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Transparency Will Help Drive Down Health Care Costs

Written by Press Release

September 24, 2018

Our health care system is in desperate need of some sunlight. Patients are kept in the dark about the true cost of their care, which often unnecessarily leads them to accept higher costs without question. That needs to change.

Senate passage of the Patient Right to Know Drug Prices Act—which will prevent health insurers and drug companies from masking the lowest possible cost of prescription drugs—is a good place to start. 

The bill takes on the health plans and pharmacy benefit management service providers that include “gag clauses” in contracts. This practice prohibits pharmacists from telling patients when a prescription drug would cost less if they paid out of pocket rather than using their health insurance.  

Overpayments for prescription drugs happen far more often than one would think. A recent study published the Journal of the American Medical Association found that nearly one in four patients paid too much for their prescriptions. The study cast a large net, and found 2.2 million instances of overpayments in the 9.5 million claims that were analyzed. According to its findings, patients pay more than they need to approximately 23 percent of the time they pick up a prescription.  

Karen Van Nuys of the University of Southern California, the study’s lead author, said she was shocked by “how common these overpayments appear to be.” 

The fact that agreements to conceal the true cost of medication are legal is upsetting—especially considering that insurance is supposed to save consumers money. The Patient Right to Know Drug Prices Actwill ensure that health insurance issuers and group health plans do not prohibit pharmacy providers from delivering drug price information to enrollees.

Transparency is a key component of a free market, and more reforms that usher it into the health care marketplace are desperately needed. Empowering patients with information will encourage accountability and fairness in the system. 

While Washington seeks additional ways to promote transparency, we can be proud that Arkansas was the first state to sign price transparency into law. This leadership from Little Rock helps increase Arkansans’ understanding of the true cost of health care procedures and services. 

Arkansas is one of fifteen states to maintain an All-Payer Claims Database (APCD). APCDs are large-scale databases that systematically collect and analyze medical and pharmacy claims from private and public payers. Cost and quality data become available to consumers through APCDs which, in turn, raises public awareness of price differences and makes lower-cost options more visible to consumers. 

Research supports the notion that the transparency provided by APCDs helps make health care more affordable. One study published in the Journal of the American Medical Association documents the benefits of employer-sponsored private price transparency platforms. After detailing its impact on three common medical services, researchers established that the “use of price transparency information was associated with lower total claims payments.”

It is clear that simple, commonsense approaches to promote transparency can effectuate positive change in the system. Eliminating barriers that prevent Arkansans from fully understanding the costs of their health care is a mechanism that will force market changes. We must continue to do more to make health care costs transparent, sensible and fair.

Original article source: | Article may or may not reflect the views of KLEK 102.5 FM or The Voice of Arkansas Minority Advocacy Council

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