The U.S. healthcare industry could save an estimated $100 billion over the next decade by providing patients, physicians, employers and policymakers more information on healthcare prices, according to new analysis from the Washington, D.C.-based Gary and Mary West Health Policy Center.
Conducted by researchers at the former Center for Studying Health System Change (HSC), the analysis, “Healthcare Price Transparency: Policy Approaches and Estimated Impacts on Spending,” quantifies the potential savings from three policy initiatives:
Use state all-payer health claims databases (APCDs) to report hospital prices This initiative could save up to $55 billion in several ways: by using claims data to make employers more aware of price differences and realize savings from narrower provider networks and tiered benefits; by increasing pressure on high-price hospitals to reduce or justify their prices; and by informing the discussion of policy options for controlling costs.
Require electronic health record (EHR) systems to provide prices to physicians when ordering diagnostic tests Physicians play a key role in recommending which tests and treatments are necessary, but they are often unaware of the cost of the services they are ordering. Providing cost information to physicians would enable informed, shared decision making about the relative value of discrete tests or treatments when developing patient-specific treatment plans. This is estimated to produce up to $25 billion in savings over 10 years.
Require all private health plans to provide personalized out-of-pocket expense information to enrollees Estimated to reduce health spending by $15-20 billion over the next decade, this initiative would have a relatively modest impact because most private plans already offer a personalized price tool but few consumers actually use them. More effective patient-facing transparency tools and/or steeper incentives for their use could increase the impact of this initiative.
The report’s analysis further concluded that price transparency is not a silver bullet that alone can tame excessive health spending. Rather, price transparency is likely to be most effective in supporting other reforms, such as shifts to health plan benefit designs that steer patients to higher-value providers, and changes in payment policy that put medical providers at greater financial risk for the total costs of care.
“While healthcare transparency is typically viewed through the lens of patient-facing transparency tools to drive comparison shopping, our analysis suggests even greater impact could be achieved by expanding the audience for such information,” Joseph Smith, M.D., chairman of the West Health Policy Center Board of Directors, said in a statement. “We’ve found that providing price information to three key stakeholders—physicians, employers and policymakers—may have a far greater impact.”