What Is Price and Quality Transparency?

For those who pay for and use health care in the United States, insight into the quality and cost of care is essential for making good decisions and identifying how to push the system to improve the value of the care it offers. Public reporting on the quality of care began about fifteen years ago, while efforts to make prices transparent began only in the last five years or so.  Big advances have been made in both areas, but there are still major gaps in the information available. Borrowing from a definition by the Health Care Financial Management Association, price and quality transparency is “readily available information on…health care services that helps define the value of those services and enables patients and other health care purchasers to identify, compare, and choose providers that offer the desired level of value.”[1]

Why Should Employers and Other Health Care Purchasers Care About It?

Nationwide demand for increased transparency in health care is driven, in large part, by employers and other health care purchasers who need access to information on provider cost and quality.

• Increased transparency exposes variation in price and quality, which helps employers identify low-value providers.
• Many benefit designs rely on an employer’s ability to direct employees to high-value providers through narrow networks, reference pricing, or centers of excellence programs.
• As employees take on more financial responsibility through high-deductible health plans (HDHPs) and other new health insurance products, they need to understand value (price and quality) when making health care decisions.
• Pressure to be transparent encourages health care providers to improve quality and the competitiveness of their pricing.

What Are the Latest Trends in Price and Quality Transparency?

Momentum for price and quality transparency is building, but there is still headway to be made toward ensuring that it produces a better health care shopping experience and higher quality, more affordable care.

• Consumer facing tools with quality and price information are becoming widespread. 53% of employers reported offering a transparency tool in 2016, while up to 84% could be offering tools by 2018.[2] Most major national health plans offer tools to patient members also.
• There’s room for education. Many Americans are unaware that prices vary by provider and that price information is available. This could explain why studies indicate low utilization of tools offered by health plans or employers.[3]
• Consumers who have insurance through large health plans or who work for large employers have access to tools. For others, seven states to date make price and quality information available to the public.[4]

How Can Purchasers Utilize Price and Quality Transparency as Part of a High Value Strategy?

First by educating consumers about the variation in price and quality, and then by integrating price and quality into benefit and network design, purchasers can make progress toward buying more high value care. Steps purchasers can take include:

• Ask contracted health plans for a demonstration of the transparency tools they offer to members and ask for data on how populations use the tool. Push for the tool to meet CPR’s specifications if it doesn’t already.
• Consider whether your population would be better served by a transparency tool offered by an independent vendor.
• Pair a transparency tool with benefit designs that encourage consumers to seek higher value care, such as a high-deductible health plan with a health spending account (HSA), reference pricing for shoppable services or procedures, such as joint replacements or colonoscopies, or incentives to seek care from relevant centers of excellence.

Want to learn more? Check out these additional resources!

• CPR’s Online Courses on High-Value Health Care Purchasing 

• CPR Webinar: How Transparency Fits into a High-Value Purchasing Strategy

• CPR Action Brief: Price Transparency- An Essential Building Block for a High-Value, Sustainable Health Care System

• CPR: 2016 Comprehensive Specifications for the Evaluation of Transparency Tools

• CPR’s Model Request for Proposals (RFP) for Price Transparency Tools

• Report Card on State Price Transparency Laws (July 2016)

• CPR & HCI3: Getting Accurate Price Estimates from Price Transparency Tools Issue Brief

• Improving Price Transparency: An Overview of the Report from the HFMA Price Transparency Task Force

• Robert Wood Johnson Foundation: Understanding the Use and Impact of Transparency in Health Care

• Public Agenda: Still Searching: How People Use Health Care Price Information in the United States

• Public Agenda: Still Searching: How People in New York State Use Health Care Price Information

• Public Agenda: Still Searching: How Floridians Use Health Care Price Information

• Public Agenda: Still Searching: How New Hampshire Residents Use Health Care Price Information

• Public Agenda: Still Searching: How Texans Use Health Care Price Information

[1] http://www.hfma.org/Content.aspx?id=22275

[2] https://www.willistowerswatson.com/en/insights/2017/01/full-report-2016-21st-annual-willis-towers-watson-best-practices-in-health-care-employer-survey

[3] http://www.hcfo.org/files/hcfo/HCFOPriceTransparencyBrief2016.Final.pdf

[4] https://www.catalyze.org/product/2016-report-card-state-price-transparency-laws/