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Price transparency gains ground as lead healthcare issue

Attention around front-end price disclosure has been growing for years as hospitals and health systems have sought to strengthen their revenue cycle management systems, streamline billing and payment processes, and increase collection success rates.

In recent months, however, the fundamental issues that point-of-service payment systems can address have been on the radars of the larger healthcare community - and its customers - in an unprecedented way.

Much of this newfound interest can be traced back to a widely-read article that appeared in TIME magazine earlier this year. In February, TIME published a lengthy piece that took an in-depth look at why medical bills are so high. While the article offered an extensive explanation of the various drivers behind medical costs, one issue that was repeatedly highlighted - as both a driver and a solution - was price transparency. This aspect of the article led to a significant uptick in the national debate about price transparency as a "macro issue" in the healthcare system - with many pointing to the lack of transparency as a driver of high bills, and improvements in transparency as important parts of a potential suite of solutions that could tame skyrocketing medical costs.

Interestingly, the debate since then has explored the issue of up-front price disclosure across many different corners of, and relationships within, the healthcare system. These include the traditional patient-provider implications, but also a number of interesting, less-traditional applications such as in-house clinics, lab tests and healthcare purchasers.

For example, recent anecdotal evidence suggests that there is reason to believe that patient "price shopping" is on the rise. As detailed in a recent article in the Tampa Tribune, there is growing recognition that healthcare consumers seeking price clarity are flat-out hamstrung in many cases because that information simply is not available to them. As the article indicates, there is some evidence that certain types of providers are recognizing the value of bucking the trend and making prices available at the point-of-service. One of the examples provided is Walgreens' in-house clinics, which posts prices for its newly expanded suite of medical services, which now include diagnosis and treatment for chronic conditions. But the reality is that these examples are few and far between.

Beyond the traditional patient-provider relationship, there is also some evidence that up-front price transparency is expanding to more types of transactions than just those between patient and provider. A recent study by researchers at Johns Hopkins sought to determine whether laboratory test orders would decrease if providers were presented with cost information at the time they enter their orders. The study found that presenting fee data to providers resulted in a modest decrease in the number of tests ordered, and researchers posited that this result might indicate that up-front price disclosure "may reduce the number of inappropriately ordered diagnostic tests."

And, in a development that is sure to capture the attention of both insurers and providers, there is some indication that major healthcare purchasers (i.e., employers) are taking notice too. Recently, a consortium of healthcare purchasing employers - including GE, Wal-Mart, Boeing and several other household names - published a report card on pricing transparency that rated all U.S. states on policies that, as one news report put it, "keep patients and their families in the dark on [medical prices]." The consortium gave 29 states an "F" and seven states received a "D." Only Massachusetts and New Hampshire received "A's."

While you will not find the words "point-of-service" in the text of the Affordable Care Act, the benefits of point-of-service payment and information capabilities - and the problems they address - appear to be gaining steam as an item-of-interest as the clock ticks closer to January 1, 2014. Time will tell what this new surge in interest ultimately means for our healthcare system.

At the moment, the signs are certainly encouraging. With the healthcare industry in the process of undergoing a historic transformation that requires new and innovative approaches to financial management and patient relationships, there could not be a better time for the industry to have point-of-service payment on their minds.

Milton Silva-Craig is president of Transunion Healthcare LLC.

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