Aug 23, 2019 - Health

How to make price transparency work for health care costs

There's a lot of skepticism about whether making prices more transparent will do anything to lower them, but there are ways to maximize the odds, Gilbert Benavidez and Austin Frakt write in JAMA Forum.

Driving the news: Both the Trump administration and Congress are pushing pricing transparency measures, banking on the idea that if consumers know how much health care services cost, they'll opt for the cheaper ones.

  • But this hasn't worked in the past. People who have access to price information rarely use it to shop around.
  • One study found that only 2% of people with access to price transparency tools actually used them.
  • This is even true for people with high deductibles.

The other side: Other incentives, when paired with transparency, actually do get people to shop for cheaper care.

  • The most effective seems to be reference pricing, in which payers set a maximum amount they'll reimburse for a shoppable service. Patients who use services that cost more than this maximum amount have to pay the difference out of pocket.
  • A slightly less effective tool is rewards programs, in which patients receive rebates when they use services below a set amount.
  • Between these 2 approaches, the stick works better than the carrot.

The bottom line: Getting the incentives right is important, but so far transparency is being pushed as a standalone approach.

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