May 29, 2019
The Wall Street Journal and other leading publications are reporting that plans are afoot in Washington to issue a pricing transparency mandate will affect how Americans shop for, receive, and pay for healthcare services in America. According to the reporting, the White House is developing a strategy aimed at bending the healthcare cost-curve by giving consumers greater access to healthcare pricing before they receive services.
The mandate is expected to require insurers to publicize the negotiated rates they pay for services, and require hospitals and physicians to provide patients with a "total price for care" before consumers receive services. It builds on a mandate that took effect in January, which required hospitals to post their prices online. The goal: bring greater transparency to the healthcare market for consumers, so they can make better choices.
We asked Bill Krause, VP of Experience Solutions, to help us understand Change Healthcare’s perspective on this news, and on the issues of price transparency and consumer engagement overall. We also asked Bill to share his advice to payers and providers who are following this news and challenged by the increasing "retailization" of healthcare.
On today's show, we discuss:
RICH LEVIN: Welcome to the Change Healthcare podcast. I’m Rich Levin. Today my special guest is Bill Krause, the vice president of experience solutions at Change Healthcare. Welcome to the podcast, Bill.
BILL KRAUSE: Thank you, Rich.
RICH: So we got together today to talk about a story that appeared in the Wall Street Journal that we found pretty interesting and I reached out to Bill when this hit. They reported on the 15th that the White House plans to issue a major pricing transparency mandate that’s sure to affect how Americans shop for, receive, and pay for healthcare services in America. According to the article, which we will have a link to in the show notes folks; just hit your smartphone or your browser, browse down in the show notes and you’ll see a link to any of the resources we talk about here today. But according to the article, the White House has been working for months on a strategy aimed at bending the healthcare cost-curve by giving consumers greater access to pricing information before they receive services. The key provisions of the mandate that is covered in this story, it’s going to … Wall Street Journal reports it will require insurers to publicize the negotiated rates they pay for services and require hospitals and physicians to provide patients with a total price for care before they receive services. And it builds on a requirement that took effect January 1st, that required hospitals to post their price lists online. You may have heard of that, I’m sure it was hard to miss it, with a goal of creating greater transparency and enabling consumers to make more informed choices. So, thanks for joining us today, Bill. Let’s react to this news. What is Change Healthcare’s perspective on this news? Of course, the White House hasn’t announced anything yet at the time we’re recording this. This could happen after we finish this podcast. But the Wall Street Journal has reported.
BILL: So, at Change Healthcare, we’ve seen this trend. And I think the industry’s seen this trend now for a number of years in different ways. And our perspective on the cost and quality transparency is that it’s important for all of the stakeholders in healthcare to have the ability to share critical information, of which financial-related information’s so important to the healthcare consumer. To have that information available and to share it, to inform decision-making, to drive value-based care, to really achieve those outcomes that the industry is working hard towards. And we view this as one important leg in a broader strategy and a broader effort afoot towards a more value-based care healthcare system.
RICH: How does this play into value-based care? What’s the connection between price transparency and value-based care, Bill?
BILL: It’s a good question. I think if we step back, what’s very apparent now is that the consumer, the individual and families, they’re the fastest growing payer in healthcare from the standpoint of out-of-pocket spending, and it’s growing quite rapidly in part due to high deductible health plans as well as other out-of-pocket costs. So, from a value-based care standpoint, if we think about what that means in obtaining quality care and healthcare outcomes that are achieved through those services, the consumer’s decision and their ability to make choices as to the care that they need, transparency is a fundamental part of that. That understanding of what the consumer should pay, needs to pay, and the quality making those decisions, empowering that consumer really does move forward the value-based care agenda.
RICH: How prepared is Change Healthcare to help the industry address any new requirements around price transparency that might come out of Washington such as what the Wall Street Journal is reporting?
