Medical innovation, increasing the complexity of care, and the relationships between stakeholders gradually lead to the increase in prices of healthcare for consumers. Lack of transparency affects the cost of premiums as well as out-of-pocket expenses. Policymakers in their considerations need to include more indicators than just insurance coverage that, without other measures, will not curb soaring healthcare expenses. Delayed care is a public health concern because of the risk of disability and under-treatment of otherwise treatable conditions. The presentation of data to non-technical audiences, including decision-makers, has to be understandable to convey the information reliably. Systems modeling techniques should be considered to estimate stakeholder behavior in a dynamic system accurately. Currently, many instances of abuse exist within the system. As an example, chargemaster fees apply to uninsured or out-of-network patients. Hospital fees are, however, tackled by state laws rather than at the federal level. Consumers in health care tend to behave differently than in other industries and often think less about the costs involved. Physicians’ education should include the delivery of cost-conscious care to prevent financial harm to their patients. Transparency of cost is one of the most effective mechanisms that enable patients and providers to make informed choices.

1. Pricing transparency at point of care
July 2017
Medical innovation, increasing the complexity of care, and the relationships between stakeholders
gradually lead to the increase in prices of healthcare for consumers. Lack of transparency affects the
cost of premiums as well as out-of-pocket expenses. Policymakers in their considerations need to
include more indicators than just insurance coverage that, without other measures, will not curb soaring
healthcare expenses. Delayed care is a public health concern because of the risk of disability and under-
treatment of otherwise treatable conditions. The presentation of data to non-technical audiences,
including decision-makers, has to be understandable to convey the information reliably. Systems
modeling techniques should be considered to estimate stakeholder behavior in a dynamic system
accurately. Currently, many instances of abuse exist within the system. As an example, chargemaster
fees apply to uninsured or out-of-network patients. Hospital fees are, however, tackled by state laws
rather than at the federal level. Consumers in health care tend to behave differently than in other
industries and often think less about the costs involved. Physicians’ education should include the
delivery of cost-conscious care to prevent financial harm to their patients. Transparency of cost is one of
the most effective mechanisms that enable patients and providers to make informed choices.
Pricing transparency
Medical innovation improves patient outcomes but also considerably increases healthcare costs.
Patients were directly responsible for payments to physicians until the end of the 19th century. With the
gradual adoption of aseptic techniques, many procedures moved from home settings to the controlled
environment in hospitals. Increased complexity of care and the introduction of third-party payers led to
decreased transparency of the cost of care for patients. Financial toxicity as a byproduct of otherwise
effective treatment first emerged as an important topic in connection with modern cancer therapies.
Economic harms inflicted by care are becoming an increasingly important topic in healthcare. The
escalating costs of care cannot be tolerated indefinitely (Gupta, Tsay & Fogerty, 2015).
The introduction of the Affordable Care Act was met with high expectations in regards to access to
quality healthcare care covered by an insurance policy. In reality, health insurance coverage did not
reduce the total medical debt; some individuals and families suffered. The problem got worse due to the
high cost of premiums for the most vulnerable groups, high copay, and lack of transparency of the cost
of care.
Defining the policy issue
The cost of care and its affordability has long been a hot topic exploited for political purposes. While the
Affordable Care Act sought to decrease the number of uninsured, who were among the most affected
by excessive medical bills, insurance alone is not going to solve the problem of soaring costs in U.S.
healthcare. Confusion over coverage, convoluted insurance coverage plans, out-of-network fees, and
other traps are among the causes of exorbitant costs of healthcare in the U.S.

