Despite modest gains in the past year among states that are considered top performers in price-transparency, the vast majority of states again post failing grades.
Forty-three states have received failing grades on a test that scrutinizes healthcare price-transparency laws. But for the first time since the annual grades were first issued in 2013, three states earned an "A" grade.
The Report Card on State Price Transparency Laws gauges the strength and effectiveness of state regulations based on a handful of metrics: the source of price data, the participation level of hospitals and physician practices, whether patient prices are listed on an out-of-pocket basis rather than a price-charged basis, the scope of the services that have pricing information, and whether the pricing information is readily available online.
Last year, New Hampshire was the only state to receive an "A," and 45 states received a failing grade. This year, Colorado and Maine join New Hampshire at the top grade level. They earned "B" grades last year.
The report card was prepared by the Newtown, CT-based Health Care Incentives Improvement Institute and Berkeley, CA-based Catalyst for Payment Reform.
Most states face an unmet need for healthcare price transparency, the report says. "It's typical in American healthcare for consumers to go into an appointment or procedure knowing nothing about what it will cost until long afterward. State laws mandating healthcare price transparency for consumers can help fix the mystery surrounding healthcare prices."
Dozens of states have laws that refer to price transparency, but provide little to help consumers shop for and choose care, the report says. It suggests that the laws need to be redesigned or implemented more effectively.
"Most states have approached the subject of price transparency at the legislative level, as only seven states have no statutes addressing it. But in 37 other states, the lack of transparency comes from weaknesses in the design and implementation of their laws, earning them each a D or F."
4 Keys to Better Price Transparency Laws
State legislators should focus on four key areas to create or improve price transparency in healthcare markets, the report card says. It offers the following guidance:
- Rich data sources: Regulators can take two approaches to ensuring access to sufficient data to support price transparency—either mandate providers and health insurers to report prices, or require creation of an all-payer claims database (APCD). Under the APCD approach, pricing data is collected from a broad array of sources, including private health plans, Medicaid and Medicare, state employee health programs, and dental insurers.
- Meaningful price information: Prior to service, patients value accurate estimates of charges for medical services, with out-of-pocket expenses specified. Additionally, cost estimates are easier for patients to interpret when they include hospital and physician-practice charges on one bill.
- Scope of procedures and services: Pricing information should include as many types and settings of services as possible. Ideally, a healthcare provider should be able to offer pricing information on inpatient and outpatient services as well as multiple service lines and surgical procedures.
- Accessible websites: Offering price information to patients online is essential to any healthcare transparency legislation. Metrics to gauge price-transparency websites include ease of access, data accuracy, and user-experience with online tools such as cost estimators.
This year's report accompanying the letter grades includes remarks from Judith Hibbard, MPH, DPH, a professor at the University of Oregon's Health Policy Research Group. She says there are three primary goals to achieve meaningful price transparency in healthcare: reducing the burden of information processing on patients, interpreting the meaning of data for patients, and highlighting best options for patients.