FEATURE STORY Redefining the Price Transparency Debate in Healthcare By Bill Marvin WHY YOU SHOULD SET PAYMENT EXPECTATIONS FOR CONSUMERS UP FOR DEBATE: PRICE TRANSPARENCY IN HEALTHCARE The prices of healthcare services and how they are displayed are hot topics of debate in healthcare, especially as consumer responsibility increases due to the shift to high-deductible health plans – Using the restaurant model to display prices does not fit the healthcare industry. THE JOURNAL OF THE HEALTHCARE BILLING AND MANAGEMENT ASSOCIATION 27 leading to a demand for transparency in healthcare prices. POINT: DISPLAY A MENU OF HEALTHCARE PRICES FOR CONSUMERS Countless articles have been published in support of the “restaurant model” for price transparency. Put simply, price transparency in healthcare enables consumers to view the total price for a healthcare service in advance, just as the restaurant industry displays prices on a menu before the customer orders. COUNTERPOINT: SET PAYMENT EXPECTATIONS FOR CONSUMERS Using the restaurant model to display prices does not fit the healthcare industry. If it were as easy as just displaying prices, the debate would have been over long ago. The real issue is the ability to set payment expectations for consumers. The “hotel checkout model” is more appropriate for healthcare, especially in regard to the variability of consumer payment responsibility. In healthcare, the payment amount depends on negotiated discounts associated with a consumer’s health benefits, while in the hotel industry, the payment amount depends on factors such as room type, length of stay, and amenities used. To further explain this comparison, let’s examine a recent hotel stay I had last winter. The Hotel Checkout Model Before a business trip last winter, I called the hotel with my travel arrangements, including my travel dates and room type, and I received a quote based on these details. Then, I gave my payment card information to reserve a room. My trip was impacted by a major snowstorm, extending my stay and making the total cost of my hotel room much higher than the original quote. Additionally, I rented a few movies on demand, and had some snacks and drinks from the mini bar. When I checked out, my card charges were a lot more than the original fee quoted, which is understandable. This payment experience closely mirrors the healthcare payment process – in that the exact payment amount cannot be known upfront. But unlike the healthcare industry, to start the payment process, the hotel required a payment card on file before I could check in to my room. The Real Problem: Patient Confusion As my example above shows, pricing in certain industries, including the healthcare industry, depends on a variety of factors. For healthcare in particular, the variations in pricing depend on a health plan’s negotiated discount for the provider’s services. Furthermore, the exact amount owed by the consumer is based on the consumer’s specific benefits and payment responsibility, including deductible and coinsurance. Because of negotiated discounts and complex benefit structures, the ability to give consumers their exact payment responsibility before a visit is
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