Expand audience for healthcare price data urges policy center

A new analysis by the Gary and Mary West Health Policy Center finds that moving beyond just encouraging patients to shop for healthcare services and also involving ordering physicians, employers and policymakers in healthcare spending decisions could save $100 billion over 10 years.

The nonprofit, non-partisan Washington, D.C., think tank noted that despite the government making both hospital and individual physician payment data available to the public, plus private health plans providing enrollees with personalized out-of-pocket expense information, relatively few patients currently use these resources in making decisions about their healthcare.

The problem with only asking patients to be responsible for making smart decisions about their care based on cost is multifaceted. Not only are the current resources hard to use and do not easily allow consideration of other factors such as quality and convenience, but they also fail to consider the situation patients may be in when making treatment choices. Healthcare decisions must often be made quickly and frequently patients and/or their caregivers are under pressure or otherwise not in a good position to objectively weigh the value of different treatment options.

According to the West Health Policy Center, the $100 billion in savings could be achieved with just three policy changes that expand access to healthcare price information to audiences beyond just patients.

First, employers with better access to hospital price data could be a powerful force for encouraging savings from narrower provider networks and tiered benefits. They could also force high-price hospitals to either reduce their prices or explain them. Therefore, policymakers should use the state all-payer health claims databases (APCDs) to report hospital prices, the West Health Policy Center said. Doing so could save $55 billion.

(In a related move, the West Health Policy Center announced that it is now in the process of contracting with the University of New Hampshire to create a “Manual for APCD Development” to assist states in developing APCDs that follow best practices and uniform standards.)

Second, if electronic health record (EHR) systems gave ordering physicians a ballpark price for the tests and procedures they were recommending, they could more easily answer patients’ questions about costs and help patients decide between different treatment options or the risks of skipping a test or procedure altogether. The West Health Policy Center estimates this could produce up to $25 billion in savings over 10 years.

In addition, this move might be supported by physicians who increasingly are being held responsible for costs by both patients (who are dissatisfied when they are surprised by a high medical bill) and payors who reward physicians who keep the cost of care down through shared savings/accountable care organization reimbursement systems. Indeed, American Medical Association (AMA) President Ardis Dee Hoven, M.D. could be one of the first converts.

“[Raw physician Medicare claims data] was not the kind of data physicians really need — instead, if [the Centers for Medicare and Medicaid Services] wants to provide greater transparency, CMS should put its efforts into providing us with accurate and timely utilization, cost and outcomes data that, combined with private sector data, will help us make better care decisions and be better caretakers of our health care resources,” she wrote just this week in the organization’s AMA Wire newsletter.

Finally, private health plans could do more to encourage enrollees to at least look at price information before making healthcare decision. The West Health Policy Center estimates that $15 billion to $20 billion could be saved if all private health plans were required to provide personalized out-of-pocket expense information to enrollees. In addition, the plans should not just make the pricing tools available, but also encourage their use with incentives for enrollees who used them.

“Price transparency alone isn’t going to change the structural factors that support excessive spending in our healthcare system, but in concert with the transition to newer health plan designs, and newer ways of paying providers, it plays an essential role,” said Chapin White, Ph.D., lead author of the analysis and a former HSC senior researcher now at the RAND Corp, in the press release.