Ohio’s Attempt to Uncloak Health Care Pricing – Yellow Brick Road to Cost Transparency
Last legislative session, the Ohio General Assembly passed a measure in House Bill 52 requiring health care cost transparency for non-emergency services. The new measure requires that most medical service providers provide in writing, prior to a service being rendered, “a good-faith estimate” of (1) the amount the provider will charge the patient’s health plan, (2) the amount the health plan intends to pay, and (3) the difference, if any, that the patient will be required to pay.
The new measure charges the Ohio’s Medical Director to adopt rules, based on the recommendations of the Health Services Price Disclosure Study Committee (“Committee”), to carry out cost transparency requirement by no later than July 1, 2016. The state’s legislature established the Committee to study the impact and feasibility of the legislature’s vision of health care cost transparency, and prepare a report and separate recommendations by December 31, 2015. Regardless of the Committee’s recommendations regarding feasibility, the Medicaid Director is required promulgate rules to implement the requirement absent an act of the state’s legislature.
Although cost transparency has been historically treated as taboo in the U.S. health care system, a number of recent trends have normalized the concept. The stunning acceleration of health care expenditures, as compared against the nation’s gross domestic product, has increased scrutiny on the marketplace for health care services. Moreover, the growth of modern high-deductible health plans has financially incentivized patients to be more cognizant of their health care spending. Patients have long been exposed to cost transparency in their prescription drug transactions, including choosing between cheaper generic and pricier brand drugs. Furthermore, cost transparency is a core element of the burgeoning retail medicine space emphasizing a more transactional health care experience. For better or worse, cost transparency has slowly taken root in the U.S. health care space and in the public’s expectations.
Ohio’s cost transparency measure will test whether the concept can be applied to health care providers at large. Following the Committee’s report at the end of last year, health care providers and other stakeholders in Ohio are eagerly waiting for the Medicaid Director to propose rules to implement the legislature’s vision of the cost transparency measure, on or before July 1, 2016. Ohio’s experience implementing the measure is likely to be closely watched in other states, where similar conversations about the lack of cost transparency in the health care system are taking place.