Bringing transparency to the notion of price transparency

Health care price transparency is making headlines again. In late July, in accord with a recent presidential executive order, the Centers for Medicare and Medicaid Services issued a proposed rule requiring hospitals to make more price information publicly available.

The growing interest in price transparency isn’t limited to one side of the aisle or one branch of government. Republican and Democratic members of various committees in both the House and the Senate have introduced bills to advance price transparency, each with its critics and proponents. Nor are the calls for transparency all coming from the top down. Private groups representing different perspectives in the health care system, including hospitals, medical societies, insurers, and advocacy organizations, are also seeking greater transparency in health care costs or commenting on the form it should take.

I am heartened to see discussion burgeoning around the simple notion that the prices of health care services should be publicly available so consumers can shop for the best value. The current spotlight shining on the issue might make it seem like this is a new concept. In fact, the nonprofit organization I lead, FAIR Health, was founded to bring transparency to health care costs 10 years ago as part of the settlement of an investigation by New York state into conflicts of interest involving the adjudication of claims.

We have collected data for and manage the nation’s largest database of privately billed health insurance claims, along with Medicare Parts A, B, and D claims from 2013 to the present, and have used this information to power fairhealthconsumer.org. The first public price transparency website of its kind from an independent nonprofit, this free site enables consumers to obtain estimates of the costs of in-network and out-of-network medical and dental procedures in their geographic areas.

In short, we’ve learned a thing or two about transparency over the last 10 years. One key lesson is that transparency initiatives come in many shapes and sizes. Some are effective while others have smaller impacts, or none. I believe that it helps to learn from the past — and to be transparent about the complexities of transparency. Here are the lessons we have learned about it that may help others in their efforts:

Use states as laboratories. Many states have already made progress toward transparency, as reported in a price transparency report card, and state innovations are worth studying. For example, in New York, we created a pilot website, youcanplanforthis.org, with individual provider listings for 100 commonly performed procedures by area physicians, including information about prices and practices. For a subset of hospitals in selected areas of New York state, the site also includes pricing and various quality metrics for a set of outpatient procedures. States themselves can benefit by looking over the fence at other states, to compare methods and results.

Avoid overprescribing. In framing legislation and regulations, the temptation may be to try to craft overly rigorous requirements for price transparency. This can be counterproductive. For example, providing latitude in the way data can be presented can help expedite price transparency initiatives.

Establish trust. To persuade health care system participants to share data, trust is essential. Organizations that are relied upon as a source of transparency should be independent and have a track record of providing objective, reliable data without bias toward any particular policy position.

Use a universal data platform. Transparency involves moving data from payers or providers onto a platform that consumers and others can access. Unfortunately, payers and providers use many different data formats and may not be equipped to reformat them for ingestion into a single database. To ease their burden, a price transparency platform should be able to accept data in all formats and then standardize them.

Use understandable language. When listening to a speech at the United Nations, delegates wear earpieces that translate the speech into their own languages. Something similar needs to be done with health care. Health plans, hospitals, and consumers tend to use different terms for the same thing. For example, to denote the fee negotiated between an insurance plan and a provider for an in-network service, the term used may be “allowed amount,” “in-network amount,” or “negotiated amount.” So any organization working with all these parties must become multilingual, and use the term most familiar to each party when speaking to that party.

Recognize key interdependencies. The health care system is a complex one of interdependencies among many groups. To advance price transparency in this context requires being steeped in nuances and mindful of the consequences of decisions. For example, the goal of lowering health care prices must not be advanced at the cost of value. It must be understood that price and value may or may not be connected: A service with a lower price may not be of lower value, and a high-priced service may not be of higher value. All key participants must be provided appropriate context for the information presented.

Don’t assume meaningful action will be too expensive. Effective initiatives in price transparency do not have to be expensive and can easily build upon work already done. For example, certain resources are already available, such as benchmarks reflecting common charges for services, so it is not necessary to begin data collection and aggregation from scratch. What matters is how the data are collected and validated and how they are presented. As part of our nonprofit mission, we make FAIR Health benchmarks available without charge to consumers on our free website and to states that reference the benchmarks as standards or guidelines for compensating health care providers.

Make transparency happen on the macro and micro levels. For price transparency to work, it must happen at the macro level of policy, such as federal and state legislation and industry initiatives, as well as at the micro level of helping individual consumers make smart decisions about their health care journeys.

In addition to the lessons we have learned about transparency, my colleagues and I have an overarching belief that has been with us from the start: Transparency is not just a goal but is also an ethic. To move toward the goal of price transparency, it helps to be transparent in other ways as well. Since its founding 10 years ago, FAIR Health has been open about its mission and methodologies. Others involved in price transparency initiatives should be transparent in the ways appropriate to them.

Robin Gelburd, J.D., is the president of FAIR Health, a national, independent nonprofit organization dedicated to bringing transparency to health care costs and health insurance information.