What is Price Transparency in healthcare?

Eliot Spitzer, when he was New York’s Attorney General, set up a website to expose the prices of the most popular medications sold in New York pharmacies.

The pharmacies “complied.” When I started my first practice in Williamsburg, I visited about 50 pharmacies and asked for their price list in order to help my patients find the best deals on medications. The pharmacies gave them to me. They were outdated and had their retail list price, “complying” with the law, but did not have the amount insurance companies or Medicare reimburse them. 

Doctors can bill insurance companies whatever they want. They can “charge” insurance companies a million dollars for an office visit if they want. But insurance companies will look at their contract with that doctor and the negotiated rate for that visit and pay the negotiated rate. So a million dollar visit will be reimbursed $42 by Aetna. The same visit might be reimbursed $49 by Blue Cross. And maybe $34 by Medicare. But cash paying consumers would see the bill for one million dollars and be expected to pay one million dollars because cash paying consumers have no idea how much they’d be charged ahead of time.

So what exactly is “price transparency?” It’s knowing how much Medicare reimburses for that product or service and paying that with cash. Does Medicare publish this information in a usable format for consumers? No way.