Even as uncertainty about the health insurance market continues, one thing is certain: more Americans are paying higher out-of-pocket amounts for their health care. One bellwether of this trend is the percentage of Americans with high-deductible health plans, which require consumers to pay a higher deductible than traditional plans, often in exchange for lower premiums. According to a report from the Centers for Disease Control and Prevention (CDC), the percentage of adults aged 18 to 64 with employment-based coverage who were enrolled in a high-deductible health plan rose nearly 50 percent in five years, from 26.3 percent in 2011 to 39.3 percent in 2016. Such consumers may have to pay thousands of dollars out of pocket for health care expenses before their health insurance will begin to pay benefits.
Even consumers who are not in high-deductible health plans are likely to have seen their share of health care costs rising in recent years, and an increasing number are in plans with narrow networks that may give rise to more people going out of network for health care and, thus, paying higher costs. Now more than ever, as such out-of-pocket costs increase, consumers need reliable information to be able to plan for their health care expenses.
Although there are a number of online price transparency tools, some have been skeptical of their utility, perhaps, in part, due to a 2016 study, published in JAMA, that was limited to two large employers who offered such a tool and found that it was used by only a small percentage of employees and did not result in lower health care spending. But, with consumers’ health care costs rising, and with cost transparency still in its infancy, this is not the time to abandon such tools. Instead, it is time to make them better and more accessible. They need a firm foundation in reliable, robust, objective, geographically specific data; they need to be clear and user-friendly; they need to deliver actionable information and provide the key elements that advance decision making; and they need to present costs in an educational context that will allow consumers to understand their health insurance and become effective advocates on behalf of themselves.
Robust, private insurance claims data from an independent, nonprofit source can provide the necessary foundation for cost transparency. By pooling information contributed from payors and third-party administrators, such a source can ascertain prevailing prices for thousands of medical and dental procedures within specific geographic areas. Through an innovative and inviting website, consumers can find out how much knee arthroscopy or cataract removal typically costs in their locality before they get the procedure. More specifically, they can learn how much the procedure typically costs in network—through an estimate of the price that insurers negotiate with the providers in their networks—and how much the procedure generally costs out of network, through an estimate of what out-of-network providers charge patients.
That information can help consumers budget for the health care they may need to receive in network before they meet their deductible—and, it can help them plan for their out-of-network services and negotiate with out-of-network providers. For example, if the data show that most providers in their location charge a certain amount for a procedure, patients can present the data to initiate a constructive discussion with the provider about costs if that provider’s pricing differs from those market norms.
A single condition, such as diabetes, or a single planned procedure, such as a hip replacement, often involves multiple procedures, which can be grouped into bundles or episodes of care. The same claims data that can be used to estimate costs for individual procedures also can be used to estimate costs for common episodes, allowing consumers to view both total and itemized costs for each episode.
Consumers may be interested in comparing information about local providers and their prices for frequently performed procedures, and information about local hospital prices for common outpatient procedures. Such information also can be made available through the use of claims data.
As important as cost estimates are, they are much more helpful in the context of a rich educational curriculum that gives consumers information about health insurance, health care quality measures and resources that can assist them further. For consumers who may not realize they are in a high-deductible health plan or a plan with a narrow network, or who are trying to decide whether to enroll in an HMO or a PPO, education in the basics of insurance can be vital.
Now more than ever, consumers need help in planning for their health care and navigating their insurance plans. Cost transparency helps propel consumers on that journey and allows them to navigate with confidence and clarity.