The impact of price transparency on consumers and providers: A scoping review

Escalating levels of healthcare spending and price variation in the healthcare market have driven government and insurer interest in price transparency tools that are intended to help consumers shop for services and reduce overall healthcare spending. However, it is unclear whether the objectives of price transparency are being achieved. We conducted a scoping review to synthesize the impact of price transparency on consumer, provider, and purchaser behaviours and outcomes.Price transparency tools had weak impact overall on consumers due to low uptake, and mixed effects on providers. Price-aware patients chose less costly services that led to out-of-pocket cost savings and savings for health insurers; however, these savings did not translate into reductions in aggregate healthcare spending. Disclosure of list prices had no effect, however disclosure of negotiated prices prompted supply-side competition which led to decreases in prices for shoppable services.     

Insurer Market Structure and Variation in Commercial Health Care Spending

ObjectiveTo examine the relationship between insurance market structure and health care prices, utilization, and spending.MethodsRegression models are used to estimate the association between insurance market concentration and health care spending, utilization, and price, adjusting for differences in patient characteristics and other market-level traits.ResultsInsurance market concentration is inversely related to prices and spending, but positively related to utilization. Our results imply that, after adjusting for input price differences, a market with two equal size insurers is associated with 3.9 percent lower medical care spending per capita (p = .002) and 5.0 percent lower prices for health care services relative to one with three equal size insurers (p < .001).ConclusionGreater fragmentation in the insurance market might lead to higher prices and higher spending for care, suggesting some of the gains from insurer competition may be absorbed by higher prices for health care. Greater attention to prices and utilization in the provider market may need to accompany procompetitive insurance market strategies.     

Injury and Illness Costs in the Certified Safe Farm Study

CONTEXT: The Certified Safe Farm (CSF) intervention program aims to reduce occupational injuries and illnesses, and promote wellness to reduce health care and related costs to farmers, insurers, and other stakeholders. PURPOSE: To evaluate the cost effectiveness of CSF. METHODS: Farms (316) located in a 9-county area of northwestern Iowa were recruited and randomized into intervention and control cohorts. Intervention farms received occupational health screenings, health and wellness screening, education, on-farm safety reviews, and performance incentives. For both cohorts, quarterly calls over 3 years were used to collect self-reported occupational injury and illness information, including costs to the farmers and their insurers. FINDINGS: Annual occupational injury and illness costs per farmer paid by insurers were 45% lower in the intervention cohort ($183) than in the control cohort ($332). Although out-of-pocket expenses were similar for both cohorts, combined costs of insurance and out-of-pocket expenses were 27% lower in the intervention cohort ($374/year per farmer) compared to the control cohort ($512/year per farmer). Within the cohort of intervention farmers, annual occupational injury and illness cost savings were directly associated with on-farm safety review scores. Reported health care costs were $237 per farmer in the safest farms (those farms scoring in the highest tertile) versus $485 per farmer in the least safe farms (lowest tertile). CONCLUSIONS: Results suggest that farmers receiving the intervention had lower health care costs for occupational injuries and illnesses than control farmers. These cost savings more than cover the cost of providing CSF services (about $100 per farm per year).     

Sustainability of school-located influenza vaccination programs in Florida

BackgroundSchool-located influenza vaccination (SLIV) programs are a promising strategy for increasing vaccination coverage among schoolchildren. However, questions of economic sustainability have dampened enthusiasm for this approach in the United States. We evaluated SLIV sustainability of a health department led, county-wide SLIV program in Alachua County, Florida. Based on Alachua's outcome data, we modeled the sustainability of SLIV programs statewide using two different implementation costs and at different vaccination rates, reimbursement amount, and Vaccines for Children (VFC) coverage.MethodsMass vaccination clinics were conducted at 69 Alachua County schools in 2013 using VFC (for Medicaid and uninsured children) and non-VFC vaccines. Claims were processed after each clinic and submitted to insurance providers for reimbursement ($5 Medicaid and $47.04 from private insurers). We collected programmatic expenditures and volunteer hours to calculate fixed and variable costs for two different implementation costs (with or without in-kind costs included). We project program sustainability for Florida using publicly available county-specific student populations and health insurance enrollment data.ResultsApproximately 42% (n = 12,853) of pre-kindergarten – 12th grade students participated in the SLIV program in Alachua. Of the 13,815 doses provided, 58% (8042) were non-VFC vaccine. Total implementation cost was $14.95/dose or $7.93/dose if “in-kind” costs were not included. The program generated a net surplus of $24,221, despite losing $4.68 on every VFC dose provided to Medicaid and uninsured children. With volunteers, 99% of Florida counties would be sustainable at a 50% vaccination rate and average reimbursement amount of $3.25 VFC and $37 non-VFC. Without volunteers, 69% of counties would be sustainable at 50% vaccination rate if all VFC recipients were on Medicaid and its reimbursement increased from $5 to $10 (amount private practices receive).Conclusions and relevanceKey factors that contributed to the sustainability and success of an SLIV program are: targeting privately insured children and reducing administration cost through volunteers. Counties with a high proportion of VFC eligible children may not be sustainable without subsidies at $5 Medicaid reimbursement.     