BILL: Our company has been an early adopter of solutions to help our customers, to help our health insurance, our payer customers, our hospitals, health systems, our provider customers. We have a portfolio of solutions today that allow for consumers and the healthcare stakeholders to be able to provide information related to cost and quality. So, I would say we’re very prepared in this regard. And we’ve been investing ahead of what we saw as the broader trend to support the need for transparency solutions.
RICH: So we’ll talk about what solutions Change Healthcare offers today and what might be coming in a little bit. But let’s drill into the problem. So people often equate transparency—and I’m putting that in quotes when I say “people”—I think the consumers and the general public often equate transparency with drug price transparency. And that’s certainly a big part of it. Over 20 states now have prescription drug price transparency laws. And it’s probably safe to assume that more regulation is likely coming in that area. But isn’t transparency a much bigger topic for consumers? For example, the Journal reports that the administration is looking at transparency for the rates payers negotiate with providers. And consumers often don’t know in advance what they’ll owe to a provider before they’re seen or treated or have a procedure. And they also rarely know what the total cost of care is. I’m not even sure they even think about things that way right now. They just worry about the deductible or the bill. Can you describe the full scope of what healthcare transparency means and the issues it poses to consumers?
BILL: Certainly. When you think about transparency in the context of consumers’ ability to understand their financial responsibility, all of the costs associated with care, and their ability to plan and prepare in which healthcare is notoriously difficult, in many cases healthcare costs are a surprise, and due to an unexpected circumstance for a consumer. But transparency is really the pain point, is being able to prepare and plan for it. So the scope of the need relates to all sorts of aspects, such as avoiding being surprised by a medical bill, which in fact statistics and data show that most patients were surprised by their medical bills in 2018 just as one example alone. So it encompasses the spectrum from understanding the full cost and then being able to plan and prepare for that in a way that avoids the consumer from reaching financial distress. If they need different approaches to finance care and to account for those unexpected bills, then there’s an opportunity for them to do it before it takes that consumer into a state of financial distress ... which the reality for many patients and many healthcare consumers is that a few medical bills, and they are in that state of financial distress. So, there’s an urgent need to solve for transparency.
RICH: And Bill, you mentioned, I think you said, over 90% of consumers have reported that they’re surprised by medical bills. Did I get the number right?
BILL: That’s exactly right. You know there’s so many other statistics here that really help define the scope of the consumer’s pain points. Almost two-thirds of consumers are confused by medical bills. Almost two-thirds of consumers would like to pay all of their healthcare bills in one place rather than multiple different bills. Just the statistics go on and on. And back to your earlier point, what’s really necessary to unlock this complexity is a way to translate all of the services and procedures that consumers need into bite-sized, understandable chunks that are described in consumer-friendly language and in a way that can help people and help patients really make sense of the complexity. That’s an important ingredient. It’s not just a number, but it’s the narrative. It’s all of the communication that surrounds that as well as the time, which is a big push as this article indicates, towards arming consumers with information prior to the time of service, prior to the actual procedure.
RICH: One other data point that I’ll add to the mix which is 66.5% of bankruptcies in the United States are related to medical debt now. And it’s interesting what you said because you actually introduced what the industry would call, what we would call consumer engagement, as part of the solution here. We talk about price transparency as if it is an end to itself: “Oh, just showing these prices, magic happens.” But you’re really talking about price transparency and consumer engagement as a potent mix to get to a better place. Because, can shifting the industry to a more transparent model really have an impact? Just the transparency alone, Bill?
BILL: No. I think this is a great point. Transparency tools have been available to consumers for a few years now. And, of course, there’s arguments as to the quality and accuracy of the data itself, which is being addressed over time. But the reality is that the number itself, the price point itself, needs the context. It needs engagement. And when we look at this, as we define the problem and the opportunity, it’s really shifting from a legacy mindset of bills and balances and statements to a mindset of financial care and engagement which really enables, helps a consumer through different tactics and capabilities that they can navigate that financial healthcare journey. And that financial journey that they go through, that we go through as patients, is significant to the earlier point on a level of bankruptcy and financial distress. So this is an issue that requires many different aspects to come together to help educate and inform beyond just the price itself. And that’s a key ingredient to adoption and making these capabilities very useful for consumers to drive smart decisions around.
