Posting hospital prices hasn’t cut spending. Will a new approach work?

When the idea of ​​price transparency first took hold outside of pure academia, the pitch was simple. The idea was that Coloradans would save themselves and the system money by buying health care the same way they buy televisions and cars.

However, purchasing health care has proven to be more difficult than purchasing consumer goods. a Opinion poll released in August It found that about 69% of Coloradans surveyed who needed inpatient care tried to find out how much it would cost beforehand, but only about 43% were successful.

And while health care costs might have been higher if federal and state governments hadn’t required hospitals and insurance companies to post prices, the cost of covering a family with commercial insurance has risen 24% nationwide since 2019. I am doing it. According to nonprofit healthcare research group KFF..

Colorado officials and others have shifted their approach in recent years. While the new tools are available to individuals, they are focused on employers and communities to reduce costs, and give insurers more direct incentives to shop around for patients.

Although not enough time has passed to know whether the next iteration of price transparency will be more successful than the last, some examples suggest that the new tactic could work, at least under some circumstances. It suggests something.

Colorado calls it a “deceptive trade practice” to allow patients to sue if a hospital that doesn’t publish prices or actively pursues patients for medical debt or withholds that information from the public. Significant progress has been made in ensuring transparent information for residents. Lt. Gov. Diane Primavera said her office includes a department focused on health care costs.

But these measures alone won’t solve the problem of unequal price fluctuations between hospitals or even within the same hospital, she said.

Insurers and employers can use this information to negotiate fairer prices, she said. “If we can save the employer health care costs, we ultimately save the employee.”

Gary Claxton, KFF’s senior vice president, said that the aspirational view of price transparency is that employers and third parties, rather than individuals, should be encouraged through negotiation or by steering patients toward the best price. said it would be successful in lowering prices.

But the data may not be clear enough to make informed decisions, and removing the most expensive hospitals from coverage may not be feasible in some markets, he said. said.

“There’s always the question of whether any of these things will work,” he said. “How good is this information?”

New price transparency tool

At the beginning of this fall, Colorado Department of Health Policy and Finance announced transparent tools This allows you to search rates by county, hospital, insurance company, plan type, and procedure.

In late October, Governor Jared Polis announced: another tooldeveloped by a non-profit organization patient rights advocateyou can search by hospital or treatment method.

Transparency is the first step for a functioning health care market, Polis said. As it stands, people can pay vastly different amounts for the same procedure by the same doctor at the same hospital, he said.

“No one knew about this until our Congress passed transparency laws,” he said.

Since the new tool is new, we don’t know if people will use it. a Dashboard illustration from the Colorado All Payer Claims Database says it gets about 2,000 views a month, but officials don’t know how many individuals represent that information or how they use it. Healthcare Value Improvement Centerrun it.

The Department of Health’s new policy tool could help consumers, but the bigger impact will be if employers, chambers of commerce, and even entire communities come together to help when they decide they are paying too much. That could come from demanding lower rates, Kim Bimestefer said. , Executive Director of the Department.

“These tools are next generation,” she said. “It’s an unfair demand on families to change the entire health care infrastructure on their own.”

In general, patients can get the most accurate results by calling their hospital or insurance company rather than trying to find out on their own, spokeswoman Carla Welch said. Colorado Hospital Association.

However, he said tools focused on employers and insurers could be more helpful in partnering with hospitals to find the right price.

“Colorado hospitals recognize that health care affordability and transparency can be confusing for consumers, which is why all hospitals must not only comply with state and federal regulations; , provides consumer-friendly tools to help patients understand the specific financial implications of their insurance and the treatments and care they need,” she said in a statement.

Price transparency tools show significant differences in how much health plans pay hospitals for common procedures, but those differences may not be meaningful to patients.

The amount patients pay depends not only on the price of the services they receive, but also on the structure of their insurance plan. For hospital-based care, patients with commercial insurance typically end up paying a portion of their hospitalization costs, up to their out-of-pocket limit. Based on federal lawIn 2024, the maximum amount cannot exceed $9,450 for an individual and $18,900 for a family.

Let’s say a hypothetical patient who lives in the Denver area needs a hip replacement and must pay 20% of his hospital costs until he reaches his out-of-pocket limit.. According to the state’s recently released price transparency tool, surgeries and associated services can cost anywhere from about $12,000 to $51,000, depending on the type of insurance a patient has and the hospital they choose. It’s a range.

If a patient has had little care this year, that difference can make a big difference. About $2,500 and over $10,000.

But if you’ve already had a difficult year and have saved up enough for medical expenses to stay within a few thousand dollars of your out-of-pocket limit, even if the treatment increases your premiums by nearly $40,000. You would pay the same amount. A similar disconnect can occur when patients pay a flat copayment rather than a portion of the cost of care.

Relationship between price and finance

The state’s employee health plan seeks to more directly link prices to patient finances.

In 2022, the state began offering financial incentives (rebates on a portion of care costs) to employees if they select providers with above-average results for the services they provide. healthcare blue bookranks hospitals on a variety of services that are considered “fairly priced.” The state’s Department of Human Resources and Administration said at the time that it wanted to save about $1.50 for every dollar of incentives awarded.

The state’s employee health insurance program saved the state about $990,000 in its first year, or about $2 for every $1 spent on incentives, said department spokesman Doug Pratt. In the second year, they saved more than $1.8 million, or more than $3.50 for every dollar spent.

The department doesn’t compile numbers on results, but anecdotally, Pratt said, employees with medical needs appear to be missing fewer days. Although the state does not survey employees, participation increased in the second year, suggesting people were satisfied and recommended it to colleagues, he said.

“The first year we rolled it out was successful,” he said. “The second year was even more successful.”

Colorado workers responsible for innovative new solutionsHilary Glasgow, executive director of the state employees union, said she has received generally positive feedback about the program. In general, she said, workers are in favor of reducing health care costs in ways that don’t reduce the quality of care.

“People find it helpful,” she said. “It helped me save money and get rebates.”

While state employee programs have so far provided little more than a carrot, other insurers have been less hesitant to pull out the stick. united healthcare The company currently has a series of plans called Surest that adjust patient copays based on an algorithm that takes into account provider prices and quality scores.