Healthcare shopping is highly complex, and consumers often have a hard time understanding the financial impact of choices they or their doctors make. In practice, healthcare shopping remains so burdensome that most consumers rarely shop for value, if they shop at all. While surveys reveal great interest in healthcare prices, price estimation tools deployed by insurers get relatively limited use. My own experience but not data-driven assessment is that most consumers use price information for yes/no decisions, but incorporating price into comparisons different providers or treatment options remains too complex for most consumers.
One significant reason for the complexity is that most consumers pay for healthcare services through their insurance. A consumers’ insurance plan has specific rules that dictate which providers a consumer can see, which kinds of care the insurance will pay for, and specific requirements that must be met in order for the insurer to pay for the care. These rules were designed for a world where consumers would get medical care without knowing about cost, the provider and insurer would work through payment after the fact, via claims submission.
Having services first and costs settled later was reasonably satisfactory for consumers and providers before three major developments:
- Healthcare service costs increased significantly over the past few decades, outstripping general inflation by a healthy margin.
- Plan designs shifted significantly more cost onto consumers through higher deductibles, copays, and out-of-pocket limits
- Insurers began to employ complex rules know as “utilization management” to avoid paying for services they determine are unnecessary or low-value.
This has left consumers frustrated with the financial risk, unexpected medical bills, and limited to no ability to advocate for their interests within the maze of healthcare billing.
Most of these rules are set within the contracts between insurers and providers (actually they’re almost always with with provider practices). The contracts are assembled into provider networks, and the rules come along with them. In practice way that these rules are published makes it hard for consumers (and even providers) to understand and navigate them.
Because the rules are generally set by the same contracts that create the network, identifying the network using a public, consumer-facing Network ID would make it much simpler for apps (and some particularly determined people) to read these rules and build shopping experiences that account for them.
The deck below goes a little deeper.
