No one likes to discuss the complexities of healthcare plans or how much they are spending on medical bills. But we just can not ignore the fact that healthcare spending is at an all-time high. As spending increases so should transparency.
Before COVID sent shockwaves across the planet, healthcare costs in the US totaled $3.8 trillion. Notably, drugs expenditure alone hit a staggering $358.7 billion in 2020 – surpassing every other country’s expenses.
We cannot make light of the situation. Increasing healthcare costs are a problem that needs proactive tackling. But a lot of people are not talking about this.
Why is this happening?
As humans, we place a premium on health more than anything else. According to a report, only 36% of patients even bother to ask how much a medical service will cost before requesting it. In cases where patients are concerned about the medical bills for a procedure, most times, the answer from doctors may be shifty.
New research shows that employer-based health plans are more expensive than Medicare services. According to the report gathered from hospitals in 25 states, private insurers pay about 240% more than Medicare.
The research also disclosed that outpatient care costs were more expensive than inpatient costs, totally 293% of the typical Medicare costs.
The Need for Price Transparency
The need for price transparency in the medical industry can no longer be ignored. The Centers for Medicare & Medicaid Services (CMS) has mandated hospitals to disclose charges for their standard services in a readable format accessible by all on the internet. They are also tasked to provide personalized information on enrollee cost-sharing.
All hospitals must publish pricing of about 300 of their most shoppable services. This must be done on their website in clear terms (not in confusing medical language). These services include standard procedures like colonoscopies or knee replacement.
Notably, three categories of medical facilities/providers are exempt from this action. They include:
- Doctors who work at hospitals without being directly hired
- Non-hospital healthcare facilities
- Department of Defense military medication facilities, Veteran Affairs facilities, and Indian Health Services,
This move is allows consumers and patients compare prices between institutions. It will also go a long way in fostering market competition and drive down healthcare costs.
While hospitals are still indecisive on what they should disclose, the CMS has issued warnings (plus a 90-day ultimatum) for all hospitals to publicly reveal their prices on services.
What Does This Mean in Terms of Employee Benefits as an Employer?
With the aid of price transparency offered by hospitals and insurance companies, your employees can get insights about their medical care beforehand. More so, price transparency can empower them to make effective decisions when selecting their benefits packages.
The transparency will reveal what health plans to opt for according to their different levels of coverage. When offered a price for medical services upfront, your employees will be in control to look out for the best deal.
As an employer, you will be able to estimate what a particular service costs according to different providers in the same area.
The impact of this particular choice is enormous. The ability to crosscheck and compare prices empower you to reject suspicious prices from providers and opt for a cost-friendly plan.
In the same vein, you will be able to use all the revealed data to encourage your employees to use cost-effective medical facilities, which may shave off mounting expenses. Research out of Stanford University already shows that employees spend more time asking questions and sorting out issues with their insurance administrators.
The study shockingly reveals that employees spend more time with healthcare insurance providers than doing their jobs. This translates to a loss of money for employers nationwide – approximately $21.5 billion annually.
Getting the information and presenting it to your employees will hugely increase your productivity margin.
On the plus side, price transparency provides you vital information at your fingertips. Understanding and putting the information to good use is critical in proscribing a cost-effective employee benefit. It empowers both employers and employees to make the best decisions possible.
In a previous article, we discussed some of the common health conditions which drive employer healthcare costs. With the information from price transparency, you can partner with a healthcare provider that provides cost-effective services beneficial to your employee health conditions and overall well-being.
Reach out to us to see how we can help your establishment reduce expenses to improve your profits.