MEDICAL BILLS +
THE PRICE TRANSPARENCY RULE
In return, they are becoming more discerning shoppers and expect more from the patient experience that their providers are delivering. One of the biggest steps that has been taken to create a more standardized, consumer-like experience is the introduction of the ﬁnal rule on price transparency from the Centers for Medicare and Medicaid Services. Starting January 1, 2021, U.S. hospitals will be required to provide clear, accessible pricing information online about the items and services they provide. According to the Department of Health & Human Services, the goal is to make it easier for consumers to compare prices across hospitals and potentially shop around, as well as better estimate the cost of care before receiving services.
Leading up to the 2021 implementation of the ﬁnal rule for hospital price transparency, Waystar wanted to better understand consumer experiences of healthcare billing and payment. We asked consumers about how they approach medical bills, how they attempt to understand the cost of care, and gauged their awareness of and attitudes towards the upcoming price transparency rule.
While medical services pricing and billing remains opaque and a signiﬁcant source of stress for consumers, there’s some good news: as patients take on an increasing amount of the ﬁnancial responsibility for healthcare, they are becoming more discerning shoppers and demanding more from their healthcare experience — including greater predictability and transparency around their out-of-pocket cost.
It is however clear that there’s a broad lack of education around the upcoming transparency rule, and that patients want more. Price sheets aren’t the same as personalized billing estimates, and we uncovered some key ways providers can meet patients halfway to ensure medical costs are as transparent and seamless as possible. True price transparency, once achieved, will be a signiﬁcant step in solving one of healthcare’s biggest issues and ultimately creating a better experience for millions of patients and healthcare providers.
Despite the $3.81 trillion that was spent on healthcare in 2019, America’s healthcare payments system has long remained opaque and broken. Patients are frequently faced with unexpected or surprisingly high medical bills, discover too late that a provider they’d been told was in-network was actually out of network, and are forced to wait 60-90 days to receive their medical bills. More than half of respondents have received an unexpected medical bill, meaning that they assumed a service was covered by insurance and it ultimately was not, or the amount they expected to pay out of pocket was different from the bill they received. Even more troubling: 48% have been late on a medical bill payment, owing in large part to confusion over the bill and who owes what.
Respondents were able to
select more than one answer.
What’s even more worrying than this lack of understanding is that medical bills are so confusing and unpredictable, consumers are ultimately more concerned about the bill than about the care they receive. More than half (52%) of respondents stated that they were either slightly (25%) or signiﬁcantly (27%) more stressed about their medical bills than about care. Gen Z and Millennials are even more stressed: 60% indicated that they’re either slightly or signiﬁcantly more stressed about bills than care, compared with 51% of Gen X and 41% of Boomers.
Improving the billing process should matter to healthcare providers—not only does it impact the consumer experience for their patients, but it also affects how, when and even if patients seek care. Almost half (49%) of people would consider switching doctors over poor payment experience, and 45% said their most recent experience with a hospital billing ofﬁce made them more likely to recommend that hospital to a friend.
Despite the general sentiment that medical bills are confusing and unclear, consumers want to educate themselves and better understand them. More than two-thirds (67%) of people say they inquire about the cost of healthcare services before going to the doctor or a hospital at least occasionally, with younger generations being particularly engaged: 83% of Gen Z/Millennials inquire at least occasionally about cost compared to 63% of Gen X and 50% of Boomers.
While consumers aren’t shy about asking for cost estimates, providers are also doing their part. About half (46%) of consumers say that this year, their provider proactively gave them an upfront cost estimate for healthcare services. With that estimate in hand, the majority of patients proceeded with their appointment, demonstrating that more transparent pricing beneﬁts providers as well by increasing the likelihood that patients will book appointments.
When asked to compare that estimate with the ultimate bill they paid, more than a third (38%) found this estimate to be completely accurate compared to the ﬁnal bill they received, but 54% found it to be either only somewhat correct or not correct at all.
Price transparency and cost estimates are empowering consumers to make educated decisions about care, but a lack of accuracy means estimates can only go so far and won’t ﬁx the root cause of opaque billing.
The ﬁnal rule on price transparency will require hospitals to provide a list of “shoppable services” for 300 common procedures, allowing patients to see payer-negotiated rates upfront and compare across different facilities.
We asked survey respondents if they knew about this upcoming change:
Creating a list of prices is only helpful if people know to look for it, reinforcing the need for better provider-patient communication on price transparency and ﬁnancial responsibility. Of the 35% of respondents who are aware of the upcoming price transparency rule, 58% received information about it from a healthcare provider and 59% received information from their insurance company.
When asked whether they thought having access to the list of standard prices would be helpful in better understanding the cost of care, 90% agree it will be at least somewhat helpful, and 59% plan to use it. Once again, Gen Z and Millennials plan to use this information more than other generations. 70% of Gen Z/Millennials will seek out the lists when they’re available, compared to 59% of Gen X and 45% of Boomers.
Consumers were also asked: if they were able to know their actual out-of-pocket cost—rather than the standard price—for care ahead of time, would they more actively pursue care? 81% of respondents said yes, indicating some patients may be putting off procedures due to the lack of transparency and concerns over surprise bills
What people truly want is personalized cost estimates, not a price sheet. Price sheets don’t tell what the patient will actually owe at the end of the day. Individuals need to factor in the level of coverage provided by their insurance company and what they’ve paid toward the deductible in a given year, as well as conﬁrm whether a hospital or provider is in-network. Nor does upfront pricing information always mean patients will indeed shop around for a better price.
In fact, patients are willing to pay for accuracy: 59% would pay $50 out of pocket in exchange for receiving an upfront cost estimate for a medical procedure, hospital stay or lab service. In the meantime, there are a number of other steps that providers can take in order to make the billing process a better experience for their patients.
The upcoming price transparency rule is a step in the right direction toward creating a truly consumer-centric healthcare experience; a world in which medical bills aren’t unpleasant surprises, and people can make informed plans and decisions when it comes to their healthcare spending.
But what we can see from patients’ activity in the last few months is that providing a price sheet is likely only a half measure. While some patients sought out pricing in advance, the large majority don’t take the extra step to shop around. That history could be a good indication of how useful the new pricing sheets will be: patients see pricing, but without the full context on their ﬁnal out-of-pocket payment, it’s not enough information to act on. Once the rule’s requirements are met, we encourage providers to focus on taking that data and helping patients understand what to do with it. One way to achieve this would be implementing a patient-facing cost estimate tool.
Some healthcare providers are ahead of the curve with this. It’s encouraging to see that even in advance of the price transparency rule, a number of providers have already been giving patients upfront estimates for services. For these providers, the next step should be improving the accuracy and simplicity of those estimates. This means leveraging data and technology more effectively, while working closely with insurance companies to give patients a more exact picture of what their ﬁnal bill will be. Another priority should be a renewed focus on healthcare ﬁnancial literacy, and ensuring their patients are fully educated on all of their ﬁnancial options when it comes to care.
Real price transparency won’t occur overnight, but there are some concrete steps that providers can take to better support the patients they care about.
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