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Why Healthcare Price Transparency Is So Murky

by David Brooks 03/09/2015 Leave a Comment

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Healthcare-Price-Transparency-Could-Save-100B-Over-10-Years

I’ve spent the better part of the last two years trying to improve price transparency in healthcare. When my startup, Medlio, began down this path, we had a very simple vision – that consumers should be able to use their smartphones to find, connect, and transact with their healthcare providers. By “transact,” I mean schedule appointments, submit medical forms and insurance information, receive an upfront estimate of the cost of the visit, make payment, and receive their data afterwards.

Now, this is pretty standard fare in just about every other industry. And, to be perfectly honest, we’re not that far off even in healthcare. The b*!#@ of the bunch in that set of transactions, of course, is accurately estimating the cost of a visit before it happens, and accurately assigning responsibility based on a patient’s specific plan benefits and current accruals (as in, how much of their benefits have they used, and if they have a deductible, where are they in meeting it).

I cannot even begin to tell you how many people have told us that (1) it’s not possible, (2) patients don’t care, (3) as an estimate, it won’t be reliable or useful… and oh yes, (4) we’re stupid.

Yet, as worthless and stupid as the idea may seem, upfront cost estimates just recently became state law in Massachusetts, and if I thought it worthwhile and relevant, I would list off the other states who are either in process or developing similar legislation. I don’t, so I won’t waste our time.

David-Brooks-Medlio-CEO-HiRes
David Brooks, CEO of Medlio

Despite what people may think, performing an upfront price estimate is not that difficult. You just need 3 key pieces of information: (1) patient specific health benefits, (2) contracted rates between the patient’s insurance company and the doctor providing the services, and (3) the specific services to be rendered. And, if you want to get technical, you should understand the various insurance companies’ bundling rules.

Every clearinghouse that I know has developed this exact estimation engine. They use it to pre-adjudicate every claim before they send the claims to the various insurance companies for processing. This allows them to identify potential issues, save money, time, etc…

The challenge is not in replicating the insurance company adjudication engines. It’s about doing it scalably and integrating the solution directly at the point of transaction. I could tell you how we struggled to solve this problem, how we eventually figured it out, and how – despite all the lip service to the contrary – insurance companies really don’t care that much about supporting it. But the point of this article is really to question the idea of transparency itself.

Over the last year or so, we have been invited to participate in multiple employer generated RFPs seeking solutions to price transparency. Our response has been, and remains – we provide point-of-care price transparency. We do not support doctor shopping based on price, nor are we in the business of commoditizing doctors and the provision of care. In other words, we are not Castlight.

Central to our belief system is that patients, or consumers, have a right to know the cost of the services they are purchasing. However, until such time that we can RELIABLY deliver the necessary supporting data points that accompany price, namely – quality, access/availability, and customer satisfaction – exposing price on providers prior to an actual visit is not only irresponsible, but borderline unethical.

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