5 Trends to Look for in Healthcare Cost Transparency

Over two years have passed since the hospital price transparency rule was enacted. Unfortunately, America still struggles with high, painfully opaque pricing across healthcare that hurts employers, workers, patients, and taxpayers. The Centers for Medicare and Medicaid Services recently announced that in 2021, the nation spent $4.3 trillion on healthcare, nearly twice the average of other nations in the developed world. Noncompliance and price gouging still exist in a market where consumers are easily blindsided by costs revealed only after care is rendered.

A recent study found only 16 percent of hospitals nationwide comply with price transparency guidelines. At the same time, 100 million Americans find themselves in healthcare debt. Consumers have difficulty planning for medical expenses because many hospitals are still not clearly publishing their pricing information in an easy-to-understand format for most people. 

Unfortunately, facilities aren’t incentivized to publish this information, nor is there large-scale accountability for non-compliance. To date, only two hospitals in the United States, out of thousands, have been fined for non-compliance. This suggests little recourse for inaction. Unsurprisingly, the two hospitals that were penalized made significant improvements: both resolved their transparency issues and brought their pricing into compliance. 

Simultaneously, a recent Kaiser Family Foundation poll revealed that 95 percent of Americans want policymakers to prioritize better healthcare pricing transparency. 

With policy in place and overwhelming public support, why isn’t price transparency the norm? 

As we pass the two-year anniversary of the federal price transparency rule and enter the third year of the COVID-19 pandemic, I foresee five trends emerging in the industry. These involve industry adaptation, consumer behaviors, payer practices, and an overall refreshed focus on the patient experience. 

Trend #1: The industry will be navigating new rules and regulations

Hospital price transparency has been out of step with the American public’s expectations and priorities for years. As of January 1, 2023, payers must provide online price estimator tools for patients; those out of compliance will face steeper penalties than before. According to America’s Health Insurance Plans (AHIP), many commercial insurers–up to 94% of them–are already providing such tools. But they must be comprehensive by 2024, covering all services and prescription drugs. 

Another rule that recently went into effect requires hospitals to publicly disclose both in-network negotiated rates and out-of-network negotiated amounts via “machine-readable files.” While this is another step toward the transparency today’s consumers expect, these files tend to be complex, making them hard to translate into actionable information. There’s no doubt that hospitals and health systems will continue to struggle this year to make such data accessible to the public, along with the online tools I have mentioned.

I expect 2023 to be include learning and adapting to what “the new normal” continues to look like. There is uncertainty and flux in the healthcare landscape, and it is going to be key for stakeholder organizations to be able to identify and respond to the changes that are happening. We need to consider: what information needs disclosure, what are the processes for publicizing such data, and how much of it is readily available for consumers? Providers and payers alike will be working on conceptualizing and implementing these new rules over the coming months.

Trend #2: Healthcare shopping and consumerism will grow in popularity

Whether they are looking to buy a new television, airfare, or a dozen eggs, consumers are in the habit of shopping around and comparing prices. As price transparency opens the healthcare marketplace, many people will begin shopping for healthcare services and procedures the same way they do for other products and services. 75% of consumers consider healthcare decisions to be the most important and costly ones they make. Unfortunately, healthcare price prediction can be difficult, if not impossible–four out of five people find comparing costs challenging. And because the average American consumer today does not have an additional $500 available for emergency expenses, many will defer care not knowing what to expect, likely leading to more costly future health events and further driving costs upward. 

Price transparency means more patients can pursue and plan financially for the care they need. With patients more engaged in their care, we may see a workforce comprised of healthier employees–resulting in lower costs for employers. Healthcare consumerism will continue gaining momentum as people grow more confident in identifying prices and comparing costs.

Trend #3: Patient experience will become a greater industry focus

Part of the patient experience includes their billing experience. People who know the cost of a medical procedure ahead of time are more likely to be able to plan accordingly to avoid debt and are more likely to pay their medical bills promptly. In a healthcare market where consumers are more informed and exercise more agency overall, I expect the industry focus to sharpen toward this aspect of the patient experience. While customer experience is the driving force in other service industries, healthcare veterans and newcomers will compete in the marketplace for consumer loyalty.

Healthcare consumerism has plenty to do with cost and accessibility. But it also relates to a facility’s net promoter score and overall patient satisfaction. Patients who play a more active role in shopping for care may also yield a stronger, more favorable opinion after services are rendered. New market entrants and industry disruptors will compete against established providers to offer competitively-priced care that exceeds patient expectations.

Trend #4: Employers look for cost predictability 

Sixty-five percent of U.S. employees have insurance coverage through employer self-funded plans. As a result of price transparency rules, more and more employers will be looking to directly partner with providers to manage their healthcare spend. The hope is that by partnering with providers, businesses can bring down the cost of health care for themselves and their employees. This direct relationship will also give businesses more visibility and predictability in managing the cost of care their employees receive. This is a challenging task, but one becoming more and more necessary in the current climate.

Trend #5: Increased advantages for cash-pay patients

Lastly, we know participants in high-deductible health plans (HDHPs) can save on out-of-pocket costs by circumventing their insurance and paying a reduced, upfront cash price for services. Because these reduced prices must now be published, I expect to see consumers taking advantage of them with more regularity. The number of Americans participating in HDHPs is on the rise, and with a substantial gap to cover before their plans begin coverage, many look for alternatives to billing through insurance when a discount is available. 

These trends are not new in 2023. They have been gaining traction in the marketplace for some time now. The convergence of transparency rule deadlines, firmer penalties for non-compliance, and consumer behaviors are sure to drive all five of these trends forward in the coming twelve months. One response from providers and insurance companies alike should include consumer-friendly, easy-to-use online price comparison tools. Not only will this be a consumer expectation in the coming months and years, but these kinds of tools will drive value for the companies that offer them proactively.

About Paul Ketchel

Paul Ketchel is President and Chief Executive Officer of MDsave Inc. Mr. Ketchel has over 10 years of combined experience in the healthcare industry. Mr. Ketchel is the founder of MDsave, Inc., which is the world’s first healthcare marketplace. The value MDsave brings distinguishes it from all other companies in the Healthcare Technology space. MDSave provides healthcare systems a bridge to transparency without jeopardizing their managed care contracts.

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