Promise, Pitfalls, and Progress of Price Transparency in US Health Care: John Barkett

Price transparency was sold as one of health care’s simple fixes. The aim was to show patients and employers what insurers actually pay for their care, allowing market forces to do the rest.

But as federal rules from both the current and past administrations push more hospitals and health plans to post their prices, the emerging picture becomes far messier. In some corners of the market, transparency is beginning to expose outliers and fuel new tools that steer patients to better-value care. In others, it is quietly arming providers with new leverage to demand higher payments.

In this Q&A, John Barkett, managing director in BRG’s Healthcare Transactions and Strategy practice and former senior policy advisor for Health Care Delivery System Reform on the White House Domestic Policy Council, discusses the appeal of price transparency as well as the risks in an interview with The American Journal of Managed Care® (AJMC®).

This transcript was lightly edited for clarity.

AJMC: What is the core objective of the White House’s renewed push on price transparency?

Barkett: The Trump administration has been focused on price transparency for a while now. They were focused on [it] in the first Trump administration; they've picked up in the second Trump administration where they left off in the first in encouraging providers, payers, and others to publish the prices that they negotiate for services that we all get when we go to the doctor or the pharmacy or the hospital. In his most recent publication around his health plan, the president announced one of his plans for his so-called Great Healthcare Plan [that] requires any health care provider or insurer who accepts Medicare or Medicaid to prominently post their pricing and fees in their place of business. For a health care provider, like a doctor or hospital, you can imagine showing up at the place of business and seeing a menu of prices for a health insurer. I'm not exactly sure how that works, so I don't know. People don't typically show up at their health insurance headquarters to ask for a price. But you can imagine that playing out, say, on a website, where you can find a price lookup tool. That’s what the so-called Great Healthcare Plan is pushing. They've also taken action through regulation. Most recently, in December, they published a proposed rule that would make improvements on what are called the transparency and coverage rules for group and individual health insurance plans, and that rule also took steps to try to improve transparency.

AJMC: How does this initiative differ from previous transparency efforts?

Barkett: The previous Trump administration was trying to get from 0 to 1 when it came to price transparency. They took a line from the Affordable Care Act—the Obamacare requirement that hospitals post prices—and expanded it, saying they wanted group health plans, individual health plans, and hospitals to post all of their negotiated rates. There was a court case about this, which the administration won, giving them the ability to require providers and payers to post their contracted rates. This policy has been continued by the Biden administration.

Now [we] have nearly a decade of efforts—across both Democratic and Republican administrations—aimed at promoting price transparency. The most recent actions include the proposed rule from December, which focuses on health plans, not hospitals, and aims to improve existing regulations so the data is more useful.

One example: the amount of data health plans are required to publish is enormous—petabytes of data—which is very difficult for tech companies, let alone individuals, to process. To address this, the proposal suggests narrowing the focus for each specialty. For instance, an insurance company wouldn’t need to post the price for a knee surgery for an oncologist, since cancer specialists don’t perform knee replacements. The idea is to focus only on commonly prescribed medications or commonly performed procedures for each type of doctor, so the set of codes that are posted is manageable and the data becomes more usable.

There are maybe a dozen other examples in the rule that aim to build on previous efforts and further promote price transparency.

AJMC: Which types of services are most likely to see savings under these rules?

Barkett: Shoppable services that are discrete and can realistically be compared by a consumer. They have to be simple enough that the average person can understand the quality and value differences between 2 or 3 providers within the amount of time anyone could reasonably spend shopping for health care. And the price also has to be presented in a relatively straightforward way.

One other important point is patient cost sharing. Two services with the same underlying price could have very different costs to the patient. For example, a generic drug might cost a patient $2, a primary care visit $15, or a specialist visit $50. No matter who the specialist is or what their visit price is, the patient often doesn’t have much incentive to shop around. At that point, the person or entity with an incentive to guide the patient toward lower-cost options is usually the health insurance company or a provider who is at risk for the cost of care. This is where delivery system and payment reforms come into play. These reforms can align the incentives of the health care system and patients, helping to lower overall costs.

Consider that the majority of health care costs are not for shoppable services. They are for major surgeries, emergency care, or other complex services that don’t fit neatly into the “shopping for candy at the checkout aisle” analogy. Health care services are not commodities—they are complicated, often with insufficient information for patients to assess quality differences. And for very expensive care, cost sharing is often fixed. For instance, a $1000 deductible applies whether a service costs $50,000 or $100,000. In those situations, the focus shifts to doctors ordering care, their recommendations, and insurance companies designing networks or care management tools to guide patients toward cost-efficient care.

That matters to patients as well. Their premiums cover not just their care but [also] the care of everyone in the insurance pool. Having someone accountable for cost-conscious decisions can help keep premiums down. But when a patient is sick, their priority is getting the best care possible. If they are paying a $1000 deductible, they are often focused on what matters to them personally, which may be the more expensive option.

These are the trade-offs inherent in health policy and health insurance. What I like about the price transparency movement is that it forces this conversation about who should be responsible for these decisions and how much latitude they should have to make thoughtful choices.