RICH: And it’s interesting Bill, because I don’t see a lot of conversation about that in the town square. Again, the talk is about transparency like it is in and of itself a silver bullet, and it’s connecting it to all these other things. It seems to be based on, what I’m hearing you say, that really will help move the needle towards improving value-based care to your earlier point, towards improving the consumer experience, towards helping people better manage the liabilities and know what they’re getting into before they get into it.
BILL: Exactly. And all of those components are necessary to drive the level of benefits that the industry and that public policy makers are looking to achieve. But it does start with the ability to bundle together the variety of different services into one transactable price, described in such a way that it is understandable by somebody not trained in healthcare. And that is the starting point towards the broader financial engagement that is needed. And so these articles and the indication that there’s effort afoot to expand that does move in the right direction. So we are excited to see that evolve.
RICH: And fundamentally, it could catalyze change but again it also poses issues for both providers and payers and maybe even employers. I mean, the industry often says that achieving transparency is cumbersome. It’s costly to provide consumers insight upfront into costs. But the lack of transparency, what consumers will refer to as “surprise bills” or “sticker shock,” is often how they refer to it. Minimal or inaccurate upfront disclosure. Pre-service or point-of-service. These are the primary reasons consumers cite for low satisfaction and poor consumer experience when dealing with providers and payers. Now Change Healthcare has been offering transparency solutions for some time. You mentioned that earlier in the conversation, and I want to drill into that now a little bit. Are solutions available today, right now, that can help payers and providers meet these anticipated requirements and, more important, help close the transparency and consumer engagement gaps?
BILL: Yes. There are those. There are solutions available today. And while we don’t know certainly the full scope of public policy that may unfold in the near term given the media around this, we do have solutions today that our customers can adopt that enable transparency and enable consumers to plan and prepare for their financial responsibility. We offer a solution, True View, which gives consumers an easy-to-use way to determine pricing for specific procedures and choose providers based on quality, price, and location. Important in that solution is that consumer-friendly narrative, that easy way to search and self-service. And that tool is available to our customers. We offer solutions for our provider, our hospital and health system customers. Our Clearance Price Transparency and Clearance Estimator tools allow our customers to be able to provide to consumers and provide to patients information on their financial responsibility that reflects where they stand with their benefits and the different factors that go into the calculation of that responsibility. So that’s available for our customers today. And so these are important tools which help in this broader financial experience journey that we’ve been discussing.
RICH: And we’ll provide links to all of the solutions that Bill just mentioned again, in the show notes. If you’re listening to this right now, just open the show notes on your smartphone or in your browser, and you will see links to these solutions if you would like more information about them or if you want to get them in front of your payers and providers. If you’re a consumer and say, “Hey, what are you folks doing about this?” Take a look at it. Let’s switch gears a little bit. What can payers and providers hope to see coming online from Change Healthcare in the future to address the full scope of transparency requirements as we understand them today and as they evolve? And I realize you might not be able to tell us a lot of things right now on this podcast, but what can you share about the company’s vision and maybe things that we’re working on that we could be unveiling later this year?
BILL: Certainly. So to your point there, we have a number of efforts underway now to bring new capabilities and solutions in this broad domain. One area which I’ll highlight relates to the overall retail trends in healthcare and the desire for consumers to have more self-service, easier digital experiences that simplify the steps that they need to access and receive care. And so underneath that broad umbrella, we are working on capabilities that will help our providers make available to their consumers ways to shop, book, and pay for healthcare in very simple, easy-to-use digital experiences. That will help enable and meet the demand that we discussed earlier on this podcast. Additionally, we are also working with a company, MDsave, where we are partners. And MDsave offers to the market today an ability for providers to offer a fully transactable, single price to consumers for a large range of procedures, so that the consumer knows exactly what the cost is prior to service, and it avoids things like surprise bills. And we’re working with MDsave to make that solution available to our customers and to simplify the way it can be incorporated into the workflow that our providers need to follow on a daily basis.
