In recent  years, many public and private price transparency initiatives have been  initiated to provide consumers with information about the price of their  health care services. Health Care Pricing

Determining the price of a health care service often involves coordination  between providers, insurers, and consumers. For consumers with health insurance, their out-of-pocket costs for a  health care service is determined by the amount of cost sharing specified  in the benefits of their health insurance plan for services covered by the  insurer. Though both public and private price transparency initiatives have  become more widespread in the last 5 years, some research suggests  that even if consumers have access to price information, such as price  information made available by these initiatives, they may not use such  information in their decision making. Various Factors, Such as the Difficulty of Predicting Health Care Services in Advance, Billing from Multiple Providers, and the Variety of Insurance Benefit Structures, Can Make Estimates of Consumers’ Complete Costs Difficult to Obtain

One factor that may make it difficult for consumers to obtain estimates of  their complete costs for a health care service is that it may be difficult for  providers to predict which services a patient will need in advance. For example, when  we anonymously contacted 20 physicians’ offices to obtain information on  the price of a diabetes screening, several representatives said the patient  needs to be seen by a physician before the physician would know what  tests the patient would need. Lastly, consumers may have difficulty obtaining complete cost estimates  from providers because providers are often unaware of these costs due to  the variety of insured consumers’ health benefit structures. For example, officials  stated that for physicians to inform a patient about the price of a health  care service in advance they have to know the status of consumers’ cost  sharing under their specific health benefit plan, such as how much  consumers have spent in out-of-pocket costs or towards their deductible  at any given time. Researchers and Officials Identify Legal Factors That May Prevent the Disclosure of Negotiated Rates, Which Can Be Used to Estimate Consumers’ Complete Costs

Researchers and officials we interviewed identified several legal factors  that may prevent providers and insurers from sharing negotiated rates,  which can be used to estimate consumers’ complete costs. For example, some insurance company officials we  interviewed told us that these contractual obligations prohibited the  sharing of specific information on negotiated rates between providers and  insurers on their price transparency initiatives’ websites. Second, some of the officials and researchers we spoke with reported  that providers and insurers may be concerned with sharing their  negotiated rates, considered proprietary information, which may be  protected by law from unauthorized disclosure. Selected Initiatives Vary in the Information They Make Available, and Few Initiatives Provide Estimates of Consumers’ Complete Costs

The price information made available to consumers by the eight selected  price transparency initiatives varies, in large part due to differences in the  price data available to each initiative. In addition to providing the price of a service, most selected initiatives  also provide a wide range of nonprice information, such as information on  quality of care measures or patient volume. Five of the eight selected  initiatives provide quality information for consumers to consider along with  price when making decisions about a provider. Like the federal initiative, all of the  selected state initiatives’ websites are publicly available, although they  include price information only for their particular state. Few Selected Initiatives Provide Estimates of Complete Costs to Consumers

Few of the selected initiatives provide estimates of consumers’ complete  costs, which is price information that incorporates any negotiated  discounts; is inclusive of all costs associated with a particular health care  service, such as hospital, physician, and lab fees; and identifies  consumers’ out-of-pocket costs. The two initiatives are able to  provide this information in part because they have access to and use  price data—negotiated rates and claims data, respectively—that allow  them to provide consumers with a price for the service by each provider  that is inclusive of any negotiated discounts or reduced payments made  to the billed charge. Specifically, Aetna bases its price data on its  contractual rates with providers, which include negotiated discounts. To promote  health care price transparency, HHS is currently supporting various  efforts to make price information available to consumers—including the  CMS initiative in our review—and the agency is expected to do more in  this area in the future. In total, HHS has  several opportunities to promote greater health care price transparency  for consumers. Recommendations for Executive Action

As HHS implements its current and forthcoming efforts to make  transparent price information available to consumers, we recommend that  HHS take the following two actions:    Determine the feasibility of making estimates of complete costs of  health care services available to consumers through any of these  efforts. Agency Comments

HHS reviewed a draft of this report and provided technical comments,  which we incorporated as appropriate.
Why GAO Did This Study

In recent years, consumers have become responsible for a growing proportion of the costs of their health care. Health care price information that is transparent--available before consumers receive care--may help consumers anticipate these costs. Research identifies meaningful types of health care price information, such as estimates of what the complete cost will be to the consumer for a service. GAO defines an estimate of a consumer's complete health care cost as price information on a service that identifies a consumer's out-of-pocket cost, including any negotiated discounts, and all costs associated with a service or services. GAO examined (1) how various factors affect the availability of health care price information for consumers and (2) the information selected public and private health care price transparency initiatives make available to consumers. To do this work, GAO reviewed price transparency literature; interviewed experts; and examined a total of eight selected federal, state, and private insurance company health care price transparency initiatives. In addition, GAO anonymously contacted providers and requested the price of selected services to gain a consumer's perspective.

What GAO Found

Several health care and legal factors may make it difficult for consumers to obtain price information for the health care services they receive, particularly estimates of what their complete costs will be. The health care factors include the difficulty of predicting health care services in advance, billing from multiple providers, and the variety of insurance benefit structures. For example, when GAO contacted physicians' offices to obtain information on the price of a diabetes screening, several representatives said the patient needs to be seen by a physician before the physician could determine which screening tests the patient would need. According to provider association officials, consumers may have difficulty obtaining complete cost estimates from providers because providers have to know the status of insured consumers' cost sharing under health benefit plans, such as how much consumers have spent towards their deductible at any given time. In addition to the health care factors, researchers and officials identified several legal factors that may prevent the disclosure of negotiated rates between insurers and providers, which may be used to estimate consumers' complete costs. For example, several insurance company officials GAO interviewed said that contractual obligations with providers may prohibit the sharing of negotiated rates with the insurer's members on their price transparency initiatives' websites. Similarly, some officials and researchers told GAO that providers and insurers may be concerned with sharing negotiated rates due to the proprietary nature of the information and because of antitrust law concerns. The eight public and private price transparency initiatives GAO examined, selected in part because they provide price information on a specific health care service by provider, vary in the price information they make available to consumers. These initiatives include one administered by HHS, which is also expected to expand its price transparency efforts in the future. The price information made available by the selected initiatives ranges from hospitals' billed charges, which are the amounts hospitals bill for services before any discounts are applied, to prices based on insurance companies' contractually negotiated rates with providers, to prices based on claims data that report payments made to a provider for that service. The price information varies, in large part, due to limits reported by the initiatives in their access or authority to collect certain price data. In addition to price information, most of the selected initiatives also provide a variety of nonprice information, such as quality data on providers, for consumers to consider along with price when making decisions about a provider. Lastly, GAO found that two of the selected initiatives--one publicly available with information only for a particular state and one available to members of a health insurance plan--are able to provide an estimate of a consumer's complete cost. The two initiatives are able to provide this information in part because of the type of data to which they have access--claims data and negotiated rates, respectively. For the remaining initiatives, they either do not use more meaningful price data or are constrained by other factors, including concerns about disclosing what providers may consider proprietary information. As HHS continues and expands its price transparency efforts, it has opportunities to promote more complete cost estimates for consumers.

What GAO Recommends

GAO recommends that the Department of Health and Human Services (HHS) determine the feasibility of making estimates of complete costs of health care services available to consumers, and, as appropriate, identify next steps. HHS reviewed a draft of this report and provided technical comments, which GAO incorporated as appropriate.