JAMA study finds that most workers with access to web-based price comparison tools did not use them, nor did they spend less on medical care than other workers

Can shopping tools designed to help patients compare providers (including medical laboratories), quality, and prices, make a contribution to reducing the increase in healthcare costs? A new study suggests that such shopping tools make only modest contributions to controlling the cost of care.

Published May 3 in the Journal of the American Medical Association (JAMA), the study found that only 10% of the 150,000 employees at two large companies offering web-based transparency tools logged on to compare healthcare costs during the calendar year. In addition, providing workers with the ability to shop for healthcare services did not bring down employees’ average outpatient spending. Instead, employees with access to transparency tools spent slightly more than workers who could not price shop.

“Our findings temper the enthusiasm around the idea that price transparency is some sort of panacea … that price transparency alone, coupled with high deductible health plans, are going to lead to reduced spending,” stated Sunita Desai, PhD, a Seidman Fellow in Healthcare Policy at Harvard Medical School who led the study. She was quoted in a Washington Post article.

Push to Expand Price Transparency Shows No Signs of Slowing

Meanwhile, following his yearlong campaign to stop “hospital price gouging,” Florida Governor Rick Scott signed legislation in April that requires hospitals in the state to post their prices and average payments online.

“The hospital has to say, ‘This is what we’re going to bill you’ and should provide all the pertinent information so the consumer can ask the insurer, ‘What will my responsibility be?’” stated Laura Brennaman, PhD, Policy and Research Director for the Florida Community Health Action Information Network, a consumer advocacy group. She was interviewed in a Modern Healthcare article.

Other states are taking similar steps to ensure that patients—particularly the growing number of consumers with high-deductible healthcare plans—know what charges to expect when they have a clinical laboratory test or procedure. Under legislation signed into law in June 2015, healthcare providers and health plan issuers in Ohio will have to comply with new price transparency rules requiring “good-faith cost estimates” beginning Jan. 1, 2017.

Sunita Desai, PhD (above), a Health Economist and Seidman Fellow in the Department of Health Care Policy at Harvard Medical School, led the study which determined that price transparency tools might not automatically lead to lower healthcare spending by consumers. The study was published in the Journal of the American Medical Association (JAMA). (Photo copyright: Harvard University.)

Sunita Desai, PhD (above), a Health Economist and Seidman Fellow in the Department of Health Care Policy at Harvard Medical School, led the study which determined that price transparency tools might not automatically lead to lower healthcare spending by consumers. The study was published in the Journal of the American Medical Association (JAMA). (Photo copyright: Harvard University.)

According to HealthPolicyOhio.org, 28 states have enacted health price transparency legislation. Such laws range from requirements that providers report their prices to state agencies, or publish their prices on public websites, to requiring insurers and/or providers to make prices for common procedures easily accessible to the public.

Colorado and New Hampshire are considered the leaders in healthcare price transparency. Both states maintain all-payer claims databases and offer consumer-facing public price transparency websites.

Not All Recent Developments Advance the Cause of Price Transparency

A court case in Vermont has introduced some uncertainty in the trend of healthcare price transparency. The U.S. Supreme Court in Gobeille vs Liberty Mutual, ruled that federal law protects the self-funded insurance company from having to report information to a state-based all-inclusive healthcare database. Seventeen other states have all-payer databases similar to Vermont’s.

In a FierceHealthFinance editorial, Editor Ron Shinkman lamented the March ruling. “The database would allow patients to know how much hospitals charged to provide their care, allowing them to shop around for the best price,” Shinkman wrote. “With the decision in the Liberty Mutual case, that tool is not likely to see the light of day on a significant scale for decades to come.”

Some hospitals, though, are not waiting for states to impose regulations enabling price comparisons. St. Clair Hospital in Mount Lebanon, Pa., recently introduced a tool from Experian Health that offers cost estimates on deductibles, coinsurance, and copays for 105 procedures, including medical laboratory tests and some surgeries. St. Clair expects future versions of the pricing calculator to include physician costs.

“There are many institutions in the United States—and in Pittsburgh—that have high quality. But we wanted to be able to do that at a very reasonable cost and to show people what it’s going to cost to come here and what their actual out-of-pocket cost is going to be,” Chief Medical Officer G. Alan Yeasted, MD, FACP, stated in a TribLive article.

According to the Pittsburgh Business Times, more than 3,000 hospitals and 10,000 other healthcare institutions have added the Experian Health Patient Estimates tool to their websites.

Higher Quality Costs More?

Most patients, meanwhile, may not believe there is an association between healthcare prices and quality of care. An analysis of survey data was conducted by researchers at the University of California San Francisco, and the non-profit advocacy group Public Agenda. Researchers found that between 58% and 71% of those surveyed “did not think price and quality were associated.” The study was published in the April 2016 issue of Health Affairs.

“Most people do not believe they have to pay more money to get better quality health care,” commented study co-author David Schleifer, PhD, of Public Agenda, in a news release. “However, a small portion of Americans do think better care costs more, or are unsure, which underscores the need to publicly report information about both quality and price.”

Collectively, these developments indicate that the trend toward more public access to provider prices and quality will continue to move forward. Accordingly, clinical laboratories and pathology groups would be well-served to have a strategy in place that enables the labs to meet patients’ expectations for accessing information about the prices of medical laboratory tests and the quality performance of their lab organizations.

—Andrea Downing Peck

Related Information:

Association Between Availability of Price Transparency and Outpatient Spending

How a Tool Meant to Help Patients Save on Health Care Backfired

New Price Transparency Law Puts Florida in the Consumer Vanguard

Governor Rick Scott Signs Legislation to Protect Patients from Price Gouging at Florida Hospitals

Transparency Basics 2016

St. Clair Hospital to Offer Patients Early Access to Care Costs

Adoption of Transparency Tool Puts Prices to Procedures

Most Americans Do Not Believe That There Is an Association Between Health Care Prices and Quality of Care

Survey: Most Americans Do Not Associate Price with Quality in Health Care

Supreme Court Just Dealt a Huge Blow to Price Transparency in Healthcare