Legislation & Regulation

If You Make Them Build It, They Still May Not Come

Price transparency mandates are catching on. But they may codify that which hasn’t worked all that well so far.

Richard Mark Kirkner
Contributing Editor

Expecting people to search out price information, even if it’s online, may be misguided, says Anna Sinaiko of the Harvard T.H. Chan School of Public Health.

A few years ago, a patient in Indiana went to his doctor, who ordered a routine cardiac stress test. The visit was in a major medical center, and the patient was sent to another floor to register for the test. Long story short, the patient, who was savvy in the ways of health insurance and was well aware of the limits of his high-deductible plan, was first told the price wasn’t available, then that the list price was $5,500, then $3,500, and finally found a price of $550 online.

That patient, Alex Azar, is now the secretary of the Department of Health and Human Services.

The experience occurred after he’d served as deputy HHS secretary in the George W. Bush administration. “Now, there I was, the former deputy secretary of Health and Human Services, and that is the kind of effort it took to find out how much I would owe for a procedure,” Azar recounted in March when he addressed the Federation of American Hospitals, the national trade association for for-profit hospitals. “What if I had been a grandmother? Or a 20-something with a high-deductible plan?”

Colorado sets good example

Improving cost transparency from providers and payers is one of four goals Azar has set for his agency. To that end, CMS in April proposed rules that would revive the unenforced ACA requirement for hospitals to publicize their standard charges, adding that they post them online and in a way that app developers would make them intelligible. The American Hospital Association has expressed its support but said it would submit ideas on tweaking the rules during the comment period. The new rules would go into effect Jan. 1, 2019.

The states have also been working on provider price-transparency laws, perhaps with the grandmothers or 20-somethings that Azar was talking about in mind. State efforts to improve drug price transparency have been getting a lot of attention; 28 now require hospitals, physicians, or health plans—and sometimes all three—to make some variation of their per-procedure charges known.

These laws typically require reporting of average charges to the state, sometimes in an annual report or by disclosing prices upon patient request. Some mandate that hospitals provide itemized bills, but that’s after discharge. Illinois requires hospitals to give patients estimated charges before treatment. Some require posting of a searchable charge master. But go to California’s portal, at oshpd.ca.gov, type in a hospital’s name and see what comes up. For the University of California–San Francisco, you get a list of 45 documents and spread sheets dated from 2005 to 2016. Not exactly user friendly. “There could be tens of thousands of items on a charge master,” says Julie Lonborg, vice president of communications for the Colorado Hospital Association.

Colorado may be breaking new ground in a couple of ways with its provider price transparency law, which went into effect this year. “Colorado is taking it to the next step,” says Patricia Riley, president and executive director of the National Academy for State Health Plans. For one, the law requires all hospitals and provider groups of six physicians or more to “conspicuously” post their private-pay, non-discounted fees on their websites or make them “readily available” electronically upon request. For another, it is specific about what prices to post. Hospitals must post the 50 diagnosis-related group (DRG) codes that they use most often and 25 most-used current procedural terminology (CPT) codes. Physician groups and other health care providers must publicize charges of their 15 most common procedures. Six months in, the association says all of its members are in compliance with the law.

The Colorado Hospital Association supports the measure, although not all its members have been so enthusiastic about it in their public comments. “This is a heavy lift for many of our members,” CHA’s Lonborg admits. Because so many hospital systems also own provider groups, compliance can be complex. One hospital system has 400 websites to update. Even a small hospital in western Colorado has nine different physician groups for which it must post prices, Lonborg says. While only 6% of Colorado’s population is uninsured and presumably interested in the self-pay price, Lonborg notes that individuals with high-deductible plans may also need this information because sometimes they opt to pay the private rate as a way of managing their out-of-pocket expenses.

Lonborg says her association likes the law because it brings in physicians and other non-hospital providers: “We believe that for transparency to work and be meaningful in the marketplace, it needs to be effective for all those providers.”

Health plan attempts

What should price transparency entail? It’s not a blank slate. Through research, experience, and perhaps common sense, people have some ideas. A 2015 report on voluntary price transparency tools by the Health Care Incentives Improvement Institute and Catalyst for Payment Reform itemized 10 features that price transparency tools should have. Some of the key ones were ease of use, showing price and quality information together, and efforts to encourage consumers to actually use the information rather than having it sit idle.

Health plans have made some efforts at price transparency, but the results have been mixed. An August 2017 study in w found that a price transparency tool for California public employees and retirees did not lead to lower spending. Only 12% of the people with access to the tool used it. The study found that those who did a price search for imaging ended up saving 14% on average. “Simply offering a price transparency tool is not sufficient to meaningfully decrease health care prices or spending,” the authors concluded.

An April 2016 Health Affairs study of Aetna’s Member Payment Estimator tool found that usage was overall low, but information on the price of imaging services and childbirth were more likely to draw in younger, healthier patients with higher deductibles. The study implied that a consumer campaign may be needed to draw more patients in.

Anna Sinaiko, an assistant professor at the Harvard T.H. Chan School of Public Health, was co-author of the 2017 study and lead author of the 2016 one. She says expecting people to search out price information, even if it’s online, may be misguided. “The tools we have now, which rely on patients going online and searching for price information on their own, aren’t meeting patients’ demands for useful price information.”

When and where the price information is delivered is important, Sinaiko says. “Ideally, patients would see price information at the time when they are making a decision about whether and where to receive care,” she says. “I’d love to see price information incorporated into primary care office visits, for example, when they are getting a referral to a specialist or for a procedure, so they have the opportunity to talk about it with their physician or another clinician in the office.” Giving patients information about quality of outcomes is also important in helping them choose providers, she says.

States are exerting more regulation over price transparency because they’re also major purchasers of health care, as Sinaiko points out. Laws that make meaningful price information available—e.g., paid claims, not charges, or prices for episode level bundles, and make these prices broadly available to the public—are an important step in this direction, she says.

But the jury is still out on state efforts to legislate price transparency and what will motivate people to buy health care based on its price and quality, Sinaiko says. “We don’t yet know whether they’ve had an impact on behavior,” she says. Colorado may need another six months to begin to get a read on that.


Legislation and regulation
By Richard Mark Kirkner
Legislation and regulation
By Richard Mark Kirkner
Legislation and regulation
By Richard Mark Kirkner

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