Traverse City Business News | Bill of Well being: Is back to basics the answer for healthcare transparency?

Bill of Health: Is Back to Basics the Answer for Healthcare Transparency?

by Lauren Harris

No wonder: health costs continue to rise. To understand how and why, it is important to understand the basic, but missing, key elements that contribute to this collective crisis.

In most consumer-oriented industries, the consumer has the opportunity to evaluate and determine which products he needs / wants and what he is willing or can pay for. These fundamental consumer behavior dynamics involve a key component of the buying process: understanding the price before buying in order to make the best decision to meet their needs, also known as price transparency.

In most industries, price transparency is an expected feature of the buying process as the consumer typically pays most, if not all, of the cost. It enforces competition between sellers, and that competition requires constant innovation in order to meet the changing needs of the buyer at a price that the market can sustain.

The healthcare industry has historically been the exception to this standard buying process. To date, health care consumers have been shielded from most costs by their insurance, so naturally patients have had little understanding of costs beyond their deductible portion.

This dynamic has disrupted the normal buying process and many believe this is one of the ways we have come across uncontrolled and unsustainable cost increases in healthcare. An example of this can best be illustrated by adding a generally transparent and purchased good, such as a car, to the current health buying process.

Imagine an employer taking out an insurance policy to cover their employee’s transportation costs in the event of an accident. In return, the employee is guaranteed the option to purchase a new car for $ 1,000 or less (deductible) regardless of the total cost of the car.

The insured employee has an accident and needs a new car, so he visits a dealer whom his workshop has referred him to. There, both the buyer and seller know that the buyer only has to pay $ 1,000 for the cost of the car, so the buyer is unmotivated to ask about other dealer options and neither has any interest in keeping the cost above their deductible from $ 1,000.

The result: the buyer buys the car from the only dealer he has visited and bought the medium to high-priced model without knowing whether there are cheaper options for his needs. This purchase decision is then used to influence the insurance premiums for the same policy in the following year.

Since the price of a knee replacement in Northern Michigan can fluctuate between $ 19,000 and $ 78,000, this car purchase example is a very realistic example of our current healthcare landscape and the wide range that an employer’s insurance company can vary for the same medical procedure Times could pay for plants.

In the past 10 years, consumer cost protection has disappeared as family health insurance premiums rose 64% and deductibles exceeded wage increases by 84%. As the consumer cost umbrella dissolves in response to rising premiums, insured patients and employers who fund insurance are shifting their expectations for price transparency and also begin to assess the value of that treatment for price.

Under pressure from consumers, employers, and the government, many insurance companies have taken steps to provide information about their negotiated prices in an easy-to-understand and consumer-friendly manner by developing online shopping tools that enable their members to check for upcoming proceedings and compare costs between facilities.

Some have even created financial incentives to reward consumers who are willing to change their longstanding behavior and shop in order to make cost-effective choices. The Achilles’ heel of these solutions is that these tools are largely dependent on the healthcare providers who allow insurance companies to post their prices, and the pricing only reflects the bargaining ability of the particular carrier.

Enter the government.

In 2019, former President Trump signed several federal laws that went into effect in January 2021 that formally required hospitals to disclose their prices in hopes of stimulating consumption, and therefore competition, and informing shoppers. The last rule added two important new requirements: First, hospitals must publish discounted cash prices for all uninsured patients and pay-specific tariffs for all services. In addition, hospitals are required to publish pricing data, including expected expenses, for purchasable services such as an MRI that can be scheduled in advance, in an easy-to-understand format to facilitate shopping at different hospitals, e.g. B. a price estimation tool.

As of press time, our largest local hospital system, Munson Healthcare, has been compliant and has released its online shopping service tool that allows patients to search for procedural prices and select some insurance carriers for the appropriate prices.

This is a big step in the right direction. Currently, outpatient and outpatient surgery centers such as the Copper Ridge Surgery Center and Alliance are exempt from this latest federal contract. However, because of their business model, their prices are usually competitive and they usually allow their prices to be published in insurance companies’ purchasing tools for this reason.

New healthcare competitors in our local market such as Novello, which provides laboratory, X-ray and MRI services, are also exempt from the transparency rules but continue to proactively post cash prices for their services on their website to meet new consumer expectations.

The value and quality of care is another component that has yet to be addressed. When you look at long-term costs, value and quality are equally important when you consider readmission costs and the long-term impact on patient health. It’s like buying a car without knowing the quality or safety ratings.

Another change is emerging in other areas of health consumption. The most recent No Surprises Act comes into effect on January 1, 2022 and includes even more reforms to protect consumers from unexpected costs in emergencies and off-network situations, and for those who use good faith to obtain estimates from vendors.

In addition, new disclosure requirements for broker fees under the Consolidated Appropriations Act (CAA) will come into effect on December 27, 2021. The CAA requires Covered Service Providers (CSPs) to provide plan trustees with information they need to assess the adequacy of the overall compensation, both directly and indirectly, received from the CSP, its affiliates and / or its subcontractors. If your organization has not received a brokerage fee disclosure in the past, expect to receive it shortly.

As the government pushes for progress, employers who can’t afford to wait for further reforms are turning to employee training, close networks, or self-financing of their health insurance to take control immediately. For self-financed employers, there are advanced damage analysis tools to maximize transparency, identify potential savings, improve health outcomes and manage risks.

Ultimately, every organization can directly influence transparency and cost reduction. How far they use them will determine their effects.

Lauren Harris is a benefits specialist with the Advantage Benefits Group in Traverse City.

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