Healthcare Consumerism and Cost: Dispelling the Myth of Price Transparency
The world of healthcare costs is confusing and messy for both patients and providers. Many providers don’t fully understand their costs and therefore struggle to meet the increasing pressure for greater price transparency for consumers. With price transparency rules finalized and implementation looming, many providers are racing against the clock to adapt business practices to meet regulations and communicate the implications to consumers. And each organization’s financial health depends on transparency, as uncertainty about costs keeps many patients from seeking care.
Deb Gordon, seasoned healthcare executive and author of the book, “The Health Care Consumer’s Manifesto: How to Get the Most for Your Money,” and Pat Rocap, Director of Cost Management Services at Health Catalyst, examine the relationship between cost and pricing as the path to transparency for consumers. Deb and Pat provide expert analysis and practical advice to help you become a savvier provider and consumer when it comes to healthcare pricing and spending.
- The implications of federal price transparency regulations.
- The connection between healthcare costing and pricing.
- How to start your organization’s journey to understand costs and why it matters.
- Why price transparency is important to both patients and providers.
Price Transparency Through a Consumer Lens
• What consumers mean by price transparency
• The cost of confusion
The Missing Link: Prices and Costs
Why Transparency Matters to Providers
• Consumer expectations
• Federal price transparency regulations
How to Start Your Transparency Journey
1. What kind of organization do you work for?
• Hospital – 15.12%
• Group practice – 4.65%
• Health center/clinic – 4.65%
• Health plan – 6.98%
• Other – 68.6%
2. What is your role?
• Administrator – 16.16%
• Physician – 2.02%
• Nurse or other clinician – 10.1%
• Billing/finance staff –9.09%
• Other – 62.63%
POLL QUESTIONS: Tell us about yourself!
Mean by Price
"warehouse dump" by parkydoodles is licensed under CC BY-NC-SA 2.0
Sources: The Harris Poll, December 1, 2020; Kaiser Family Foundation, February 28, 2020; JAMA Network Open, November 16, 2018
The Cost of Confusion
68% of Americans have gotten a surprise bill
2 out of 3 Americans worry about
unexpected medical bills
Confusion about costs and coverage leads
people to avoid care altogether
Source: The Health Care Consumer’s Manifesto
“I am just concerned that I’m going
to go to the doctor and I’m going to
have to pay a lot.” --Bella
Confusion and Fear of Costs Leads to Care Avoidance
3. Have you ever tried to find the cost of a healthcare service before getting care?
• Yes – 73.04%
• No – 26.96%
4. If yes, did you find what you were looking for?
• Yes – 21.05%
• No – 78.95%
5. Have you ever compared prices across healthcare providers?
• Yes – 49.5%
• No – 50.5%
POLL QUESTIONS: Who has tried to find cost information?
Sources: Public Agenda. “Still Searching: How People Use Health Care Price Information in the United States.” April 6, 2017; Health Affairs, August 2017
According to Public Agenda “Still Searching” report:
• 50% of Americans have tried to find cost information before getting care
• 28% have tried to find out the costs of care at one provider
• 20% have compared prices across providers before getting care
• Consumers are looking to healthcare providers for cost information:
• 46% look to their doctor, 45% to the office staff, and 31% to the hospital
In a survey published in Health Affairs:
• 52% of patients were aware of cost before they got care
• 13% searched for the price, 10% compared prices across providers
Consumers Want Price Information…From Their
Source: The Health Care Consumer’s Manifesto
“I can’t think of another situation
where you would sign up for a major
purchase without knowing [the
Consumers Expect Price Transparency
• So many services, codes, negotiated rates
• Disclosing proprietary terms
• Economists fear transparency could lead to tacit collusion, price fixing
• A Tylenol costs what?!?