2. Delayed care as a public health concern
Galbraith et al. (2013) argue that high copay and the complexity of insurance plans lead to underuse and
delays in the use of needed care. The inability of providers to foresee these issues compounds the
problem. The example of the Massachusetts health insurance exchange showed that the majority of
enrollees who did not qualify for subsidies chose bronze or silver plans with high deductibles.
Unsurprisingly, the financial burden affected most families with more children and lower incomes and
those with more complex health needs. Transparency of pricing and the ability to estimate the cost of
care accurately turned out to be a significant problem. The authors concluded that policymakers should
focus their attention on the development of cost calculators and price transparency tools (Galbraith et
al., 2013).
Insurance does not solve the problem of cost
The reluctance of lower-income population to enroll in mandatory insurance is not driven by the lack of
desire for healthcare. The reasons are more complex and depend on the amount of copay, the ability of
people to make informed choices about the care they receive, and their ability to navigate the complex
U.S. healthcare system. The fact that a drug is new and FDA-approved is not a guarantee that it is always
better than therapies that are much less costly. A thorough understanding of treatment cost-
effectiveness is a challenge even for seasoned professionals. Policymakers at all levels would need the
information to be presented to them in a form that is accessible and understandable.
Presentation of data
The presentation of complex economic evaluations to non-technical audiences can be a challenge in
itself. Many guidelines on economic evaluations include standard reporting templates and formats,
mostly in the form of tables and graphs. Sullivan et al. (2015) analyzed thirty-one guidelines for
instructions on how to present economic analyses to non-technical audiences. In healthcare, common
elements include clinical outcomes and quality-adjusted life years (QALY) and disability-adjusted-life-
years (DALY), and the effect of delayed or inappropriate care on these attributes. Communication of
cost-effectiveness to non-technical audiences such as policymakers and patients may be a tough thing to
do. Conveying uncertainties and limitations of science to stakeholders within healthcare is essential to
maintain credibility and consistency (Sullivan, Wells & Coyle, 2015).
Modeling of complex systems requires an understanding of the system as a whole. While systems
modeling software is available and routinely utilized in many other industries, it seems that healthcare is
still more dependent on decisions made by people whose main qualification is an opinion driven by
ideology. The use of modeling of stakeholder behavior and cost-effectiveness analyses for individual
protocols and procedures needs to become a norm rather than an exception.
Considering the context
In 1933, the Committee on the Costs of Medical Care argued that increased need for healthcare leads to
costs that are becoming burdensome for individual families that suddenly had to pay for childbirth and
other medical care. In 1954, expectant mothers would have received the cost of their care and board
upfront. This transparency vanished with the increasing complexity of care and the introduction of
provider-payer-patient relationships (Gupta, Tsay & Fogerty, 2015).
Social and health implications
Patients’ decision to delay or forgo needed care because of the cost may not be evident to providers
who rarely discuss the cost of care with their patients. Such avoidance of financial issues leads to non-
adherence to prescribed treatment and improper management of otherwise treatable conditions

3. (Galbraith et al., 2013). Under-treatment of chronic diseases such as high blood pressure and diabetes
leads to earlier onset of complications, disability, and premature death.
Chargemaster
Price transparency is the key to preventing billing disputes for out-of-network care. A variety of
approaches is used to remediate out-of-network billing disputes over overcharged care. Richman et al.
(2017), in their review of potential legal remedies, concluded that contract law, if appropriately applied,
including price lists, should prevent many if not most of the current billing disputes, and should also
provide sufficient incentives for transparent pricing. Inflated charges for out of network care are the
primary driver of increasing financial burden to patients, especially those who have to seek urgent
unavoidable care. The abuse of vulnerable patients by providers who unilaterally set prices and charge
exorbitant amounts for out-of-network care is well documented in the current media. Although federal
laws do not safeguard patients against the use of inflated chargemaster prices, some states have
enacted consumer protection legislation “balanced billing laws” that limit the practice. Contract law,
however, offers a solution that is based on existing market forces and mutual assent (Richman, Kitzman,
Milstein & Schulman, 2017).
Stakeholders
Healthcare organization in the U.S. is a complex affair with many direct and indirect relationships
between stakeholders. In addition to healthcare providers, patients and insurers, the key participants
include the pharmaceutical and medical devices industry, municipal and state administration,
regulators, investors, and a variety of private service providers in related industries. The relationships
between facility owners, management, healthcare personnel, vendors, suppliers, and government and
private payers can be very complex and dynamic due to ongoing organizational changes. The continuum
of care needs to function often in spite of these complicated and often conflicting and clashing
structures.
Women as critical stakeholders
Women are often responsible for making healthcare-related decisions and choices. In Massachusetts,
the cost-containment law intends to improve transparency and curb costs of care utilizing a variety of
innovative approaches. The bill, however, had some unintended consequences for women’s care that
later had to be corrected in several amendments. Women are more likely to be affected by
unmanageable healthcare costs because of a combination of lower-income and higher needs due to
longer life span, reproduction-related care, and increased risk of multiple chronic diseases. Women are
critical stakeholders among consumers when it comes to healthcare (Glynn, MacKenzie & Fitzgerald,
2016).
Considerations within nursing
Healthcare shopping is not necessarily something patients want to contemplate on, especially when
there is a perceived more or less urgent need. The consideration of cost is a shared responsibility
between the patient and the physician.
Consumer behavior
Consumer behavior in healthcare differs from the behavior of the same people in any other industry.
Commonly, people enroll in plans without overthinking the options and visit providers they know
without any consideration of the quality of care or costs involved: confusion and lack of communication
compound the problem. First, patients who seek care often do not know where they can find the
answers to questions that only occur to them once they are in contact with the provider. Second, the

