So... Where Are We at With Patient-Facing Price Transparency?

You’d think that working in healthcare, we would know the ins and outs. We should be able to find the best and cheapest care. Yet, at least for me, that’s not how it works.

The federal government mandated that hospitals and insurance companies publish negotiated prices starting in 2019. Compliance has gradually improved. However, issues with enforcement and data quality remain.

Even with tools that organizations have built for the public, the focus on giving patients the chance to be smart shoppers has not gained a ton of traction.

This is particularly relevant as the incoming Trump administration will likely push for these initiatives.

Most of the progress in making prices more public has benefited the B2B sector. Employers can also use price transparency data. This helps inform health plan decisions, negotiate better rates, and improve healthcare affordability for employees.

As well, recently, transparency has been seen to lead to uniformity in healthcare costs—but not necessarily lower prices.

So, can we actually get to a place where prices can be used to change market dynamics and decrease prices?

My answer, is that one of the biggest barriers is healthcare literacy. The overwhelming nature of where a patient should even start huge is a challenge. There is also the fear of who to trust.

Additionally, the healthcare billing process itself could still impede the impact.

Status Quo

Medical billing is often unclear, leading to confusion and delays for patients, providers, and insurance companies.

This increases costs and creates frustration for everyone. The lack of transparency and complexity in the billing process makes it difficult for patients to understand what’s covered, leaving them uncertain about their financial responsibilities.

For those seeking non-insurance options, direct pay clinics, such as Direct Primary Care (DPC), are available in both independent and franchise formats.

For those relying on insurance, challenges arise from deductibles, benefits, and the uncertainty of whether insurance will approve a procedure, making it hard to determine out-of-pocket costs.

For example, when visiting a hospital, the price shown for a service often doesn’t reflect the actual costs. Additional expenses, such as hospital stays, anesthesiologist fees, and lab tests, are often not included in the initial price.

This complexity makes it difficult for patients to understand the true cost of care, undermining price transparency and leading to unexpected financial burdens. It also makes it harder to compare costs between hospitals or service providers.

There are structural issues that need to be addressed before patients can truly engage with the market. Simply providing information may not be enough to foster meaningful change.

Where Prices Can Be Useful for Patient-Facing Products

It is challenging to obtain and integrate Total Incurred Cost (TIC) data, or any price transparency data, into an application due to poor data quality. Many hospitals post inconsistent formats, and each data set is massive.

Even if an organization does make sense of this data, the data must be user-friendly. Current tools need improvement to ensure patients can easily access and interpret the information.

A product should be designed to make it easy for users to search for prices, quality, and personal preferences of providers. It should also show where they stand with their benefits. This applies to the current insurance system.

In my view, this means not using CPT codes but presenting the information in a way that a layperson can easily understand.

It should create a shoppable experience, similar to Amazon.

Patients should be able to know the full, all-in cost upfront, rather than having to guess or assume based on incomplete information. The goal is for a product where patients can confidently know that a service will cost a specific amount, like $200, without hidden fees or surprises.

One example I’ve seen of this is Surest, a company under United Health.

And a product can't just focus on hospital providers, but also on individual providers. Currently, a lot of the engagement is on in-patient which significantly limits engagement.

And to provide a broader overview, here are some of the different product features I imagine would be helpful:

1. Retrospective:

   1. Use local prices in negotiating a hospital bill to a lower rate.

2. Prospective:

   1. Patients knowing the cost of planned, non-emergency services upfront to use that information to compare prices across facilities.

      1. Elective Procedures: Compare prices for surgeries like knee replacement or cosmetic surgery.

      2. Diagnostics: Choose cost-effective options for tests like MRIs or blood work.

      3. Therapies: Budget for treatments like physical therapy or counseling.

      4. Maternity Services: Evaluate costs for prenatal care and delivery.

      5. Chronic Care: Plan recurring expenses for managing conditions like diabetes.

      6. Dental/Vision Care: Select providers for fillings, crowns, or LASIK based on price.

      7. Preventive Care: Compare prices for screenings like mammograms or colonoscopies.

Keep in mind, though, that life happens, and care can be unpredictable, making the most important factor simply getting the best care rather than focusing on cost. The fancy term here being inelastic demand.

How Could Providers Respond to This

The foundation of all of this is foreign to both patients and providers.

For example, imagine we create patient tools that people use. My hunch is that to have competitive pricing between providers, there would be a bottleneck in costs due to an administrative burden.

Picture this.

Provider Side: Healthcare administrative costs are high for providers due to labor-intensive tasks like billing, insurance verification, and prior authorizations. Providers must invest significant resources in submitting accurate claims, ensuring proper medical codes, handling approvals, and addressing claim denials and appeals. These processes divert time and resources from patient care.

Payor Side: Insurance companies add to administrative costs through complex requirements like prior authorizations, medical reviews, and claims processing. Evaluating claims for medical necessity, verifying documentation, and managing disputes require significant resources, increasing administrative overhead.

Patient Side: High administrative costs lead to delays in care, confusion about insurance coverage, and frustration for patients. They face longer wait times, confusion about treatment coverage, and unexpected expenses due to coding errors or claim denials, negatively impacting their care experience.

Nowhere here do I think price transparency has any impact on administrative costs, which are 15–30 percent of healthcare spending.

One way this could change is something similar Mishe is doing, and something Yubin Park mentioned. Where an organization can predict and put the costs upfront.

Companies that can offer bundled pricing or cost predictions using RCM data are moving in the right direction. Bundling could simplify the complex billing system and provide a clear, all-inclusive price.

Providers could benefit from immediate payment, reduced administrative tasks, and guaranteed reimbursement based on pre-negotiated rates, which could significantly lower administrative costs.

More Steps Forward

While price transparency in healthcare is a necessary step, significant barriers remain, including complex billing, inconsistent data, and low healthcare literacy. These issues make it difficult for patients to fully benefit from transparent pricing, and administrative costs further hinder efficiency across the system.

To create real change, the industry needs solutions that simplify decision-making for patients and reduce administrative burdens for all parties. An intermediary that guarantees prices and bundles services could bridge this gap, offering clearer, predictable costs and driving a more competitive, consumer-driven market. This approach could change healthcare by providing patients with the confidence to make informed choices.