How important is price variation between health insurers?

Prices negotiated between payers and providers affect a health insurance contract's value via enrollees’ cost-sharing and self-insured employers’ costs. However, price variation across payers is difficult to observe. We measure negotiated prices for hospital-payer pairs in Massachusetts and characterize price variation. Between-payer price variation is similar in magnitude to between-hospital price variation. Administrative-services-only contracts, in which insurers do not bear risk, have higher prices. We model negotiation incentives and show that contractual form and demand responsiveness to negotiated prices are important determinants of negotiated prices.     

Manufacturing costs of HPV vaccines for developing countries

BackgroundNearly all of the 500,000 new cases of cervical cancer and 270,000 deaths occur in middle or lower income countries. Yet the two most prevalent HPV vaccines are unaffordable to most. Even prices to Gavi, the Vaccine Alliance, are unaffordable to graduating countries, once they lose Gavi subsidies. Merck and Glaxosmithkline (GSK) claim their prices to Gavi equal their manufacturing costs; but these costs remain undisclosed. We undertook this investigation to estimate those costs.MethodsSearches in published and commercial literature for information about the manufacturing of these vaccines. Interviews with experts in vaccine manufacturing.FindingsThis detailed sensitivity analysis, based on the best available evidence, finds that after a first set of batches for affluent markets, manufacturing costs of Gardasil for developing countries range between $0.48 and $0.59 a dose, a fraction of its alleged costs of $4.50. Because volume of Cervarix is low, its per unit costs are much higher, though at comparable volumes, its costs would be similar.InterpretationGiven the recovery of fixed and annual costs from sales in affluent markets, Merck’s break-even price to Gavi could be $0.50–$0.60, not $4.50. These savings could support Gavi programs to strengthen delivery and increase coverage. Outside Gavi, prices to lower- and middle-income countries, with profit, could also be lowered and made available to millions more adolescents at risk. These estimates and their policy implications deserve further discussion.     

Hospital supplements in Belgium: Price variation and regulation

ObjectivesAlthough there is a comprehensive public health insurance system in Belgium, out-of-pocket expenditures can be very high, mainly for inpatients. While a large part of the official price is reimbursed, patients are confronted with increased extra billing (supplements). Therefore, the government imposed various restrictions on the amount of supplements to be charged, related to the type of room and the patient's insurance status. We investigate how prices are set and whether the restrictions have been effective.MethodsWe use an administrative dataset of the Belgian sickness funds for the year 2003 with billing data per hospitalisation and hospital characteristics. Boxplots describe the distribution of several categories of supplements. OLS is used to explore the relationship between hospital characteristics and extra billing.ResultsThere is a large and intransparent variation in extra billing practices among different hospitals. Given the room type, supplements per day are smaller for patients qualifying for protection, confirming that the regulation is applied quite well. However, because of their longer length of stay this does not result in lower supplements per stay for these patients.ConclusionsCurrently the price setting behavior of providers lacks transparency. Protective regulation could be refined by taking into account the longer length of stay of vulnerable groups.     

The Impact of Sharing Drug Rebates at the Point of Sale on Out-of-Pocket Payments for Enrollees in Employer-Sponsored Insurance

ObjectivesThis study aimed to estimate the impact of sharing drug rebates at the point of sale on out-of-pocket spending by linking estimated rebates to administrative claims data for employer-sponsored insurance enrollees in 2018.MethodsWe applied the drug rebate rate to the retail price of each brand name drug fill, allocated the reductions to out-of-pocket spending based on cost-sharing provisions, and aggregated each individual’s out-of-pocket spending across drug fills. We assumed that generic drugs have no rebates for employer-sponsored insurance. We assessed the impact of sharing rebates at the point of sale on out-of-pocket spending overall, for the therapeutic classes and specific drugs with the highest average out-of-pocket spending per user, and by health plan type.ResultsAcross 4 simulations with different assumptions about the degree of cross-fill effects, we found that 10.4% to 12.2% of enrollees in our sample would have realized savings on out-of-pocket spending if rebates were shared to the point of sale. Among those with savings, approximately half would save $50 or less, and 10% would save > $500 annually. We calculated that a premium increase of $1.06 to $1.41 per member per month among the continuously enrolled, insured population would be sufficient to finance the out-of-pocket savings in our sample.ConclusionsOur study suggests that, for a small percentage of enrollees, sharing drug rebates at the point of sale would likely improve the affordability of high-priced brand name drugs, especially drugs that face significant competition.     

