Health Care Price Transparency Tool Fails To Decrease Costs

A study found that employees spent more on outpatient care after tool let them comparison shop for care.

Absent stronger incentives and other information, simply offering health care price transparency tools to employees doesn’t guarantee that they—and by extension their employers—will spend less on health care services by comparing prices between hospitals, doctors, clinical laboratories and other providers. In fact, employees actually may spend more by equating higher prices with higher quality care.
That’s the takeaway from a new study in the Journal of the American Medical Association that examined the link between the availability of price transparency tools and spending on outpatient care.
Researchers from the Harvard Medical School compared the use of the same price transparency tool by employees at two large national companies, one with nearly 60,000 employees and the other with more than 90,000 employees. The study did not identify the companies. The tool is the Truven Treatment Cost Calculator from Truven Health Analytics that, according to the study, gives users access to a database of community- and provider-specific price and out-of-pocket cost estimates for 330 different health care services.
During the first year that employees of the two companies had access to the tool, only 10 percent used it at least once to obtain a price estimate for care. Eight percent searched the website at least three times, and 3 percent used the tool at least twice with at least 30 days between each search.
The researchers then compared the employees’ outpatient care expenses and their outpatient out-of-pocket costs the year before the tool was available and the year after the tool was available. They then compared those expenses and costs with a comparable group of employees from other companies who didn’t have access to the tool at all.
The outpatient expenses and outpatient out-of-pocket costs rose for both groups of employees. But, they rose faster for employees with the price transparency tool than for employees with no access to the Truven database. The researchers calculated that use of the tool added $59 in outpatient expenses per employee per year and $18 in outpatient out-of-pocket costs per employee per year.
In attempting to make sense of the unexpected results, the researchers offered a number of possible explanations, including:

  • Low use of the tool skewed the results
  • A limited set of “shoppable” health care services limited the tool’s ability to reduce spending
  • Patients preferred to use their same hospital and doctors regardless of price
  • And patients used price as a proxy for quality and chose providers that charged more

The researchers urged employers and health plans do more with price transparency tools than giving them to workers and hoping for the best. They suggested designing health benefits that incent workers to use less expensive providers, offering financial bonuses to workers who use less expensive providers and giving workers more information on less expensive providers that offer the same quality of care.
The new JAMA study dovetails with a recent study in the American Journal of Managed Care. That study found that 31 of 43 health plans it surveyed, or 72 percent, gave enrollees access to price estimator tools. Of those that did offer such tools to enrollees, 29, or 94 percent, of the mobile or online tools let enrollees shop for providers based on price.
But, only 14 (48 percent) included provider clinical performance data. Absent that performance data, enrollees may equate higher prices with better care and choose more expensive providers without knowing they could get better value elsewhere, the AJMC study said.
The lesson for employers from both studies is clear. If companies give workers access to health care price transparency tools that let them comparison shop for care with the hopes of lowering health care spending, companies also need to teach workers how and incent them to use the tools effectively.