Opaque prices – the norm in U.S. health care – in a key driver of inefficient, ineffective medical care and rapid cost increases.  Transparency of health care prices – public reporting of prices – is an essential ingredient for a high-value, cost effective health care system.

In recent years, rising prices have driven up health care costs for people under the age of 65 with private health insurance. In 2010, health care spending per capita rose 3.3 percent, nearly three times the rate of general inflation. Out-of-pocket costs for the privately insured increased 7.1 percent that year.

Greater spending has led to efforts to create more transparency in health care costs and quality for consumers and employers. An All-Payor Claims Database (APCD), for example, collects claims information from both public and private health insurance plans, which would allow states to notice cost and use trends or to catch Medicaid fraud.

The Catalyst for Payment Reform (CPR) is taking another approach to helping employers, government, and other health care purchasers make decisions based on cost and quality. CPR developed a set of specifications to help consumers make better use of the cost and quality tools many health plans have created in recent years.

CPR defines price transparency as:

The availability of provider-specific information on the price for a specific health care service or set of services to consumers and other interested parties.

Price is defined as:

An estimate of a consumer’s complete health care cost on a health care service or set of services that 1) reflects any negotiated discounts; 2) is inclusive of all costs to the consumer associated with a service or services, including hospital, physician and lab fees; and, 3) identifies the consumer’s out-of-pocket costs (such as co-pays, co-insurance and deductibles).

In a recent brief for health care purchasers, Catalyst for Payment Reform described the five different types of information included in its specifications. They are:

  1. Scope – which addresses whether the cost tool has complete information about a plan’s provider network, as well as information on provider price, quality, and consumer ratings.
  2. Utility – which helps the consumer assess how well the tool helps to make comparisons and decisions based on price, quality, and care settings.
  3. Accuracy – which evaluates how reliable the tool’s data are.
  4. Consumer Experience – which looks at how easy the tool is to use.
  5. Data Exchange, Reporting and Evaluation – which refers to a collection of factors, such whether the tool is continually improved, whether purchasers may use the data for third-party vendors, and whether users can easily give feedback about the tool.

CPR, created in 2009, is lead by experts from a diverse group of organizations, including the Urban Institute, the AARP, GE, WellPoint, and the American College of Family Physicians, to name a few.