RICH: You mentioned the company’s strategic investment in MDsave, and a link to that announcement will be in the show notes. What about the partnership announcement that was made, I think, about a year ago now? We’re recording this in May of 2019, and I think it was May of 2018 we shared the stage with Adobe and Microsoft at the HLTH conference and announced a partnership around consumer engagement. Does that play a role here? Looking at the consumer engagement angle here? And if it does, can you tell us about that announcement and where are we at with that? Is that still alive? Is anything going to come out of the chute here?
BILL: It does play a very important role here. I’m happy to speak to that partnership as we’ve been working with our provider customers in the last 12 months with Adobe and Microsoft to develop new solutions and capabilities that really take digital experiences and the patient digital experience to the next level. So we’ve been working on a variety of areas that our providers want to make digital self-service tools available to share personalized content, and to bring the range of those capabilities that Adobe has delivered so successfully to other industries. So we’re excited about that partnership. We’ve been working actively with our customers, and we will be releasing solutions that utilize those capabilities and help in this financial experience, this overall financial journey.
RICH: How close are we to actually delivering anything on that front Bill, if you’re able to say?
BILL: Certainly. Well, we have active early customers now using some of those capabilities. And those solutions will be in market and available for customers to purchase here this year and really over the summer. So it’s moved along quite rapidly. And it was important for us to really build out very solid capabilities, demonstrate the value of those capabilities with early adopter customers so that when we make this available to the rest of our customers, that they can benefit from this and achieve the value that they need in a very short period of time.
RICH: Change Healthcare talked back in May of 2018 about bringing a more “retail-like experience” to the consumer. What does that mean? You touched on that a little bit with Adobe bringing their capabilities and consumer benefits to other industries and Change Healthcare, I believe, is the first to work with them to bring that retail-like experience to healthcare. What does that mean? Unpack that a little bit for us.
BILL: Certainly Rich. From our standpoint, when we think about retail-like experiences, we naturally gravitate towards e-commerce giants such as Amazon and eBay and other companies. And what we as consumers enjoy is that easy ability to shop, to be able to purchase and receive whatever service or item we want with a minimum level of effort. Very simple. So to me, retailization, in part, has to do with simplification and making things very easy for consumers to complete a full purchase cycle. And I think those capabilities are really behind what’s needed in healthcare. Now there’s lots of different ways you can go with the retailization in healthcare. We can talk about the new front door of urgent care and retail clinics, but I think the broader trend here is around simplifying access to care, the purchase of care, and those steps that in reality consume a fair amount of any individual’s time. If we think about our own healthcare experiences and managing across different bills and statements and scheduling appointments and all the other logistics of care, these are the things that will benefit dramatically from those retail ecommerce-like approaches.
RICH: It’s interesting the term you use, “the retailization of healthcare”, because that’s, in my view, a better term than the consumerization of healthcare, because it really describes the experience that you want to deliver as opposed to consumerization of healthcare, which kind of speaks to, “Oh well, the consumer’s in the driver’s seat.” But they haven’t been. Healthcare has largely resisted that until now. And in fact, I sometimes think if you look at healthcare—and the old joke in healthcare is that advanced technology is a fax machine—they’re still using fax machines throughout healthcare. And how do we kill the fax? And the joke I overheard at an industry event: Two physicians. One physician said to the other that we no longer use the fax for whatever it was they were using. And the other physician said, "How did you do that? How’d you get there? How did you get the organization to go along with that?" He says, "We unplugged the fax machines." And it was brute force. They stopped using the fax machines that way. And I sometimes think that the retailization of healthcare is also the leading edge for transformation of healthcare IT as well. It’s going to pull the whole industry along because, by definition, it has to be contemporary, has to be a great user experience, and that’s going to wash over the entire industry. That’s just a theory of mine, but I wonder what you think about that?