Designing a Value-Based Formulary for a Commercial Health Plan: A Simulated Case Study of Diabetes Medications

ObjectivesThe healthcare expenditure for managing diabetes with glucose-lowering medications has been substantial in the United States. We simulated a novel, value-based formulary (VBF) design for a commercial health plan and modeled possible changes in spending and utilization of antidiabetic agents.MethodsWe designed a 4-tier VBF with exclusions in consultation with health plan stakeholders. The formulary information included covered drugs, tiers, thresholds, and cost sharing amounts. The value of 22 diabetes mellitus drugs was determined primarily in terms of incremental cost-effectiveness ratios. Using pharmacy claims database (2019-2020), we identified 40 150 beneficiaries who were on the included diabetes mellitus medicines. We simulated future health plan spending and out-of-pocket costs with 3 VBF designs, using published own price elasticity estimates.ResultsThe average age of the cohort is 55 years (51% female). Compared with the current formulary, the proposed VBF design with exclusions is estimated to reduce total annual health plan spending by 33.2% (current: $33 956 211; VBF: $22 682 576), saving $281 in annual spending per member (current: $846; VBF: $565) and $100 in annual out-of-pocket spending per member (current: $119; VBF: $19). Implementing the full VBF with new cost shares, along with exclusions, has the potential to achieve the greatest savings, compared with the 2 intermediate VBF designs (ie, VBF with prior cost sharing and VBF without exclusions). Sensitivity analyses using various price elasticity values showed declines in all spending outcomes.ConclusionDesigning a VBF with exclusions in a US employer–based health plan has the potential to reduce health plan and patient spending.     

Modeling the Impacts of Price of an Over-the-Counter Progestin-Only Pill on Use and Unintended Pregnancy among U.S. Women

ObjectiveTo model the impacts of out-of-pocket cost of an over-the-counter (OTC) progestin-only pill on use and associated unintended pregnancy among U.S. women.Study DesignUsing data from a 2015 nationally representative survey of 2,539 U.S. women aged 15 to 44 assessing interest in using an OTC progestin-only pill, we used discrete survival analysis and a Markov model to analyze women's likelihood of using of an OTC pill at different price points and by sociodemographic characteristics. We modeled the impact of product price on the potential total number of U.S. users and on unintended pregnancies in 1 year among adult women at risk of unintended pregnancy.ResultsIn a model assuming no out-of-pocket costs, more than 12.5 million adults and 1.75 million teens reported likely use of an OTC progestin-only pill if available. Among adults, this resulted in an estimated 8% decrease in unintended pregnancy in 1 year. Adult and teen women on average were willing to pay $15 and $10, respectively, resulting in 7.1 million adult and 1.3 million teen users and an estimated 5% decrease in unintended pregnancy among adults.ConclusionsAt low and no out-of-pocket cost, a large population of women in the United States might likely use an OTC progestin-only pill. A low retail price and insurance coverage are necessary to provide equitable access to this method for low-income populations across the United States, fill current gaps in contraceptive access, and potentially decrease unintended pregnancy.     

Out-of-Pocket Costs and Insurance Coverage for Abortion in the United States

BackgroundSince 1976, federal Medicaid has excluded abortion care except in a small number of circumstances; 17 states provide this coverage using state Medicaid dollars. Since 2010, federal and state restrictions on insurance coverage for abortion have increased. This paper describes payment for abortion care before new restrictions among a sample of women receiving first and second trimester abortions.MethodsData are from the Turnaway Study, a study of women seeking abortion care at 30 facilities across the United States.FindingsTwo thirds received financial assistance, with those with pregnancies at later gestations more likely to receive assistance. Seven percent received funding from private insurance, 34% state Medicaid, and 29% other organizations. Median out-of-pocket costs when private insurance or Medicaid paid were $18 and $0. Median out-of-pocket cost for women for whom insurance or Medicaid did not pay was $575. For more than half, out-of-pocket costs were equivalent to more than one-third of monthly personal income; this was closer to two thirds among those receiving later abortions. One quarter who had private insurance had their abortion covered through insurance. Among women possibly eligible for Medicaid based on income and residence, more than one third received Medicaid coverage for the abortion. More than half reported cost as a reason for delay in obtaining an abortion. In a multivariate analysis, living in a state where Medicaid for abortion was available, having Medicaid or private insurance, being at a lower gestational age, and higher income were associated with lower odds of reporting cost as a reason for delay.ConclusionsOut-of-pocket costs for abortion care are substantial for many women, especially at later gestations. There are significant gaps in public and private insurance coverage for abortion.     

