Regardless of potential confusion, the bill’s passage is seen as a positive step toward greater transparency by high-level members of the state’s government

In an effort to promote price transparency in healthcare, Colorado legislators passed a new law requiring hospitals in that state to post self-pay prices for the most common procedures and treatments. Their hope is healthcare consumers who lack insurance will find it easier to price shop and, therefore, make informed healthcare decisions.

However, not all providers in that state think the bill is needed and some are concerned it could cause confusion. It remains to be seen how Colorado hospital medical laboratories and outpatient practices, such as anatomic pathology groups, will be impacted by the new transparency requirements.

Potential Confusion a Concern for UCHealth

The Transparency in Health Care Prices Act (SB17-065), which took effect on January 1, 2018, calls for Colorado hospitals to post self-pay prices for their top 50 diagnosis-related-group codes; and self-pay prices for the 25 leading current procedural technology billing codes, according to the Denver Business Journal.

Physicians’ practices and other providers also must post prices for their 15 most popular procedures under the new law, Healthcare Dive reported. In an issues brief, the Colorado Hospital Association (CHA) supported the bill “because it aligns with the Association’s transparency policy principles.”

But some Colorado healthcare providers have expressed concerns about the new requirements.

“Because of the complexity of pricing, it’s possible the self-pay prices we have posted on our website might increase confusion,” Dan Weaver, Senior Director of Public Relations for UCHealth, told Colorado Politics. “Patients who have insurance coverage, Medicaid or Medicare will have very different out-of-pocket responsibilities [from the posted price].” The article was later published in the Durango Herald.

Various points of potential confusion include:

  • Prices show what self-pay patients must pay and not what an insured patient would pay under their health plans, which would be much lower;
  • Only 7% of Colorado residents are uninsured, according to a Colorado Health Institute report; and,
  • Even an “apple-to-apple” comparison by price is not so easy to do, reported Healthcare Finance based on its analysis of some Colorado hospitals’ price lists.

Christine Clark, Associate CFO Revenue Cycle (above), Denver Health, told Healthcare Finance, “We do have concerns that this will make the issue more confusing to patients as there is not a ‘one size fits all’ approach to providing patients estimates due to the wide variability insurance plans bring to the process. Providing a self-pay price for a service is probably the least complicated.” However, she added, “There is always some variability in the price of procedures due to different patient needs.”

Regardless of the potential confusion, however, some see passage of the bill as a step in the right direction.

Senate Republican Kevin Lundberg (above right) shaking hands with Colorado’s governor following signing of SB17-065, which Lundberg sponsored. In a statement, he noted, “Coloradans have a tough enough time navigating the complicated structure of our broken healthcare system without worrying about hidden healthcare costs.” (Photo copyright: Colorado Senate Republicans.)

Studies Show Consumers Not Highly Motivated to Shop for Healthcare

Ironically, consumers do not appear to be rushing to compare hospital prices, as they do for other products and services. And those who do shop around do not like the price data tools or understand the data, state and national studies found.

“Even with pricing data available, patients tend to rely more on their physician’s advice about where and from whom to seek medical care,” noted the Health Policy Institute of Ohio (HPIO). According the HPIO report, consumers say healthcare price data tools are not user-friendly.

And a national study, published in Health Affairs, that explored American’s views and habits when shopping for healthcare, noted:

  • Only 13% of 3,000 survey respondents who had out-of-pocket responsibilities sought cost information before their healthcare encounters; and,
  • Just 3% compared costs across possible providers before accessing care.

The researchers acknowledged the existence of price transparency tools, such as those offered by Colorado, Ohio, and on other state websites. Nevertheless, survey respondents still reported:

  • Lack of awareness about available price information;
  • Unwillingness to switch providers; and,
  • Network constraints and lack of providers available to patients.

“Simply passing price transparency laws or regulations appears insufficient to facilitate price shopping. Price information must be more accessible and comprehensible,” the study authors wrote in Health Affairs. “Even if information was more accessible, patients’ preference to maintain provider relationships and efforts to coordinate care would limit overall rates of shopping.”

Keeping it Simple Could Be the Key

Researchers suggested non-urgent services in quantity, such as a package of physical therapy visits, may best suit comparison price shopping.

“Price is not being presented in a simplified enough way for consumers to make informed decisions,” Elena Prager, PhD, Assistant Professor, Kellogg School of Management, Northwestern University, told Healthcare Finance.

Ultimately, it’s not enough that healthcare price data is simply made available to consumers, it also must be easily found and understood. Though transparency laws might not be directly aimed at clinical laboratories; lab leaders are nonetheless encouraged to ensure self-pay prices for procedures and diagnostic tests are accessible to the public.

—Donna Marie Pocius

Related Information:

Colorado Hospitals Must Begin Posting Prices for Most Common Procedures on Jan. 1

Colorado Law Requires Hospitals Post Prices for Common Procedures

Issue Brief, Senate Bill 17-065 Price Transparency

Colorado Sings Law Mandating Hospitals Post Self-Pay Prices

New Colorado Law Gives Patients More Transparency on Medical Fees

Colorado Health Access Survey

Healthcare Data Transparency Basics-2016

Americans Support Price Shopping for Health Care, But Few Actually Seek Out Price Information

Vitals Study Shows Consumers Using Cost Transparency Tools Select Clinical Laboratories with Low Test Prices