The Need for Cost Clarity in Healthcare

With consumers’ share of healthcare costs expanding, we need to do a better job making charges more transparent and more predictable?

My husband recently stubbed his toe. Badly. Badly enough that I encouraged him to go see a doctor. He was reluctant. While I suspected he’d rather just garner sympathy by complaining to me while limping around the house (just kidding, honey), his stated reason was all too familiar. “I have no idea what we’ll have to pay. They’ll want to do an?X-Ray,?it might need surgery. And I have no idea what it’ll cost.” All true. We have good health insurance, but like most Americans, when we go to the doctor or have a procedure, what we will actually?have to?pay out-of-pocket remains a mystery.?This is something that we can and should?change.?

As consumers we are shouldering more and more of the cost of healthcare. And the biggest increases are for those of us with employer-sponsored plans. According to an analysis of federal data by the?Commonwealth Fund,?deductibles in employer plans more than doubled between 2008 and 2017, from $869 to $1,808. Especially troubling, an accompanying?Commonwealth Fund survey revealed that only 62 percent of adults were very or somewhat confident in their ability to afford health care.?

This increasing burden is also evident when you look at the crushing levels of medical debt in the United States: according to a?new study?by JAMA, medical debt is now the largest contributor to personal debt. And the data for this study was collected?before?the COVID pandemic.?

Some of this debt is driven by unpredictability – if the heart procedure you needed cost several thousand dollars out-of-pocket?more than you thought it would, you may not be prepared, emotionally or financially, to pay it. This is a bad outcome, obviously. The risk on non-payment rises for the provider, and a recuperating patient is burdened with the stress of a large,?unexpected bill.??

More Skin in the Game?

So?as consumers are paying more out-of-pocket, some may become reluctant to seek care (like my husband), or seek more information about what they will?have?to pay for the care they receive. Consumers are also armed with incredible levels of price transparency with other products – everything from hotel rooms to clothing to household items. With so much skin in the game, and the internet providing so much information, consumers’ expectations are changing when it comes to healthcare.??

State and federal regulators are also beginning to take action, a trend that will likely accelerate. Most hospitals are now required to publicly disclose the prices they charge. This does not, however, solve the issue for consumers. While it provides a measure of visibility into pricing for insurance companies, Medicare and Medicaid, it doesn’t show what share the patient will ultimately pay.??

?Making the complicated simple?

The complexity of pricing in healthcare is well documented. Niall Brennan, CEO of the Health Care Institute, a non-profit that analyzes medical costs, calls healthcare pricing “insane.”?As a recent Wall Street Journal article reported, a price of a C-section varied from $6,421 to?$60,584,?at one hospital. This all has to do with the vagaries of the agreements that hospitals sign with multiple insurance companies and government payers. In turn, each insurance company will have its own deductible and out-of-pocket schedules, which providers don’t have access to.?

We are seeking to change this at Change Healthcare. We are piloting our Care Cost Estimator with a few innovative providers. With the Care Cost Estimator, we?leverage our unique data set, and the largest eligibility network in the industry, to make the unpredictable, predictable.?Because we’ve managed 15 billion healthcare transactions, and our network covers 1 million physicians, 6000 hospitals and 2,400 payers, we have an unmatched ability to analyze what real-world patients are paying for practically any procedure, performed at almost any hospital or clinic.?

With cloud-based,?transaction engine, providers will now be able to tell their patients how much they will have to pay out-of-pocket for a given procedure.?And this analysis takes place in real time.?

?Removing Unpredictability in Pricing?

This gives providers the opportunity to offer added value for their patients, taking some unpredictability out of what?is often a stressful transaction. In addition, it accelerates patient payment cycles, which as the patient’s share of the cost burden increases, is becoming more and more important – we’re not talking $50 dollar co-pays anymore. It’s thousands of dollars per transaction. If necessary, providers can also help the patient plan for the expense, offering financing options, thus reducing unpaid bills. For the patient, it allows more informed decision-making and peace of mind.?

Testing the beta version of our Care Cost Estimator with our partners will allow us to receive real-world feedback, and to collaborate with customers on how to continuously improve the product as we scale it. We expect the ROI for providers, in addition to the payment-cycle improvements, will include greater patient satisfaction and loyalty. For the patient, it provides the information necessary to make proper utilization decisions and to plan emotionally and financially. In other words, giving the consumer the same information for vital healthcare transactions that’s available to them for practically any purchase.??

This is kind of win-win solution that is at the core of Change Healthcare’s mission to improve the healthcare experience for everyone. Including my husband’s, and his broken toe!?