Price transparency reveals multiple dimensions of health inequalities beyond patients

Price transparency, the much-discussed US regulation that became federal law in 2019, has taken some time to implement, but now its significant side effects are being revealed. For the first time, we see clearly that the inequities in our health care system affect not only patients, but also the doctors who care for them. Research on prices and payments by health insurance providers indicates a clear need for changes in our health care payment systems.

Inequality in US health care has long been a focus of researchers. Individuals in poorer and rural communities generally experience worse health outcomes than their wealthier counterparts. Although medical schools and healthcare institutions are investing resources to address some of these known inequities, the disparities faced by healthcare providers themselves have gone largely unexamined, both in research as in response to the problem.

With health care price transparency regulations, researchers are gaining new insights into the issues that exacerbate certain problems within our health care system. Initially, advocates and policymakers promoted price transparency as a way to empower citizens, allowing them to bring a free-market, competitive mindset to an industry long clouded by bureaucracy. The goal was to allow patients to choose providers who offer the best rates. Price transparency data has been made public, but practical tools for patients to easily compare prices are still missing.

Price transparency also benefits doctors, who can now see the rates other providers are being paid by different insurers. In the US health care system, each provider has unique reimbursement rates for each procedure that vary among insurance companies due to separately negotiated contracts. That’s why the cost of knee replacement surgery can vary from one hospital to another, and that’s why a doctor can get two completely different payments for performing the same procedure on patients with two different insurance plans.

However, accessing this data is not simple for either doctors or patients. Insurance companies have released vast amounts of pricing data, the scale of which can only be analyzed by data scientists.

As part of a research study, I delved into this data to understand trends in insurance payments affecting physicians and their impact on health outcomes nationally. My process began with the analysis of trillions of individual records, illustrating why both doctors and patients find this information almost impossible to interpret.

Many of my findings align with what experts have observed anecdotally, but now, with price transparency, we have the data to back up those observations. Some results are positive; for example, practices with higher patient service ratings tend to negotiate better rates with insurers, which supports a free-market approach to health care: better care, better payment.

Other findings paint a different picture. Doctors receive lower payments in markets where insurance companies have strong market control (many patients in the same community use the same insurance company), making it more difficult for them to negotiate reimbursement rates just This discourages doctors from practicing in these areas, where they may not be adequately paid.

In addition, price disparities create competitive challenges for certain suppliers. For example, larger practices often receive higher reimbursement rates, making it harder for small practices to compete. This trend helps explain why many private practices are merging with larger healthcare groups. In addition, doctors in geographic areas where the population has poorer health status are paid less than those in healthier areas, which is a troubling finding. For example, doctors in rural areas tend to charge less for the same procedures than their counterparts in more centralized locations, a troubling trend given the significant physician shortages already facing rural communities.

In the US, community health is often related to socioeconomic factors. Communities facing economic challenges often have poorer health outcomes, dealing with chronic conditions such as heart disease, diabetes, addiction and cancer. In this interconnected system of health and wealth, the doctors who serve these communities are paid less by insurers, effectively penalizing them for working with those who need their care the most.

This reality is alarming and should concern us all. The United States is facing a critical shortage of health care providers as the constant struggle for fair reimbursement with insurance companies causes burnout among health care professionals, threatening the stability of the system. When physicians are not adequately compensated, they have little incentive to continue practicing, and with slow growth in reimbursement rates and the closing of rural health facilities, ensuring fair compensation for all physicians is crucial to maintaining the integrity of our healthcare system.

Transparency in our healthcare system is just the beginning. Understanding healthcare pricing can empower not only patients, but physicians as well. Saving our healthcare system depends on it.

Meade Monger is CEO of Omniscient Platforms in Dallas.