4. answers they receive may inflict even more confusion, primarily when a provider in their network refers
them to out-of-network specialist care.
Most importantly, their personal needs do not always conform to the hospital's internal processes.
Consumer behavior in healthcare and patient attitudes depends on their trust in the healthcare system
in general and on their understanding and knowledge of the system. Improving institutional culture and
communication with customers at their own pace is essential to improve satisfaction and outcomes.
Consumers shall be able to make informed choices — rational decision-making by consumers shall be at
the heart of curbing health care costs (Roberts, 2016).
Are physicians aware of the costs of care they provide?
Jonas et al (2016) argue that value for patient and cost-consciousness needs to become part of
physicians’ training. The study was driven by results of post-intervention surveys in a children’s’ hospital
to develop a new curriculum about value-based care. Increased transparency and physician education
are essential to provide cost-conscious care and limit the care that does not improve clinical outcomes.
Project Striving for Value in Pediatrics includes topics that enable physicians to make treatment
decisions that are value-based and cost-effective (Jonas, Ronan, Petrie & Fieldston, 2016).
Options and solutions
The four currently prevailing strategies to counter chargemaster abuses include increased transparency
of pricing, enacting state laws that prohibit balance billing, transferring the obligation to pay for out-of-
network care from consumers to insurers, and providing mediation. The most promising strategy,
however, relies on the current bedrock of contract law (Richman, Kitzman, Milstein & Schulman, 2017).
The quality of care
Patients should be able to decide for themselves what type of care and where they should seek based
on data that are available and accessible. The differences between hospitals are substantial in terms of
quality, cost, and value. There are no tools in the public domain that would allow comparison of quality
and cost of care. Weeks et al. (2016) created a tool that utilizes publicly available data derived from
Hospital Compare and Medicare care expenditures. Although imperfect, the measures as presented still
offered reasonably accurate information on the cost and quality of care (Weeks, Kotzbauer & Weinstein,
2016).
Transparency tools
By 2014 – 2015, health plans implemented a variety of tools that should assist members in their efforts
to estimate the cost of care and their contributions in advance. These tools primarily cover commonly
used procedures, including surgery and radiology. Price estimates facilitate informed choices and
increase the probability that members will facilities that offer the best value for their money. The
majority of the estimator tools allowed the comparison of providers and services and the cost of
prescription drugs based on data from paid claims (Higgins, Brainard & Veselovskiy, 2016).
Cost-transparency tools are often not apparent to physicians who should be able to advise their patients
on how to access cost-effective care. Out-of-pocket expenses are a significant burden to patients, and
unnecessary care that burdens insurers is reflected in the cost of premiums. The Institute of Medicine, in
its study of healthcare costs, concluded that in 2009, approximately a third of all healthcare spending,
totaling $750 million, was spent on unnecessary services (Kirkner, 2014).
It is also unclear whether transparency tools decrease the cost of care. Studies from some developing
countries suggest that this is not always the case. Comparisons of price levels work best when

5. performed against multiple countries to account for a variety of methodologies and variations (Hinsch,
Kaddar & Schmitt, 2014).
State laws on transparency
The problem of transparency of healthcare pricing initiated numerous discussions on the topic, such as
the Healthcare Incentives Improvement Institute (HCI3) or Catalyst for Payment Reform (CPR). The
results of these initiatives highlighted the grim state of affairs: in October 2013, 36 out of 50 states got a
D or an F for their price transparency efforts or lack thereof, respectively. A new law passed in North
Carolina in 2013, the Health Care Cost Reduction and Transparency Act, gives hospitals numerous
obligations, including publishing prices they charge uninsured patients (Carroll, 2013).
State laws to curb costs
The cost of novel prescription drugs and their widespread use is one of the crucial drivers of increasing
costs of care. In the absence of federal legislation, some states have been tackling the cost of healthcare
on their own. Some states limit access to costly drugs or imposed restrictions for those whose care is
covered by public funds. Some legislative proposals challenge the industry claim that the high cost of
new drugs reflects the cost of research and approval and require disclosure of research and
development costs as well as a value proposition and clinical benefit of the new drug. Verification of the
data provided by the industry and the ability to include research expenses for failed projects remains a
significant challenge (Sarpatwari, Avorn & Kesselheim, 2016).
Model Act
In November 2015, the National Association of Insurance Commissioners amended the Model Act to
include more protections for consumers. The Model Act intends to improve pricing transparency and
encourage mediation between payers and providers. Among other obligations, the providers would be
required to create accurate network directories that would inform patients what care is out-of-network.
The Model Act has not been enacted in any state yet but can serve as an example of growing efforts to
curb the problem (Richman, Kitzman, Milstein & Schulman, 2017).
What’s next – options to consider
Because of the legal and political ambiguities in regards to access to care, and the complex system of
medical insurance in America, it is advisable to start at the hospital level with a pilot project of cost-
conscious care optimization for underinsured and uninsured populations. The pilot could encompass
prioritization of cost when providing care to patients and the provision of cost-calculation when offering
treatment options to patients. Evaluation of such a project can be conducted in cooperation with local
and municipal authorities and academic institutions to develop an evidence-based solution that
enhances public health in the community.
Conclusion
Active dissemination of information on relative risks, benefits, and treatment alternatives, including cost
comparison and cost-effectiveness to enable consumers to make better choices, seems to be a more
viable solution. Physician education of cost-conscious care significantly improves the awareness of the
cost-effectiveness of individual therapies. For policymakers, systems modeling, in addition to a more
accessible presentation of cost-effectiveness, would facilitate the development of rational, evidence-
based solutions.

6. References
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