Rapid assessment technology: A demonstration evaluating potential cost-benefit outcomes of U.S. hospital price transparency regulation

BackgroundIn 2019, the Centers for Medicare and Medicaid Services (CMS) mandated U.S. hospitals to publicly display their negotiated charges for health care services provided. The 2019 mandate is the second step in a CMS’ comprehensive, long-term price transparency initiative affecting several hospital pricing aspects. To date, little is known about potential implications of the 2019 CMS mandate on healthcare sector.MethodsTo address this gap, we utilized rapid assessment technology and surveyed a nationally representative panel of health policy and management researchers (N = 216).PurposeWe asked the research panel about the likelihood of a complete hospital price transparency mandate implementation and whether it will achieve its intended goals.ResultsThe majority of panelists (68.6%) perceived that the hospital price transparency policy was not likely to be fully implemented. However, if the comprehensive price transparency policy would be enacted, respondents perceived that it would help control costs, but not by engaging consumers in price shopping behaviors. Respondents noted the significant technical challenges to producing and interpreting the health services pricing information would be a barrier to bending the healthcare cost curve.ConclusionRapid assessment technology proves useful and adds value in the healthcare sector to quickly evaluate potential policy outcomes.     

Cost Sharing and Utilization of Postpartum Intrauterine Devices and Contraceptive Implants Among Commercially Insured Women

BackgroundCost sharing may impede postpartum contraceptive use. We evaluated the association between out-of-pocket costs and long-acting reversible contraceptive (LARC) insertion among commercially insured postpartum women.MethodsUsing the Clinformatics Data Mart, we examined out-of-pocket costs for LARC insertions at 0 to 3 and 4–60 days postpartum among women in employer-sponsored health plans from 2013 to 2016. Patient costs were estimated by summing copayment, coinsurance, and deductible payments for LARC services (device + placement). Multivariable logistic regression evaluated the association between plan cost sharing for LARC services (at least one beneficiary with >$200 cost share) and LARC insertion by 60 days postpartum (yes/no).ResultsWe identified 396,073 deliveries among women in 51,797 employer-based plans. Overall, LARC placement by 60 days postpartum was observed after 5.2% (n = 20,604) of deliveries. Inpatient LARC insertion (n = 233; 0.06% of deliveries) was less common than outpatient LARC insertion (n = 20,375; 5.14% of deliveries). Cost sharing was observed in 23.4% of LARC insertions (inpatient IUD: median, $50.00; range, $0.93–5,055.91; inpatient implant: median, $11.91; range, $2.49–650.14; outpatient IUD: median, $25.00; range, $0.01–3,354.80; outpatient implant: median, $27.20; range, $0.18–2,444.01). Among 5,895 plans with at least one LARC insertion and after adjusting for patient age, poverty status, race/ethnicity, region, and plan type, women in plans with cost sharing of more than $200 demonstrated lower odds of LARC use by 60 days postpartum (odds ratio, 0.74; 95% confidence interval, 0.71–0.77).ConclusionsCost sharing for postpartum LARC is associated with use, suggesting that out-of-pocket costs may impede LARC access for some commercially insured postpartum women. Reducing out-of-pocket costs for the most effective forms of contraception may increase use.     

