HHS price transparency efforts may decode only sliver of total spending

By | January 21, 2020

Dive Brief:

  • A new analysis by the large payer-backed Health Care Cost Institute concludes the Trump administration’s efforts at pushing price transparency may cover just a sliver of services obtained by patients.
  • Altogether, CMS specifies 70 services out of 300 for which hospitals will have to provide price data beginning next year. Hospitals can determine the other 230 services for which they will disclose prices.
  • HCCI estimates those 70 service codes would represent about 12% of total healthcare spending, and 16% of out-of-pocket spending. It observes that while it “is not trivial, it does limit the potential impact of consumer-focused initiatives.”

Dive Insight:

The Trump administration has been pushing providers to be more transparent on their prices, claiming it would help consumers better navigate their care and potentially cut costs. It recently issued a rule that would put price transparency initiatives into place beginning in 2021.

The examination of the effort by the HCCI concludes the transparency efforts proposed by CMS could help consumers — but not by much.

The HCCI examination focuses on what’s known as “shoppable services” — non-emergency care that a patient can choose deliberately, such as hip or knee replacements, as opposed to emergency services.

It concludes that shoppable services are a substantial focus of healthcare spending, accounting for 36% of total healthcare spending in 2017, including spending on prescription drugs. Shoppable services accounted for 43% of all patient out-of-pocket costs during that same year. That has decreased somewhat compared to prior years — in 2011, the HCCI estimated shoppable services accounted for 43% of total healthcare spending and 47% of out-of-pocket costs.

Despite the significant proportions of spending devoted to shoppable care, the HCCI believes that the CMS price transparency rules will assist patients only to a point. It concluded the 70 codes CMS mandates providers price out in a consumer-friendly manner on their websites would represent just 11.8% of total healthcare spending, excluding drug spending.

And that sliver would represent 7.9% of spending on inpatient care and 13.1% for outpatient care. For out-of-pocket costs, it would represent 12.3% of all care but 8% of inpatient care — where co-payments tend to be the highest. For outpatient care, it would represent 16.5% of all out-of-pocket costs — still less than a sixth of the total.

Hospitals and other providers will decide the remaining 230 codes to be priced out for patients. However, there has been such resistance to price transparency in that sector — including a lawsuit filed by hospitals against HHS last month — it is not out of the realm of possibility that those codes might be cherry-picked from obscure procedures few patients undergo.

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