Despite Passing More Laws, States Flunking Health Price Transparency

Despite the fact that the majority of state legislatures have passed some laws relating to pricing transparency for health care services, only seven states are receiving passing grades for both the statute's design and implementation, according to the report, Report Card on State Price Transparency Laws. Price transparency is necessary to combat significant pricing variation for health care services and the increasing financial burden individuals face, according to the study authors, the Health Care Incentives Improvement Institute (HCI3; Newtown, Conn.) and Catalyst for Payment Reform (Berkeley, Calif.).

Many recent studies highlight regional variation in health care costs, including for laboratory tests. This variation is receiving more attention as of late as patients become responsible for a larger percent of their own bills as a result of high deductible health insurance plans. New data from the Kaiser Family Foundation shows that in 2016 the average deductible for the most commonly purchased plan sold in health insurance marketplaces is $3,065.

"The lack of information on the price of care hurts the pocket books of Americans every day," writes François de Brantes, HCI3 executive director and lead author of the report.

Analysts from the Source on Healthcare Price and Competition at the University of California, Hastings College of the Law and the University of California, San Francisco assessed each state's enacted and proposed legislation on health care price transparency. Each state is given a letter grade with an explanation of the shortcomings that are holding back transparency. The authors say the scoring methodology rewards states that both have an all-payer claims databases (APCDs) and that publish that data on a well designed, searchable website.

The researchers found that all but seven states (Alaska, Alabama, Hawaii, Idaho, Mississippi, Oklahoma, and Wyoming) have passed some price transparency legislation. However, the quality of transparency varies due to differences in design and implementation of state laws.

"We recognized a trend in proposed legislation focusing on directing providers or insurers to disclose prices to patients prior to a procedure or service," the authors write. "Such mandates are a step toward meeting consumers' needs, but they are not a substitute for a robust state price transparency resource."

Colorado and Maine jumped in this iteration of the grading from Bs in 2015 to As, as a result of the quality of their websites. Oregon became a leading state for the first time this year, earning a B, as a result of a new law and website. The authors say not all Fs are "equal" and expect several of the states to rapidly emerge as leaders in transparency. For example, both Louisiana and Washington enacted new APCD legislation, but have not yet launched websites to share the collected price data.

Takeaway: Laboratories should be prepared for more states to enact legislation mandating price transparency and full consumer disclosure.