On January 1st, 2021, the Centers for Medicare and Medicaid gifted the American people with a new rule requiring price transparency in healthcare. The federal rule requires hospitals to publish cash prices, prices with insurance plans, and minimum/maximum commercial negotiated prices in a “manner that is consumer-friendly,” each year.
If hospitals do not comply, they are fined $300 a day, or what would come out to just $109,500 a year.
Unfortunately, in a July report, the Patient Rights Advocate, a nonprofit organization, found that only 5.6% of hospitals are fully compliant with the new rule. Moreover, over half of the hospitals have not published any negotiated rates at all.
Due to the lack of noncompliance, the Centers for Medicare and Medicaid Services Advocates proposed raising the penalty to $2 million a year. Advocates such as Sally Pipes agree. She writes, “the penalty is justifiable if it means getting hospitals to comply with a measure that should have been commonplace to begin with.”
Hospitals benefit from preventing true price transparency. In an effort to keep the status quo of secret medical prices, several U.S. business hospital groups are suing to block the new rule.
Between noncompliance, low penalties, slow moving legislators, and powerful hospital interests, it seems that achieving a truly competitive and transparent healthcare system is a long way off.
But what if there were another way around the standoff? What if Americans did not have to rely on hospitals to reveal their closely guarded secrets? What if the American people could rely on one another instead?
Enter: crowdsourcing.
Crowdsourcing is the process of attracting a ‘crowd’ to solve a problem, aggregate information, or create something useful. Whether it be crowd-funding platforms such as Gofundme, crowd-voting platforms such as American Idol, or crowd-information platforms such as Gasbuddy, crowdsourcing revolutionized how problems are solved and how information is shared. So why not apply crowdsourcing to healthcare as well?
I envision an app or website where users can anonymously upload a picture of their itemized medical bill. The user fills in a few details such as the name of the hospital where services were rendered, which insurance (or if cash pay) was used, and maybe even a short review of the perceived quality of care.
The data would then be added (perhaps even through AI) to a larger database that could be turned into a searchable interface with important filters such as location, procedure, and payment method.
If enough information was uploaded to build a large enough database, the benefits to the American people would be enormous. Not only could hospital services finally be shoppable, but it could potentially start a price war as well.
For example, a Georgia man was quoted $40,000 for a simple urology surgery. After the man visited the Surgery Center of Oklahoma’s website (a free market minded surgical center that has posted their prices online since 2011), he saw the same procedure quoted at just $3,600! He told his surgeon he would be going to Oklahoma. Rather than lose his patient, the Georgia surgeon agreed to do the procedure for just $4,000.
The example shows us that a crowdsourced database could potentially place the power of negotiation into the hands of the patients, dramatically reducing the overall cost of healthcare.
Interestingly, a few startups were created 7 – 10 years ago that have attempted creating searchable databases for procedure prices such as Pricing Healthcare, KQED, and Clear Health Costs.
But after almost a decade, it seems that these startups still lack the necessary information to be useful. For example, if I search for “c-section” within 100 miles of me on KQED, zero results show. Clear Health Costs shows just four. Pricing Healthcare was unsearchable. It seems that few individuals upload pricing information, which forces the startups to rely primarily on information from the hospitals – which gets us right back to where we started.
Harnessing the power of social media, individualization, and pathos could potentially educate and motivate individuals to contribute healthcare pricing information.
For example, a startup could post a link on a Pancreatic Cancer Survivor’s Facebook Group asking individuals to upload their hospital bills to help a recently diagnosed “Shelby” prepare accordingly. Or they could run a Facebook ad detailing how surprise medical billing financially crippled a young family. Or the startup could post a link to an Orange County mom group with a simple message to “let’s get transparent labor and delivery pricing available for our county.”
Furthermore, businesses or nonprofits concerned with medical care could incentivize the public to upload medical bills (with personal information redacted) with coupons, freebies, or gift cards given to those who upload the costs they paid.
By embracing new and individualized approaches, crowdsourcing medical prices can yet achieve its full potential.
McKenzie Richards is a Health Care Program Associate and Development Associate at the Pacific Research Institute.
