How transparency can actually change healthcare

A new federal rule on price information is going to be transformational


The federal government’s new Transparency in Coverage Rule, based on provisions of the Affordable Care Act, means that 212 million Americans must be given access to the prices of virtually every medical test and procedure. That means they are going to learn — and fast — that a blood test for lipid levels can cost $9 at one location within driving distance and $160 at another. An MRI of the lower back can cost $800 at one provider and $6,000 at another. There are, quite literally, thousands of examples just as dramatic.

Actual prices of medical tests and procedures won’t be something consumers have to hunt for in obscure databases, either. The Transparency in Coverage Rule mandates that ready access be given — otherwise, employers will be fined $100 per day per insured individual.

That means a doctor will tell a patient that, for instance, a CT scan of her abdomen is needed, and that patient will then use an app to look up — in seconds — a nearby provider with a great reputation and a reasonable price. The doctor and patient will agree where the physician’s order for the CT scan will be sent, and it will happen. That technology exists and is already being used, in fact, today. I know, because my team and I built it. We were also directly involved in motivating the federal government to issue the Transparency in Coverage Rule.

Price transparency is a sea change that promises to finally unleash true market forces in healthcare. But how will consumers knowing prices actually achieve that? After all, why would consumers really be interested in how much an X-ray or a knee replacement costs, once they have satisfied their deductibles?

One answer to that question is that high deductibles are now commonplace, and healthcare consumers won’t much like the idea of burning through $5,000 for an MRI when they can get one for $400. But another very powerful answer to stoking consumer interest is that employers now have the ability to reward their employees — via the same software solution, right on their smartphones — for making smart decisions. When an employee chooses a lower-priced medical test or procedure of equal quality, an employer can deposit cash into that employee’s Health Savings Account or issue a gift card for any amount — potentially, hundreds of dollars or more.

The idea of employers financially rewarding employees for making economically and medically smart decisions is a win-win. Employers who are self-insured will see the savings go right to the bottom line. Those who are not self-insured will see the savings soon result in decreased healthcare premiums paid to insurers. And employees, of course, get instantaneous rewards they can see as deposits to their accounts or enjoy in the form of gift cards for anything they might want to buy.

These utterly transformational changes in the landscape of the healthcare marketplace aren’t theoretical; they’re literally happening right now. And with massive fines on the immediate horizon for those companies that don’t heed the federal mandate and empower their employees to be savvy healthcare consumers, the momentum of change will only increase.

Mark Galvin is founder and CEO of Portsmouthbased Talon, developer of the MyMedicalShopper price comparison app.


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Ensuring Compliance with the No Surprises Act and Transparency in Coverage Rule