Most hospitals are familiar with the health cost transparency rule that was pushed by Trump and HHS Secretary Alex Azar and is scheduled to go into effect January 1st after being published back in November 2019. The AHA with backing from organizations like the US Chamber of Commerce contested this rule in court as too burdensome and would be misleading to patients. Azar and team asserted that the value of transparency to patients would outweigh the costs to hospitals. The AHA’s appeal was denied on a 2-0 decision by the U.S. Court of Appeals for the District of Columbia Circuit. Hospitals will have to publish their prices starting January 1, 2021.
While I think most of us agree that price transparency in healthcare would be a really valuable thing, I also don’t think that most of us think this legislation and rule will dramatically help solve this problem. At best it’s a good first step towards the effort. Although, those of us in healthcare know that the price of something in healthcare is really messy. Some might argue that this is by design.
My guess is that the biggest result of this new health costs transparency rule is that it will highlight what a complex mess pricing in healthcare really is for healthcare organizations and the average consumer. Maybe that knowledge will push towards other efforts to simplify the system?
For those not familiar with the complexity of healthcare price transparency, Nikhil Krishnan prompted a great Tweet storm from Erin Bali, Co-founder and CEO of Carbon Health, where he described their efforts to try and work on this problem. It really does highlight why healthcare price transparency is so difficult. Here’s what Bali shared:
We have spent a ridiculous amount of time trying to bring full price transparency to healthcare payments but haven’t been able to make much progress. Let me explain why this is hard 🧵
Our goal is to predict patient responsibility of a visit as soon as possible. Ideally this would be calculated real-time in our EHR so that clinicians can do cost/value trade offs with the patient while ordering things that impact the cost (procedures, diagnostic tests, etc)
The main independent variables here are
1) Complexity of the evaluation (usually 1-5)
2) Additional services like labs, procedures, medical imaging etc which are modeled as CPT codes
3) The nature of the work done (preventive, sick visit, etc) which are mapped to service types
4) Coverage of the insurance plan by service type. This is far more complex than United vs Cigna. Each plan may have arbitrary rules that impacts coverage + HMO/ACO/EPOs complicate things further
5) Contracted rates between provider and network (not the insurance or the plan).
6) Remaining deductible
7) Other details like the clinician type, modality, location etc.
The first challenge is to generate claim details (mostly CPT codes) real-time in your EHR. This is a solvable design problem. You can solve price transparency for self pay patients with it.
Next you have to get very granular details of the insurance plan. Clearing house APIs give you some of this but you hit an “edge case” 20-30% of the time.
Next challenge is digitizing your contracts which is 100x harder than it should be but Rivet Health does help here.
Here is the biggest challenge: with the exact same plan, CPT code, same literally everything you get 100s of different “total allowed amount’s from the insurance companies. On theory the allowed amount should match the contracted rates, but it only does ~40% of the time.
Two underlying problems here. First, there are a ton of things that influence “the contract” which are opaque to the provider. Secondly, insurance companies still employ an army of humans to respond to claims. You get everything from inconsistent interpretation to missing digits.
Price transparency with the incomplete data we have is really hard, particularly because an inaccurate prediction may be worse than no prediction. Companies like Oscar have automated claim processing systems, but legacy insurance infrastructures can’t support this.
I’m guessing the solution will be getting rid of the complexity altogether (case rates, full capitation, etc). Unfortunately a lot of efforts to “reduce cost” are making things even more complicated and thus indirectly increase the cost.
I should sit down and write a detailed article about this and have our team fact check it. Take this as a directionally accurate portrayal of the challenge.
This is one of the better threads I’ve read on the challenge. Although, Alan Shoebridge offered this incredible insight from the patient perspective that goes well beyond the logistical challenges mentioned above:
Good explanation. On the patient side of things a huge barrier to “shopping” is how often you don’t know that you will be needing medical care … until you need it immediately.
— alanshoebridge (@alanshoebridge) December 27, 2020
What are your perspectives on this rule? What do you see when it comes to price transparency?