extent data are available, the average amount paid for services instead of the average amount charged
  • Conform with the U.S. Department of Justice and Federal Trade Commission's Statements of Antitrust Enforcement Policy in Health Care

In particular, if the price information offered on a state-supported transparency website is based in whole or in part on prices negotiated between health plans and providers, that information must be sufficiently aggregated so that recipients of the information cannot identify specific negotiated prices. 

Examples of state-supported price transparency websites include the following:

Recommendation 8. Transparency tools for beneficiaries in Medicare health plans or Medicaid managed care programs should follow the recommendations for patients with private or employer-sponsored coverage as detailed in Recommendation 3. 
Beneficiaries of federal and state healthcare programs, including Medicare and Medicaid, will have different sources for price information depending, for example, on the Medicare option they have chosen (e.g., traditional Medicare or Medicare Advantage) or the structure of Medicaid within their state (e.g., whether the state has a Medicaid managed care plan).

For Medicare beneficiaries enrolled in Medicare Advantage or another Medicare health plan, and for Medicaid beneficiaries in a Medicaid managed care program, the health plan or company administering the program will be the best source of price information. Medicare health plans and companies administering Medicaid managed care programs should provide beneficiaries with transparency information and tools similar to those described for patients with private or employer-sponsored insurance coverage in Recommendation 3

Recommendation 9. The Centers for Medicare & Medicaid Services and state administrators of Medicaid programs should develop user-friendly price transparency tools for traditional Medicare and Medicaid beneficiaries.
Traditional Medicare beneficiaries pay a percentage of Medicare-approved amounts for many healthcare services and also are responsible for certain deductibles (e.g., the Part B deductible) and payments for certain prescription drugs and medical devices and supplies. The Centers for Medicare & Medicaid Services (CMS) has taken steps toward greater quality transparency through its Hospital Compare website. 

CMS is urged to add user-friendly price transparency functions to the website, similar to those that are being developed by health plans, to assist traditional Medicare beneficiaries in better understanding their out-of-pocket responsibilities and to assist them in locating high-value providers. Although information on Medicare-approved payments is publicly available, in its current format, it can be difficult for Medicare beneficiaries to locate and understand.

State administrators of Medicaid programs should also work to develop web-based or telephonic price transparency tools for their beneficiaries.

Recommendation 10. To supplement information provided by CMS and state administrators of Medicaid programs, providers should offer information on out-of-pocket payment responsibilities to traditional Medicare and Medicaid beneficiaries upon a beneficiary’s request.
While CMS is developing price information and tools, traditional Medicare beneficiaries should contact providers for information on their out-of-pocket payment responsibilities for scheduled services. Medicaid beneficiaries who are not in a Medicaid managed care program should also contact providers for information on their out-of-pocket payment responsibilities. 

Recommendation 11. Fully insured employers should continue to use and expand transparency tools that assist their employees in identifying higher value providers.
The framework for employer price transparency will vary depending on whether the employer offers its employees a fully-insured or a self-insured plan. When an employer purchases health insurance for its employees from a health plan (fully insured), it does not need to know the rates negotiated between the health plan and providers. Employers in this instance should, however, expect that the health plan will provide its employees with transparency tools that enable employees to understand their out-of-pocket payment responsibilities and provide price, quality, and other relevant information that help employees identify higher-value providers. 

Recommendation 12. Self-funded employers and third-party administrators (TPAs) should work to identify data that will help them shape benefit design, understand their healthcare spending, and provide transparency tools to employees.
Employers that offer their employees self-funded plans directly pay the claims for their employees' care. A self-funded employer may use a health plan or other third-party administrator to administer the plan, but the employer bears the risk. In this instance, employers and TPAs should identify information that can help the employer make informed decisions on benefit design for its employees, understand how its funds are being spent, and provide transparency tools for its employees. 

Recommendation 13. Referring clinicians should help patients make informed decisions about treatment plans that best fit the patient’s individual situation. They should also recognize the needs of price-sensitive patients, seeking to identify providers that offer the best price at the patient’s desired level of quality.
Clinicians who refer patients for diagnostic testing, specialist or acute care, or other healthcare services can play a significant role in communicating price information to patients. Most clinicians will encounter more price-sensitive patients as exposure to higher deductibles and other forms of patient cost-sharing increases. Resources such as the Choosing Wisely campaign, a collaborative effort of more than 50 specialty societies, are helping clinicians and their patients make informed decisions about appropriate treatment plans to meet the patient’s individual situation. 

When a treatment plan has been decided upon, clinicians will need price information to help their patients find providers that best meet the patient’s clinical and financial needs.

  • For insured patients, the clinician will typically want to refer the patient to his or her health plan as the best source of information.
  • To address the needs of uninsured patients, clinicians should request that providers to whom they refer patients make price information available to help in referral decisions.
  • In non-emergent situations, the clinician should provide the patient with a list of providers so that the patient can obtain and compare price information from them before the referral decision is made. 

Clinicians who assume some degree of financial risk for managing a patient’s total cost of care under new payment models (including shared savings models and global or capitated payment models) may need some information on the cost of care provided by others treating that patient. The specific information required will depend on the type of financial risk assumed by the clinician, the ways in which attribution is handled, and the clinician’s relationship with other providers delivering care (e.g., whether they are part of the same ACO). The relevant stakeholders should determine the best way to ensure that clinicians have the information necessary for making such decisions. 


Publication Date: Tuesday, March 10, 2015