Price Transparency Predictions
24 June 2021
Out-of-Industry Lessons for Healthcare Leaders
Back in 2019, Oliver Wyman predicted that 2021 would be “the year of the consumer”. Price transparency -- and its accompanying sticker shock -- is merely the first step in helping consumers make smarter and more educated choices about their medical care, we said back then.
Well, here we are in 2021, coming out of the pandemic, and hospitals are now required to publish negotiated rates on how much their services cost. Large data releases have already begun. Organizations like Turquoise Health are emerging with consumer front-ends to curate the data. In many markets, consumers can now hop online to quickly comparison shop for medical services and look up the price of a coronary bypass, for instance, to see how much it would cost based on their insurance, coinsurance, deductible, and copay. Healthcare is finally taking steps to become more like the retail industry where the price of something is readily available at your fingertips (literally).
More accessibility means more data to analyze. Data released thus far reinforce what we’ve known all along—pricing variation levels are unjustifiably high. (At a single hospital in one part of the US, for example, a knee replacement can cost between $23,000 and $100,000. At others, some patients will pay 10 times what others pay.)
Specification around price transparency data releases remains incredibly broad; there’s much room for interpretation. This is naturally leading to a huge range of formats and pricing estimation approaches in the released machine-readable files. Another issue is compliance, or to be more specific, lack of it. A minority of providers are posting payer-specific negotiated rates.
There will likely be multiple rounds of rule adjustments before the industry sees broad comparability on any set of services. Frankly, contracting processes are so unwieldy among payers and providers that we should not expect universal transparency in any reasonable timeframe.
This article is courtesy of Oliver Wyman and may be completed at this link.