School-Located Vaccination of Adolescents With Insurance Billing: Cost,Reimbursement, and Vaccination Outcomes

PurposeTo assess, in a school-located adolescent vaccination program that billed health insurance, the program costs, the proportion of costs reimbursed, and the likelihood of vaccination.MethodsDuring the 2010–2011 school year, vaccination clinics were held for sixth- to eighth-grade students at seven Denver public schools. Vaccine administration and purchase costs were compared with reimbursement by insurers. Multivariate analyses were used to compare the likelihood of vaccination among students in intervention schools with students in control schools who did not participate in the program, with analyses stratified by grade (sixth grade vs. seventh–eighth grades).ResultsFifteen percent (466 of 3,144) of students attending intervention schools were vaccinated at school-located vaccination clinics. Among students vaccinated at school, 41% were uninsured, 37% publicly insured, and 22% privately insured. Estimated vaccine administration costs were $23.98 per vaccine dose. Seventy-eight percent of vaccine purchase costs and 14% of vaccine administration costs were reimbursed by insurers; 41% of total program costs were reimbursed. Sixth-grade students in intervention schools were more likely than those in control schools to receive tetanus–diphtheria–acellular pertussis (risk ratio [RR], 1.30; 95% confidence interval [CI], 1.08, 1.57), meningococcal conjugate (RR, 1.42; CI, 1.18, 1.70), and human papillomavirus (for females only, RR, 1.69; CI, 1.21, 2.36) vaccines during the 2010–2011 school year, with similar results for seventh- to eighth-grade students.ConclusionsAlthough school-located adolescent vaccination with billing appears feasible and likely to improve vaccination rates, improvements in insurance coverage and reimbursement rates may be needed for the long-term financial sustainability of such programs.     

At What Cost? Payment for Abortion Care by U.S. Women

BackgroundMost U.S. abortion patients are poor or low-income, yet most pay several hundred dollars out of pocket for these services. This study explores how women procure these funds.MethodsiPad-administered surveys were implemented among 639 women obtaining abortions at six geographically diverse healthcare facilities. Women provided information about insurance coverage, payment for service, acquisition of funds, and ancillary costs incurred.FindingsOnly 36% of the sample lacked health insurance, but at least 69% were paying out of pocket for abortion care. Women were twice as likely to pay using Medicaid (16% of abortions) than private health insurance (7%). The most common reason women were not using private insurance was because it did not cover the procedure (46%), or they were unsure if it was covered (29%). Among women who did not use insurance for their abortion, 52% found it difficult to pay for the procedure. One half of patients relied on someone else to help cover costs, most commonly the man involved in the pregnancy. Most women incurred ancillary expenses in the form of transportation (mean, $44), and a minority also reported lost wages (mean, $198), childcare expenses (mean, $57) and other travel-related costs (mean, $140). Substantial minorities also delayed or did not pay bills such as rent (14%), food (16%), or utilities and other bills (30%) to pay for the abortion.ConclusionsPublic and private health insurance plan coverage of abortion care services could ease the financial strain experienced by abortion patients, many of whom are low income.     

Are Drugs Priced in Accordance With Value? A Comparison of Value-Based and Net Prices Using Institute for Clinical and Economic Review Reports

ObjectivesThe Institute for Clinical and Economic Review (ICER) is an independent organization that reviews drugs and devices with a focus on emerging agents. As part of their evaluation, ICER estimates value-based prices (VBP) at $50 000 to $150 000 per quality-adjusted life-year (QALY) gained thresholds. We compared actual estimated net prices to ICER-estimated VBPs.MethodsWe reviewed ICER final evidence reports from November 2007 to October 2020. List prices were combined with average discounts obtained from SSR Health to estimate net prices. If a drug had been evaluated more than once for the same indication, only the more recent VBP was included.ResultsA total of 34 ICER reports provided unique VBPs for 102 drugs. The net price of 81% of drugs exceeded the $100 000 per QALY VBP and 71% exceeded the $150 000 per QALY VBP. The median change in net price needed to reach the $150 000 per QALY VBP was a 36% reduction. The median decrease in net price needed was highest for drugs targeting rare inherited disorders (n = 15; 62%) and lowest for cardiometabolic disorders (n = 6; 162% price increase). The reduction in net prices needed to reach ICER-estimated VBPs was higher for drugs evaluated for the first approved indication, rare diseases, less competitive markets, and if the drug approval occurred before the ICER report became available.ConclusionNet prices are often above VBPs estimated by ICER. Although gaining awareness among decision makers, the long-term impact of ICER evaluations on pricing and access to new drugs continues to evolve.     

Taking the first step toward system reform

Small companies and individual Americans have an extraordinarily difficult time finding health insurance they can afford. And, even when they do, annual premium increases quickly force them to shop for a new policy. Reforms of the small market insurance field should include requiring insurers to sell a policy to anyone who wants to buy one; requiring insurers, after six months, to cover all costs incurred because of preexisting medical conditions; and regulating annual premium increases. Two standard "MEDPLANS" would be offered at prices ranging from $75 to $100 a month.