The Biggest Question No One Is Asking in Healthcare

There is a really big question in healthcare, one that could shift the entire industry toward more patient-focused care while simultaneously driving down healthcare costs. Very few people even think about this question. In my experience even fewer, if any, of those who do ask it are involved in developing healthcare policy at the federal or state level.

This one question, if deployed, would start to solve the issues facing patients, clinicians, payers, hospitals – everyone involved in getting or receiving medical care.

What’s the question?

“How much is that?”

There are two things in play in the healthcare industry that fly in the face of marketplace sense. First is the lack of price transparency. Imagine going to the grocery store and seeing aisles upon aisles of food … without any prices posted.

“How much is that package of chicken breasts?” “That depends. How are you paying for it?”

My guess is that you wouldn’t shop in that store again. Healthcare is the only consumer-facing industry in the US that doesn’t have price transparency. Worse, if you ask for pricing, you’re often met with blank stares and “I have no idea” or, worse, “we can’t tell you because [insert name of health insurer here] considers that to be proprietary business information.”

Second is how the prices are set. You’ve heard of the medical billing codes – the Holy Codes that outline Medicaid, Medicare, and health insurance reimbursement payments for everything from lab tests to joint replacement. The price values for each of those billing codes is set by an American Medical Association (AMA) committee called the RUC: the Specialty Society Relative Value Scale Update Committee (for my personal take on the RUC, see this piece). The RUC meets behind closed doors, creates the pricing list for every single medical procedure and billing code, and then publishes it. This is not price fixing, since they hand the list to the Centers for Medicare and Medicaid Services (CMS) for publication, the AMA does not publish the list on its own.

Here’s a critical health policy issue: creating price transparency. One starting point could be requiring providers to know, and share, the cost of the services they provide to the customers they serve: THE PATIENTS. On the employer sponsored insurance (ESI) front, employers are starting to push for this with reference-based pricing in their benefits packages. On the state and federal policy front, there are a rising number of discussions about all-payer claims databases (APCDs) – for a really good explainer on that, I’ll point you toward this piece from July 2018 on the Health Affairs blog, “Transparency In Health Care: Where We Stand And What Policy Makers Can Do Now.” Both of these, either in tandem or singly, might accomplish what all the healthcare blue-ribbon committees and working groups in DC haven’t been able to pull off since the 1960s: downward pressure on healthcare costs.

In 2003, the late Princeton economist Uwe Reinhardt published an article in Health Affairs titled, “It’s The Prices, Stupid: Why The United States Is So Different From Other Countries.” Fifteen years later (on March 13, 2018 to be exact), WBUR in Boston published “Why Are U.S. Health Costs The World’s Highest? Study Affirms ‘It’s The Prices, Stupid’” – we haven’t made much progress since 2003.

Think about that as you evaluate your choices in the voting booth on November 6, and hold your representatives at the state and federal level to account after they take office. Whether you love the Affordable Care Act or not, you know that the healthcare system in the US must change, for the health of our families and communities as well as the financial health of our national economy.

And the next time you’re buying healthcare services, ask that really important question: “How much is that?” If you don’t get an answer, consider shopping in another healthcare store.

That could start bending the cost curve.