When the idea of price transparency first took hold outside purely academic circles, the pitch was simple: Coloradans would save themselves and the system money by shopping for health care the way they do for TVs or cars.

But shopping for health care has proven more difficult than buying consumer goods. A poll released in August found about 69% of surveyed Coloradans who needed hospital care attempted to find out what it would cost them in advance, but only about 43% succeeded.

And while health care costs might be higher if the federal and state governments had never required hospitals and insurance companies to post prices, the cost of covering a family with commercial insurance has gone up 24% nationwide since 2019, according to the nonprofit health care research group KFF.

Colorado state agencies and others have pivoted their approach in the last few years. New tools, while available for individuals, focus on employers and communities to drive costs down, and insurers are giving patients more direct incentives to shop around.

While not enough time has passed to know whether the next iteration of price transparency will be more successful than the one that proceeded it, a few examples suggest new tactics could work, under at least some circumstances.

Colorado has made major strides in ensuring residents have transparent information, such as allowing patients to sue if a hospital that didn’t post its prices pursues them aggressively for medical debt, and making it a “deceptive trade practice” not to publish that information, said Lt. Gov. Dianne Primavera, whose office includes a division focused on health care costs.

But those measures alone won’t solve the problem of unfair variation in prices between hospitals, or even within the same hospital, she said.

Insurance “carriers and employers can use this information to negotiate fairer prices,” she said. “If you can save an employer money on health care costs, you ultimately save employees.”

The hopeful view of price transparency is that employers and third parties will be more successful in bringing down rates than individuals have been, either through negotiations or by steering patients toward the best value, said Gary Claxton, a senior vice president at KFF.

But the data may not be clear enough to allow them to make informed decisions, and in some markets, cutting the most expensive hospitals out of an insurance network may not be feasible, he said.

“There’s always the question of whether any of this stuff works,” he said. “How good is this information?”

New price transparency tools

Earlier this fall, the Colorado Department of Health Care Policy and Financing unveiled a transparency tool that allows the public to search for rates by county, hospital, insurance company, plan type and procedure.

In late October, Gov. Jared Polis announced a different tool, developed by the nonprofit group Patient Rights Advocate, which allows searching by hospital and procedure.

Transparency is the first step toward a functioning health care market, Polis said. As is, people can pay significantly different amounts for the same procedure with the same doctors in the same hospital, he said.

“Before our legislature passed the law to require transparency, nobody knew this,” he said.

The new tools haven’t been around long enough to know if people will use them. A dashboard drawing from Colorado’s All-Payer Claims Database gets about 2,000 views per month, though officials don’t know how many individuals that represents or how they use the information, according to the Center for Improving Value in Health Care, which runs it.

While the new Department of Health Care Policy tool can be useful to consumers, the bigger impact may come from employers, chambers of commerce, or even entire communities banding together to demand better rates if they see they’re over-paying, said Kim Bimestefer, the department’s executive director.

“These tools are the next generation,” she said. “For a family alone to change the whole infrastructure of health care, that is an unfair ask of a family.”

Generally, patients get the most accurate results by calling their hospital and their insurance company, rather than trying to figure it out on their own, said Cara Welch, spokeswoman for the Colorado Hospital Association.

Tools focused on employers and insurance companies could be more useful, however, in partnering with hospitals to find the right prices, she said.

“Colorado hospitals recognize that health care affordability and transparency can be confusing for consumers, which is why all hospitals not only comply with state and federal regulations but also offer consumer-friendly tools to help patients understand their specific financial impact based on their insurance and the procedure or care they need,” she said in a statement.

Price transparency tools show significant differences in what health plans pay to hospitals for common procedures, but those differences may not be meaningful for patients.

What patients pay depends not only on the price of the services they use, but also on the structure of their insurance plan. For hospital-based care, a patient with commercial insurance typically will owe a percentage of the cost of their stay until they hit their out-of-pocket maximum. Under federal law, the maximum couldn’t exceed $9,450 for an individual and $18,900 for a family in 2024.

Say a hypothetical patient living in the Denver area needs a hip replacement and owes 20% of their hospital costs until they reach their out-of-pocket maximum. According to a price transparency tool recently unveiled by the state, the price of that surgery and the services that come with it range from about $12,000 to $51,000, depending on what type of insurance the patient has and what hospital they choose.

If the patient has used very little care this year, that gap makes a significant difference: about $2,500 vs. more than $10,000.

If they’ve already had a difficult year and racked up enough medical bills to come within a few thousand dollars of their out-of-pocket maximum, though, they would pay the same amount even if their care cost their insurance almost $40,000 more. A similar disconnect can also appear when the patient is responsible for a flat copay, rather than a percentage of their care costs.

Connection between prices and your finances

The state’s employee health plan has tried to make the connection between prices and patients’ finances more direct.

In 2022, the state started giving employees financial incentives — partial rebates on their care — if they chose providers that had above-average results at offering what the Health Care Blue Book, which ranks hospitals on a variety of services, deemed a “fair price.” The state’s Department of Personnel and Administration said at the time that it hoped to save about $1.50 for every $1 in incentives it paid out.

In the first year, the state’s employee health insurance program saved about $990,000, or roughly $2 for every dollar it spent on incentives, said Doug Platt, the department’s spokesman. In the second year, it saved more than $1.8 million, or $3.50 for every dollar spent, he said.

The department hasn’t compiled numbers about outcomes, but anecdotally, employees appear to be missing fewer work days when they need medical care, Platt said. The state hasn’t surveyed its workers, but participation increased in the second year, which suggests people were satisfied and recommended it to their coworkers, he said.

“The first year we rolled it out, it was successful,” he said. “The second year, it was even more successful.”

Colorado Worker for Innovative and New Solutions, the state employee union, has gotten generally positive feedback about the program, executive director Hilary Glasgow said. In general, workers are in favor of reducing health care costs in any way that doesn’t decrease care quality, she said.

“People have found it helpful,” she said. “It’s helped them save money or get a rebate.”

While the state employee plan has only offered carrots so far, other insurers have been less hesitant to pull out the sticks. UnitedHealthcare now has a set of plans, called Surest, that adjust patients’ out-of-pocket costs based on an algorithm that factors in their provider’s prices and quality scores.

Mark Olson, vice president of UnitedHealthcare’s Colorado branch, declined to share the number of people using the plans, but said about one in five of United’s large multi-state customers will offer Surest as an option in 2025.

Essentially, the Surest plan eliminates co-insurance and deductibles, so patients only pay a copay upfront. The copay is higher if the provider charges higher prices or has worse outcomes. Unlike typical insurance, where people pay a higher percentage of their health care costs before meeting their deductibles, the patient’s share stays the same until they hit their out-of-pocket maximum.

Employers saved about 11%, or $412 for each employee each month, Olson said. The average worker’s out-of-pocket costs were roughly half what they had been under the old model, he said, and annual premium increases were smaller than in traditional plans.

United has posted the prices it pays to doctors and hospitals for years, but customers rarely used it, either because they didn’t know how to, or didn’t see how it made a difference, Olson said. In some cases, people seemed to choose the expensive providers because they assumed the care would be better, he said.

“With this, it’s baked in,” he said.

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