Are Healthcare Prices Transparent Enough?

Initiatives for price transparency seek to bring market forces in to help curb runaway healthcare costs. Lack of price transparency causes, among other things, an inability for the patient to budget or finance their healthcare cost. In fact, one in seven patients have experienced surprise billing at an in-network hospital, and almost two-thirds of bankruptcies are tied directly to medical bills. Knowing exactly what their out-of-pocket amount would be prior to the procedure is important to patients. It is because of the ambiguity in pricing that patients tend to delay needed care until it becomes worse and, in turn, more complicated. In the past couple of years, rules have been established requiring insurers and health plans to disclose negotiated contract rates for network providers and provide estimates of an individual’s out-of-pocket cost for services.

However, quality of care is noticeably absent from recent price transparency initiatives. Without factoring in patient outcomes, the true value of knowing a price is diminished. Selecting a lower-cost hospital for an elective surgery does not decrease overall costs if the patient is readmitted or has complications that add to the initial surgery price. Recall the saying, “You get what you pay for.” This is a potential barrier to the success of price transparency, as patients might equate more expensive hospitals and providers with higher quality. As mentioned in a previous Enlace Health post, The Complex Relationship Between Healthcare Cost and Quality Outcomes, focusing solely on healthcare costs only addresses half of the problem; one needs to prioritize quality healthcare outcomes as well.

Why Value-Based Care Pricing is Essential

Within value-based care programs, prospective bundled – or episodes of care (EoC) – payments address the concerns of ensuring quality even at a lower cost. Having a set contract price for not only the main procedure, but all subsequent related claims from all providers involved allows complete visibility of cost with no unforeseen expenses. With EoCs, the patient knows ahead of time exactly how much deductible and coinsurance they are required to pay. If there is a concern with paying the amount all at once, providers and patients can work collaboratively on a payment plan that leads to better payment compliance and higher patient satisfaction. To make EoCs attractive to plan participants, payers and employers often reduce patient responsibility or even remove patient liability altogether. With the provider taking on financial risk, there is an integrated incentive for high-quality, coordinated care which fosters reduced complications and unnecessary services. Prospective EoC arrangements provide a true “win-win” for the patient with lower costs and higher quality care.

Improving price transparency of healthcare services will help drive market economics. However, price is only half the equation. Alternative payment models, such as EoCs, tackle both cost transparency and quality outcomes at the same time.  Enlace’s deep bench of expertise in alternative payment methods eases the transition from fee-for-service to value-based contracts. To learn more about how we can help, please visit


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