Will Alaska’s health care prices drop if patients can easily shop around to find the best deal on a surgery or the lowest rate for an M.R.I.?
That’s the hope in a bill that was signed into law today.
Gov. Bill Walker signed Senate Bill 105, which among other provisions requires Alaska’s hospitals and other health care providers to start publicly posting the price of common procedures and operations in 2019.
The price transparency provisions come from Rep. Ivy Spohnholz’s House Bill 123, which was added to Senate Bill 105 in the final days of the session. The core of Senate Bill 105 adds licensed marriage and family therapy counselors to the list of eligible providers for Medicaid-eligible behavioral health services.
The price transparency provisions specifically require all hospitals and health care providers to publish the undiscounted price of the top 10 most common health care procedures from each of the six categories under the American Medical Association’s Current Procedural Terminology (evaluation and management, anesthesia, surgery, radiology, pathology and laboratory, and medicine). The law requires the lists to posted at the entryways of each facility, on the facility’s website and with the state’s online database.
The law also specifically requires the documents to be “in plain language that an individual with no medical training can understand.”
Hospitals will have to post the documents by Jan. 31, 2019 though enforcement won’t kick in until March 31, 2019.
The hope is that the change will allow patients to shop around, increasing competition between health care providers and reducing prices.
“In almost every facet of life you know what something will cost, but for some strange reason, health care is different. In many cases, you don’t know the cost of a treatment until it’s done, and you get a bill,” said Spohnholz in a prepared statement released with the bill’s signing. “Taking the mystery out of health care pricing empowers customers to make informed decisions that are both good for their health and their pocketbook.”
Will it matter?
Whether or not patients will use the new price tags to shop around has yet to be seen, but the existing studies seem to suggest that it’s not a silver bullet for health care spending. A breakdown of those studies seems to suggest similar findings across the board: It’s impossible to tell because people aren’t taking advantage of the new information. In fact, a study of such a price comparing tool found that very few people used it (though those numbers increased in the second year the tool was available).
However, another study found that when price transparency is combined with active involvement by an insurer that a difference can be made. In this case, an insurer that alerted users of the price differences for an M.R.I. saw $220 reduction in cost for the procedure.
“If there’s one thing we’ve learned time and again, it’s that there’s no single best way for reducing health care spending,” writes economist Austin Frakt. “Price transparency may be part of the answer, but it clearly isn’t the entire answer.”