Health Care Cost Transparency Could Actually Increase Spending

Even when patients are granted access to a health care services price transparency tool, they don’t seem to reduce their spending habits.

Observed cost variation among physicians, hospitals, and other care settings, in addition to increased patient cost burden from higher deductibles, co-payments, and co-insurance, have caused many health care stakeholders to cry foul against health care pricing methodologies.

In response, more than half of US states have passed price transparency laws to help patients and health care providers alike make sense of murky care services costs. Despite these legislative advancements, there has been limited inquiry into how patients use transparency tools when managing their health.

To find out, Harvard researchers compared the health care spending patterns of employees who were offered an online cost transparency tool with those of employees who weren’t. The website provided users with information about projected out-of-pocket costs for health care services from different physicians, hospitals, and other clinical sites.

Surprisingly, access to the price transparency website spurred a slight relative increase in health care spending, as it was associated with a $59 increase in outpatient spending and an $18 increase in out-of-pocket spending, on average.

Notably, only 10% of employees who were offered the price transparency tool actually used it at least once in the first year. Top searches on the website were for obstetric deliveries, colonoscopy, office visits, and gastric bypass surgery.

The researchers conceded that the low rates of the tool’s use weakened the study’s primary finding that price transparency could produce an increase in health care spending.

“A more conservative interpretation is that the study failed to find evidence of meaningful savings associated with availability of a price transparency tool,” the study authors wrote.

Nevertheless, the patterns they observed provide valuable information on how patients shop for health care.

“Low utilization is the most commonly reported challenge to price transparency initiatives by insurers who offer tools,” the researchers wrote. “…Patients may not find the information compelling or may simply forget about the tool if they seek health care infrequently.”

Additionally, the authors noted that there could be limited opportunities for patients to save money using the tool.

“Price shopping is most useful for care that is nonemergent and of lower cost, and there may be a limited set of services that meet those criteria,” they wrote.

In a related editorial, Kevin G. Volpp, MD, PhD, postulated that, in the absence of “credible information presented simultaneously on quality, many patients may likely assume that higher price means higher quality.”

“For the average patient as a consumer, in other realms of their lives such as buying cars, food, and houses, higher price uniformly signals higher quality,” Dr. Volpp wrote.

Pharmacists can best help patients understand their total health care costs by informing them of trends seen among prescription drug costs associated with their conditions.

The current study results appeared in the May 3, 2016, edition of JAMA.