Fighting Price Transparency On Sly

The Opaque Fight Against Price Transparency

Public opposition would be unseemly, so insurers and hospitals work behind the scenes against price transparency.

For those who doubt the importance of transparency in price and quality to free the market, you just have to look behind the public curtain and observe the fierceness with which the opponents of transparency are trying to keep consumers in the dark. Two states in particular stand out in this battle—Ohio and Florida. Both have traditionally been battlegrounds for control of the political fate of the country. Now they are playing a pivotal role in the fate of American health care.

Ohio passed legislation that would provide pricing information to consumers in 2015, and Florida followed suit in 2016. The Ohio law requires hospitals to publish pricing information on their websites and to create estimates for consumers prior to a hospitalization. The Florida law is similar but is notably more ambitious and would mean the creation of an all-payer claims database and public website that would allow consumers throughout the state to compare prices for common procedures by facility. The important provisions of both were supposed to go into effect last year.

But then the fighting broke out, much of it behind the scenes.

In Florida, the largest payer decided to simply wait until it was compelled to provide a claims data file. The Florida Agency for Health Care Administration has now mandated that Blue Cross Blue Shield of Florida deliver production files to the all-payer claims database vendor by this fall. Perhaps it will comply. Or perhaps it will simply wait for the next governor to be elected in November.

In the meantime, citing the lack of submission by the largest payer, the Florida Hospital Association has strongly objected to the release of information that is incomplete and therefore could be misleading. And, of course, it has pointed out that all hospitals are now compelled to provide this information directly to consumers, so why bother with this expensive, centralized website? So far, the hospital association has got what it wanted: The publication of hospital-specific pricing information on the public website has been postponed indefinitely.

In Ohio, the state hospital association sued to block the implementation of the law, claiming that the lack of clear regulations would stir up too much uncertainty, create a financial burden, and mislead consumers. It claimed a lot of other potential harm, none of which seems to have materialized in states like Florida that have implemented similar rules. What’s more, Ohio’s Governor, John Kasich, and his administration have retreated and are now complicit in keeping the public in the dark by failing to compel adherence to any part of its transparency legislation. Earlier this year, the hearing on the lawsuit was postponed indefinitely.

Health care is a business, and when you massively profit from that business you’re not going to let go of those profits without a fight. These profits, much like the fight to keep them, are also artfully concealed. Consider the recently published report by the Center for Improving Value in Health Care, a Colorado not-for-profit group charged with managing the state’s all-payer claims database. In it, the group compares the prices paid by employers to those paid by Medicare for common procedures such as colonoscopies, appendectomies, and endoscopies, and finds that employers pay two to seven times more than Medicare. Further, consider the March 2018 MedPAC report that said that efficient facilities make money on Medicare payments and average facilities break even.

Hospitals and many physician groups may whine that they don’t make money on Medicare, but that’s true only if they’re inefficient. And if they are ine efficient, shouldn’t they lose money? Isn’t that the way the rest of the market works? So how can one justify getting paid two to seven times the Medicare rate? You can’t, and hence the hand-to-hand combat to prevent price transparency.

As the examples from Florida and Ohio have shown, respecting the will of the voters and of legislators is of little concern in this fight, as is the financial well being of millions of consumers. Which is why this is a fight that America cannot afford to lose and, unfortunately, we often find managed care organizations on the wrong side of the battle.

François de Brantes is the senior vice president of the commercial group of Remedy Partners in Norwalk, Conn.