Price Transparency is a Challenge…and Sensitive
Source: Kaiser Family Foundation, 2020 Employer Health Benefits Survey, October 8, 2020
Consumer expectations are rising as they pay a bigger share of total healthcare costs
• Consumers pay more out-of-pocket than ever before
• 83% of workers have a deductible, averaging $1,600+ ($2,000+ for 26% of workers)
• In 2010, only 70% had deductibles, averaging $917
• 65% of workers have coinsurance for hospital admissions, averaging 20%
Innovation will influence transparency
• Price transparency tools from private companies, payers, states
Regulations are forcing transparency
• No Surprises Act of 2020 holds consumers harmless from unanticipated out-of-
network medical bills
• Hospital price transparency regulations
Price Transparency Is No Longer Optional
Starting 1/1/2021, each hospital operating in the U.S. will be required to provide
clear, accessible pricing information online about the items and services they
provide in two ways:
1. As a comprehensive, machine-readable file with all items and services
2. In a display of shoppable services in a consumer-friendly format
This information will make it easier for consumers to shop and compare prices
across hospitals and estimate the cost of care before going to the hospital.
CMS Summary Hospital Price Transparency
Single machine-readable, digital file
1. Gross charges
2. Discounted cash prices
3. Payer-specific negotiated charges
4. De-identified minimum and
maximum negotiated charges
Consumer-Friendly Display of Shoppable
Services, unless a Price Estimator Tool is
Display of at least 300 “Shoppable Services”
that a health care consumer can schedule in
advance. (70 of which is CMS defined)
Must contain plain language descriptions of
services and group them with ancillary services,
1. Discounted cash prices
2. Payer-specific negotiated charges
3. De-identified minimum and maximum
Hospital Standard Charges MUST be Posted in Two Ways
Service is for the Inpatient Services at the Hospital
• Does not include any pre or post services.
• Post may include stay at SNF, Physical Therapy, Drugs.
Professional Services, Physician Components
• Does this only include the Surgeon?
• What about the Anesthesiologist, the Radiologist, the Pathologist?
Example of Price Estimator – MSDRG 470
• Amount of the Healthcare Provider
charges (or prices) that the patient will be
• All the expenditures (cost) of providing
the services to the patient. The Provider
then constructs the charges (or prices) to
cover the cost of providing service.
The Price-Cost Disconnect
In the U.S., a
master (CDM) is
simply defined as
list of items
billable to a
etc. and Cost of
is tied to this
The Hospital Chargemaster
6. Do you believe most healthcare providers understand their own operating cost at
a procedure/test level to construct a Chargemaster in accordance with billing
• Yes – 12.5%
• No – 87.5%
7. How confident are YOU that you understand your own organization’s costs?
• Extremely confident – 10.11%
• Somewhat confident – 38.2%
• Not confident – 51.69%
POLL QUESTION: How Well Do Providers Understand Their
• Enhancements in clinical care
• Birth of electronic health records
• Electronic Data Warehouse, Data Data Data, and leveraging that data for insight
• Changes in Medicare reimbursement, 1980s regulations shifting hospitals from
cost based to a prospective system (DRGs)
• Stark Laws
• Health Insurance Portability and Accountability Act
• Patient Protection and Affordable Care Act (Massachusetts Healthcare Reform)
• Aging population
• Cost pressures
• Global public health concerns
Historical Changes Affecting Hospitals
Traditional costing is a SILO system of Departmental Cost to
Charge Ratios or Relative Value Unit
Do Hospitals Understand Their Own COST?
Advance costing breaks the SILOS system, utilizes patient
activity and department cost to develop TRUE costing
Do Hospitals Understand Their Own COST?
Benefits of Understanding of True Cost of Services
Would you like to be entered to win one of five copies of Deb Gordon’s book, The
Health Care Consumer’s Manifesto: How to Get the Most for Your Money?
POLL QUESTION #8
Would you like to learn more about Health Catalyst’s products and services?
POLL QUESTION #9
Deb Gordon, Author, The Health Care Consumer’s Manifesto: How to
Get the Most for Your Money
Pat Rocap, Director, Cost Management Services, Health Catalyst