Opaque Transparency?

Lack of price transparency is one of the biggest problems plaguing American patients and well-intentioned state legislators are now taking a stab legislative fixes.

But is a government mandate the right approach? Dr. Keith Smith, for one, warns that it isn’t.  Here’s a recent example of just what can go wrong.

In one state, Ohio, the legislature passed a law now known as Ohio Revised Statute 5162.80, which has misdiagnosed the disease and has prescribed an ineffective and even potentially harmful cure, particularly for patients tied to an “insurance” plan.

On it’s face the bill seems straightforward: doctors and hospitals must give patients good faith estimates for charges and payments. Who could be opposed to that?

The devil is in the details, particularly in this section of the law:

A provider of medical services shall provide in writing before care is rendered: “The amount the health plan issuer intends to pay for the product, service, or procedure…”

Anyone who has ever tried to get an insurance company to divulge its contracted rates with providers prior to receiving care knows all too well what a herculean task it is.

To their credit, the bill’s authors included a provision to address this problem:

“Any health plan issuer contacted by a provider … shall provide such information to the provider within a reasonable time of the provider’s request.”

Again this looks like a reasonable provision at first glance, but it is really non-transparent transparency and worse could lead to delays in care.

Why should a patient have to contact a physician or facility to find out what his or her insurance plan will pay? This is in reality erecting a barrier between the patient and finding out what the actual costs for care will be at any given doctor or facility. It blocks meaningfully shopping for the best price.

We are not recommending government mandates, but  a more effective requirement might be to demand that the insurers release ALL of their reimbursement rates, both in network and out-of-network, in a transparent manner so that everyone, particularly patients enrolled in a plan, can easily see how much the insurer would pay paying before a patient even sets foot in a doctors office.

The bill as written only requires that the insurers divulge the info on a case by case basis to the “provider.” Why not also to the patient? After all the patient is at least purportedly the actual customer of the insurance company.

As Dr. Michel Accad explains, price opaqueness is a symptom of larger problem, pervasive third-party-payment, and not in itself the root cause.

In a free and competitive healthcare market, price transparency would rarely be an issue, as it is not an issue in the market for cell phones and bubble gum.  Doctors and hospitals could not survive without being upfront about fees.  But, in its great wisdom, and supported by the sound logic of healthcare analysts and healthcare economists, the government has ensured—through its tampering with and participation in health insurance—that charges would be as opaque as possible.

As demonstrated by free market facilities like the Surgery Center of Oklahoma — who post their actual prices not fictitious chargemaster rates — the ultimate solution to not only price transparency, but increasing access to high quality, low cost care, is to kick out the middlemen driving up and obscuring the prices.