Transparency in Health Care: What Providers and Insurers Need to Know

by Nick Versaw Updated November 19th, 2021

Doctor holds smiling child

Transparency in health care is an important issue that health care providers and medical insurance companies need to honor. 

For many years, patients had to make decisions on medical treatments and procedures without knowing what they would actually cost. As a result, finding the best treatment at an affordable price was pretty much impossible. 

In the last two decades, transparency has become an important topic in the industry.

What Is Transparency in Health Care?

Transparency in health care can be defined as making the cost and quality of health care as easy for patients to navigate as possible. 

The idea of transparency touches everything from how physicians treat patients to what information is shared with patients to how hospitals gather and report what happens in their practices. 

The goal is to provide clarity and promote trust among patients and physicians in the hopes of improving long-term health outcomes.

The health care industry’s transparency is an umbrella of various initiatives aimed at making health care prices and quality available to the public in an easy-to-understand way.

Increasing transparency was a key tenant of the Affordable Care Act of 2012. The idea behind these new laws was to make the health care system more transparent, competitive, and consumer-friendly. It also sought to give payers more health care options and the ability to make smart decisions about how they spend money. 

But transparency in health care isn’t just about price. It’s also about understanding the quality of care you’re receiving and what alternatives you have access to. 

For patients to make better health care decisions for their health and budget, insurance companies and health care organizations need to cooperate more. 

In a health care market that fully embraces visibility, the cost, quality, and patient experience for all elements of the health care supply chain are made publicly available. The following table from the American Health Policy Institute shows what those key elements are:

Cost Measures  Quality Measures Customer Experience Measures
Insurers and health plan administrators 
Hospitals
Doctors
Other providers (i.e., chiropractors, mental health providers, nursing homes)
Source: americanhealthcarepolicy.org

Read on to get a basic understanding of hospital pricing transparency and clinical performance transparency. 

Hospital Price Transparency

Two doctors talk as other people rush around them

Transparency in health care laws require that physicians, hospitals, and other health care providers make their pricing information for the particular health care services they offer visible to the public. This information is usually provided to insurance purchasers as a list of shoppable services

Health care cost information and copayments can vary from doctor to doctor and facility to facility based on contracts that are in place across the health care industry. Hospital price transparency requirements are designed to eliminate the confusion consumers have when it comes to navigating their health care spending. With this change, patients will know the cost of a hospital treatment or service before they get it. 

Beginning on January 1, 2021, all hospitals operating in the United States are now required to provide clear, accessible, and shoppable pricing information on their websites. Patients need to be able to compare prices across hospitals and estimate the out-of-pocket cost of their care before choosing where to go. 

Health care price transparency rules require physicians and clinical providers to share: 

  • Any financial factors that may prevent, inhibit, or otherwise affect a patient’s care. 
  • Any financial incentives and cost-sharing programs they have in place with private insurance providers, including reimbursements or cost-sharing initiatives.

Health insurance providers must be similarly transparent when it comes to disclosing: 

  • Rates, premiums, and costs that they have pre-established with physicians and hospitals.
  • A simple, easy-to-understand Summary of Benefits and Coverage (or “SBC”) outlining the costs and deductibles for each service covered. 
  • A uniform glossary of terms commonly used in health insurance coverage. 

Performance Transparency

Doctor high-fives child, who is being held by father

While cost of care is an important aspect of health care, the decision-making patients are doing isn’t always about finding lower costs. Quality of care is a huge factor when people look for medical services, prescription drugs, or a health insurance policy in a crowded health care market

Performance transparency refers to making information about experience and excellence of care providers known to the public. This information is required of individual clinicians and hospitals. 

This quality transparency effort is crucial in the evaluation of all health care providers. Factors such as staffing hours to surgical complications to physician communications ratings are a huge influence in patient outcomes as well as fluctuations in costs.

In the past, lengthy audits of doctors and facilities — usually by government agencies — were the method used to encourage health care providers to improve their processes. 

These audits weren’t just time-consuming and expensive, but the conclusions they reached were often reserved only for providers themselves. They weren’t easily accessible by patients.

New developments in software now allow hospitals and medical care providers the opportunity to regularly (and inexpensively) look at comparisons, improvement opportunities, and achievements in patient care.

Using patient care software to track hospital and care provider successes will be one of the first steps to making information on a healthcare system’s overall quality available to the public.

Before these expectations were in place, the quality of outpatient care was basically a mystery to health care consumers. This new era of transparent information in health policy is designed to provide patients with a high-quality look into both the quality and price of coverage for medical services in their health plan

Find the Lowest Costs in Your Area

Real transparency in health care gives both private purchasers and policymakers the ability to make more informed decisions surrounding plans, providers, and treatments.

The Compare.com procedure price comparison tool can give you an idea of what other practices are charging for specific procedures. Look up your most common procedures to see how you stack up.

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