Transparency crucial to empowering health care consumers

June 20, 2012

Knowledge is power — the power to think, to act, to buy, or even to not do any of the above. Our nation’s health insurers and health care providers need to figure out how to put power back into the hands of consumers. Consumers today have too many constraints when it comes to accessing decision-critical information about the cost of health care. That’s a hard pill to swallow when there’s so much at stake.

A recent post on The Health Care Blog featured a fascinating yet not unsurprising finding: The cost for appendectomies can vary by more than $100,000 between health plans and hospitals.

Dr. Renee Hsia of UCSF was asked what appendectomies cost by a friend who had to pony up over $50,000 in co-pays for one. Dr. Hsia’s research, which looked at pricing variability across the state of California and was published in the Archives of Internal Medicine,  found that an appendectomy could run from $1,529 to $182,955 — varying as much as $7,504 to $171,696 within one hospital.

The question of where to begin is starting to be answered by sites like FAIR Health’s Consumer Cost Lookup. It uses continually updated claims data from insurers and third-party administrators for 126 million people to benchmark costs. Visitors to the site can find typical rates for certain services in their area as well as what Medicare pays.

Fourteen other states have or are setting up searchable databases to help compare health care prices and quality.

The savings that can be realized are impactful not only for consumers but for health insurers themselves. Because half its members had no idea when they were being referred to out-of-network providers, Aetna launched a service to let members know if their outpatient surgery could be done by an in-network provider. In many cases, the surgery could be done less expensively, in-network reducing out-of-pocket costs for Aetna members, not to mention for Aetna.

More and more insurers are trying to help people locate services and compare costs, like UnitedHealthcare’s postcard campaign, which lists costs for common lab services at in-network and out-of-network facilities in members’ local areas and its online tool for estimating the costs of over 100 common treatments.So what’s central to all of these stories? Information.

In the California appendectomy story the information was too hard to get: too many sources, too many different plans. And, technically Aetna didn’t offer consumers (and network doctors) anything they didn’t already have access to. The information was just too hard to piece together and act on.

What these stories show us is that health care consumers today need access to information, plus tools and services to make sense of it all. Like Aetna, United Healthcare and other insurers who have developed cost-comparison tools for consumers, the insurance side of health care has been making cost information more available to aid consumer decision-making. We look to healthcare providers and hospitals to start doing the same.

Bringing transparency to the costs of services and products can supercharge consumer decision-making, forcing healthcare providers and hospitals to be more upfront with price information and to work on getting a better handle on costs for “incidents of care.”

Extend Health Medicare Exchange Interface

Extend Health Medicare Exchange Interface

The Extend Health exchange platform is a great example of transparency in an insurance shopping site. It delivers information on thousands of private Medicare plans to our customers — and it does it in an easy-to-understand way. Our system supports benefit and cost transparencyby allowing customers to compare plans side-by-side and estimate their prescription drug costs for the year. These tools, along with the opportunity to speak with a benefit adviser if they wish to, help ensure that our customers find the plan or plans that meet their health needs and the needs of their budget.

Massachusetts and Utah already offer the ability to buy health insurance online through their state exchanges. The upcoming Supreme Court decision on the Patient Protection and Affordable Care Act will determine if citizens in every state will have the same opportunity. If all or part of the ACA is struck down, health insurance exchanges — a forum whose effectiveness is based on transparency in costs, benefits, services and products (such as drugs) — could be in jeopardy.

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For regular commentary on developments and trends in health care, insurance, and health IT, follow @brycewatch and @ExtendHealth on Twitter and check out Extend Health online.

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