Only one in ten Americans are proficient in health literacy says the US Department of Health & Human Services. Ask the average person on the street to perform a task like calculating their health insurance costs for a year, and you may as well be asking them to divide 14 by the letter Q. Healthcare — and healthcare costs in particular — is confusing for most people. Lack of transparency into how services are priced only complicates matters.
The American healthcare system not only suffers from a lack of price transparency; it reinforces it at all levels. There are any number of contributors to this lack of transparency, from bureaucracy and outdated legacy technology to disparate coding systems and intense shareholder expectations.
“It's all just a black box to patients,” says Catharine Roberston, Director of Human-Centered Design at Bellese Technologies. She notes a number of examples that contribute to the confusion, including an information stalemate between healthcare stakeholders.
Hospitals may not want to divulge prices, because they believe it harms their ability to negotiate with insurers. Insurers may not publish prices because they believe it harms consumers' ability to get the lowest cost. And providers may be reluctant to share costs because they feel they need to trying to balance-bill patients to make up for their perceived shortchanging at the hands of an insurer's reimbursement to them.
“Understanding insurance and paying for healthcare in the US is just really complicated,” says Roberston. For a given procedure, in addition to knowing what the going rate is, consumers must consider additional factors including co-pays, co-insurance, deductibles, and out-of-network costs. When the bills arrive, they can come as a shock. “We have a national crisis where people are going bankrupt because of medical bills,” Robertson says. “Price transparency measures can help them recognize what they’re getting themselves into before and after they receive healthcare services.”
Providers’ bottom lines aren’t the only — or even the biggest factor — inhibiting price transparency. Often the culprit is bureaucratic or technological. “Looking at Medicare data, we can see differences in the cost of procedures in different facilities,” notes Carol Sunderland, Program Director at Bellese. “In addition to data interoperability issues, it’s the fact that even when providers are sharing costs, the codes are unclear to the average patient, not to mention the impact on costs.”
Despite the challenges facing price transparency in healthcare, there is progress. Bellese worked with the Centers for Medicare & Medicaid Services (CMS) to develop the Procedure Price Lookup (PPL) application for Medicare.gov. Driven by a legislative mandate for CMS to disclose prices on procedures, the PPL tool allows consumers to see what they can expect to pay on average for a particular procedure. They can then use that information when deciding between locations where they may have a procedure.
While greater price transparency has its obvious benefits — especially for patients — it can have hidden drawbacks. Like a drug, information can be beneficial in the right dose. But an overdose of data — without the tools to understand and process it — can make a simple process more complicated. “Giving people too many choices doesn't improve the decision-making process,” says Sunderland. “In fact, it could make things worse.”
Bellese’s efforts to bring human-centered design to healthcare and price transparency are helping consumers avoid data overload. Understanding how people manage their healthcare, from choosing a doctor to booking a procedure, is essential to creating tools that people will use. UnitedHealthcare, for example, has launched multiple online and mobile applications to educate consumers. Their Health4Me app promotes the ability for consumers to “comparison shop for health care services based on quality and cost, with estimates based on actual contracted rates.”
But there’s still work to be done. Look no further than industries like travel, finance and real estate to see what the future may hold for healthcare. Brands in these highly competitive industries have made accessing and understanding information a differentiator, designing applications that package big data to help consumers make smarter decisions — all while keeping the user’s needs in mind.
Bringing greater transparency to pricing in healthcare is non-negotiable. Some experts estimate that healthcare costs could nearly double by 2027. Beyond the possibility that unchecked spending could deplete the Medicare Trust Fund, there’s the larger impact it could have on the economy — and the American psyche.
But Sunderland believes the prognosis isn’t terminal.
“Bellese’s partnership with CMS has created a foundation to build on,” she says. Work has already begun on enhancements to the PPL application, and the firm is testing additional ways to improve users’ healthcare experiences. Beyond tools, though, it’ll take further research and partnership with insurance companies, providers, and patients to bring the true cost of healthcare into the spotlight.