How comparative analytics improves price transparency

Today, consumers are on the hook for more of their healthcare costs. From higher monthly premiums and deductibles to increased out-of-pocket expenses, they are taking a closer look at their healthcare expenditures, and for good reason:

• Half of all overdue debt on credit reports is from medical debt, with 52% of all debt on credit reports from medical expenses. And, nearly 20% of U.S. consumers with credit records––nearly 43 million people––had unpaid medical debts as of late 2014, according to a December 2014 report by the Consumer Financial Protection Bureau.

• During 2014, 17.4 million consumers were enrolled in high-deductible plans––a 12% increase over the previous year, according to data from America’s Health Insurance Plans (2014) as reported in Instamed’s “2014 Trends in Healthcare Payments.”

• Out-of-pocket expenses for insured patients are expected to have reached $420 billion for 2015, up from $250 billion in 2009, and representing a 68% percent increase in five years, according to estimates by America’s Health Insurance Plans (AHIP) Center for Policy Research.

This vortex of rising healthcare costs is impacting more than just consumers. Unpaid medical debts mean providers are not getting paid, negatively affecting their bottom lines, and that’s just scratching the surface. While patients may not necessarily have a choice regarding high deductibles, they seek greater control over their own healthcare expenditures through improved access to pricing information.

Price transparency benefits everyone: Payers can reduce costs with a consumer-driven model that focuses on value-based choices, providers can improve their bottom lines by serving a more educated patient-base, and patients seeking services can make more informed decisions.

The California Department of Insurance and Consumer Reports recently launched an online transparency tool for patients to compare price and quality information for providers in their region. The site allows patients to compare hospital and medical group price and quality in the areas of maternity care, hip and knee replacement, back pain, colon cancer screening, and diabetes. The site also reveals estimated regional costs for more than 100 different medical procedures or conditions ranging from appendicitis to prostate cancer, illustrating dramatic price differences depending on where patients seek care.

This tool is just one example of organizations seeking to provide greater price transparency.

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