Price Transparency

About a year ago, I shared details of my own out of pocket medical expenses and concluded that we have to have to be more transparent with our patients (and potential patients) about the costs they will face for our services. The urgency of price transparency as a business imperative and a professional responsibility has only increased since then.

Consider that we are now a year in to the implementation of the Affordable Care Act. Everything that I have read suggests that consumers were intensely price sensitive when it came to choosing which plans they elected. Well, duh! The benefits are defined by “metal” levels (e.g., Bronze, Silver, etc.), and there is almost no way for people to compare the quality of competing narrow networks or individual providers, so price differences drove decision-making. Likewise, the healthy people who bought insurance because they were compelled to by the individual mandate generally chose high deductible plans to minimize their monthly payments. This, in turn, makes them much more price sensitive at the point of care. That means that patients may resist recommended treatment. It also means that physician offices will face more challenges in collecting fees from patients who have not yet met their deductible for the year. At the very least, patients will be more interested in learning what costs they will be exposed to.

The New York Times recently ran a story that featured a “price sensitive” patient who, despite his best efforts to anticipate his financial obligations for neck surgery, got an enormous ($117,000!) bill from an assistant surgeon – someone he had not anticipated would be providing care. Whatever you think about the magnitude of the bill (and I for one think it is obscene), the more salient point is that it shouldn’t be this hard for patients to anticipate what their bill will be. What other professional service works that way?

Increasingly, this is becoming a target of regulatory reform. A number of States have enacted laws aimed at increasing pre-treatment disclosure of the costs of care. New York enacted a law this past April that is slated to go into effect in January. It is aimed primarily at curbing “surprise” bills from out of network providers, and it also limits payments to out of network providers who render emergency treatment.

It seems clear to me that it is no longer business as usual. Patients are acting more and more like rational consumers of the services we provide, which means we should expect to be challenged to explain what we are charging and why. This is going to be hard to do, but I think it is the right thing to do, and long overdue.

What do you think?

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