BILL: Yes. I agree with that perspective. I don’t see where all of healthcare will become completely consumer-directed in the decisions; it requires that medical expertise and that guidance. There’s no question about that. But your fax example, there’s so many opportunities where we can use tools and technology to simplify and to ease the process of accessing care for consumers. So I’ll give you another example. Some of our customers we’re working with for radiology follow-up, and these are patients that need to come back in for follow-up radiology exams. And the process to do that for a lot of the patients is quite cumbersome. And so we’re applying these digital experience tools to simplify it, to help them set the appointment, to create a self-service experience. At the end of the day, the consumer isn’t deciding by themselves that they need another MRI or that there’s some follow on. That’s coming by the direction of the physician. But the consumer is benefiting from all of the cohesiveness of these consumer tools that can just simplify that process for them.
RICH: And you’re talking about how the industry can empower consumers to be smarter healthcare shoppers so they can understand their options, better manage their costs and liability, and find the best value for quality healthcare. Before we go Bill, if I could get a couple parting shots from you, some advice specifically to three constituencies, critical constituencies: What can specific stakeholders do right now to help move the needle on price transparency and consumer engagement? And specifically, payers, providers, and employers?
BILL: I think all three constituencies have a great opportunity to more proactively engage consumers with these consumer transparency tools and to help consumers digest the information, make it actionable. So when I think about it from the provider standpoint, in reality consumers are already shopping. They may not be shopping across different providers—and in some cases they certainly are—but they may be shopping and deciding whether or not they’re going to receive care in the first place. Which, for patients, depending on what their medical need is, could have very severe negative consequences if they don’t follow through. So for those providers, making available transparency tools that can help inform consumers what their responsibility is really pays off. And in fact, there’s a data point out there that shows when transparency tools are made available to patients, they are more likely to pursue care knowing that information. And so that’s a win on quality. That’s a win for consumer outcomes as well. I think for payers, the opportunity is there, and payers certainly have adopted transparency tools in the past. But it’s again, it’s how to make it contextually relevant. How to be able to surface the information to those members at the point in time when they’re going to be making decisions. Whether it’s the payer becomes aware of an opportunity to inform the member because of a check on member eligibility, or some other trigger that can provide insight as to context and outreach. And then, at the end of the day, employers really focus on the health and well-being of their employees, and also benefit greatly from making these tools available to patients. So I guess I would boil it down to say the need is the same across the different constituents, and it really has to do with context and when this information is served to the patient, or the member, or consumer, and how it is wrapped into our broader consumer engagement strategy.
RICH: Anything specific just for employers who are often, at least in my opinion, overlooked in this conversation?
BILL: My advice for employers is to ask their payers, during the period of time when they’re negotiating and setting the benefits and plans for the employees, ask those payers to make these tools available to the employees in very consumer-friendly ways so that adoption levels can go up for these solutions. We know that consumers want these solutions and capabilities. And employers have a really important voice here and an opportunity to work with payers to bring those forward.
RICH: What’s the short list of bullets that the employers should ask their payers to provide their employees?
BILL: The short list is really, first of all, do you have a cost and quality transparency solution that we can make available to our employees? Secondly, do you have a mechanism to ensure that that information is populated with the most recent and more informative perspective needed for consumer decision-making? Those two points alone will go dramatically towards helping employers provide these tools to their employees.
RICH: Bill Krause, Vice President of Experience Solutions at Change Healthcare, thank you so much for joining us today on the Change Healthcare podcast. Folks, this is first in a series on price transparency and consumer engagement. We will be inviting folks from MDsave, from Adobe, from Microsoft to join us on this podcast. And we also hope to talk to some of the providers that are working with us to develop the next generation of solutions that you’ll be hearing about in the future from the company. Remember you heard it here first, so stay tuned to the Change Healthcare podcast for the latest news from Change Healthcare. Thank you so much Bill.
BILL: Thanks, Rich.