Employers Benefit from Price Transparency in Healthcare

by Ed Clarke, M.D.

Employers as well as consumers have been pushing for price transparency in healthcare for some time, but now the idea is gaining momentum. Employers know price transparency can help their employees make informed healthcare decisions and, ultimately, better manage the cost of care.

Nationally, healthcare represents nearly one-fifth of the total gross domestic product, and the annual per-person cost of healthcare stands at $10,348, according to 2016 data from the U.S. Centers for Medicare & Medicaid Services. As the cost of care continues to rise at an unsustainable rate, employees are feeling the pinch in the form of higher premiums and deductibles. The same is true for employers that must carve out a bigger line item for healthcare in their annual budgets.

The irony is that patients are largely in the dark when it comes to the cost of care. They don’t know that healthcare providers bill different insurance companies at different rates for the same services or that a CT scan in one location could be much less expensive at another facility a few blocks away. As long as they have insurance and their premiums are paid, they have come to accept the out-of-pocket costs as “normal.” 

When asked about their concerns with healthcare, nearly two-thirds of Americans say it’s too difficult to find out what medical care costs, according to research presented by six U.S. senators sponsoring healthcare transparency legislation. There’s also the issue of cost vs. benefit. In some cases, the same lab and other services could vary in price. In other cases, unnecessary tests may be ordered and additional services provided, driving up the cost of care without necessarily improving the outcome.

A good example is the treatment of acute lower back pain. Evidence-based guidelines prove that for the vast majority of patients, such pain will resolve itself within 30 days without any medical action. Even so, an immediate reaction by patients is often to request an MRI or a procedure that has little to no measurable impact on their recovery. 

That’s why giving employees an opportunity to comparison shop for healthcare is so important. 

It starts with awareness — providing employees information about their healthcare plan options, including the services covered and the total and out-of-pocket cost of care. 

Employee engagement also is critical. By getting regular check-ups, keeping track of medications and implementing wellness initiatives, employees can make a positive difference in their health and the cost of care. 

Finally, physicians must be cognizant of the relationship between quality of outcomes and the cost of care. Research shows that while consumers do want price information, they rely on their doctor when it comes to making most healthcare decisions. As such, physicians must understand the true cost of the care and operationalize this in their practices by eliminating duplicate services, openly discussing the cost of care — and safe alternatives — with patients.

Accountable care organizations can help by offering new health plan options to employers and employees, and helping physicians navigate a changing healthcare environment. The idea is not to ration healthcare, but to help everyone along the healthcare continuum — from providers to patients — make the best, most cost-effective healthcare choices that yield the best results. 

Employer often bear the cost burden of inefficiencies in employee healthcare. They can improve cost transparency simply by asking their health plan for a menu of choices and the cost of covered services, and arming employees with information and technology tools to help them take better care of themselves and evaluate the cost and benefits of care they receive.     

Ed Clarke, M.D., is the chief medical officer of Arizona Care Network, a physician-led and -governed accountable care organization thatimproves healthcare and reduces costs for patients inMaricopa and Pima Counties.

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