This morning during my still-dark-at-5:15 am walk, my iPod was motivating me to “get up offa that thing,” as James Brown was motivating me to “release the pressure.” Two minutes into the song, he urges, “Get into the sunshine, church is out.”

This brought to mind a publication I’ve taken time to review from the General Accounting Office (GAO) report to the U.S. Congress, Health Care Price Transparency – Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care, published in September 2011.

While employers and health plans want consumers to become more engaged in their health, a key barrier facing all patients has been the lack of accessible, easy-to-understand, comprehensive information on the price of health care services in their communities. Congress asked the GAO to look into the challenge of U.S. consumers’ to obtain price information before receiving health care to enable effective health “shopping.” In the current mode, health consumers can face health price “sticker shock” at the point of purchase, which is generally after care is delivered. GAO believes that price information, coupled with quality measures, can help consumers make informed choices about their care.

GAO looked at eight price transparency programs in the public and private sectors, and found price variations lots of holes in the data based on their review conducted between November 2010 and September 2011. GAO examined:

  • Centers for Medicare and Medicaid Services Hospital Compare program
  • California Common Surgeries and Charges Comparison
  • Florida Health Finder
  • Massachusetts MyHealthCareOptions
  • New Hampshire HealthCost
  • Wisconsin Hospital Association PricePoint
  • Aetna Member Payment Estimator
  • Anthem Care Comparison.

The difficulty in consumers’ accessing health cost information stems from many factors:

  • It is often impossible to predict in advance what services a patient might need for an episode of care
  • It is difficult to forecast a patient’s length of stay in a hospital
  • Services are usually accessed from several providers (e.g., lab, imaging, physician office, rehab center) so bills can be generated from each source
  • Patients enrolled in health plans can benefit from lower prices pre-negotiated between their employer/plan sponsor and the health plan. There are two challenges with negotiated prices in health care: plans consider this information proprietary so do not believe this should be made public; and, legally, the contractual information may also be required to be kept private based on language in the contract. There may also be antitrust concerns that discourage providers and insurers from making negotiated rates public, based on the Sherman Antitrust Act, Clayton Act, and the FTC Act, along with specific state laws.

Few transparency initiatives provide consumers estimates of complete costs to consumers, the GAO found: only Aetna and the New Hampshire state program came close to doing so. These two models succeed because they have access to both negotiated rate information as well as claims data.

Under the Affordable Care Act, the local/regional Health Insurance Exchanges will be required to make public and update lists of hospitals’ standard charges for services and products provided in the hospital. The HIEs, by law, would also require health plans to provide amounts of cost-sharing (deductibles, copayments) under their plan designs.

Health Populi’s Hot Points:  Price transparency has become so important in health care in the U.S. because people are facing increasing out-of-pocket costs for co-sharing at the point-of-service, as well as more people without health insurance needing to pay 100% “retail sticker” prices for services from doctors, pharmacies, and other community-based providers.

Returning to James Brown’s insistence that we get into the sunshine, the proverbial “church” is the health system, and people in pews — health citizens — need to get more engaged as health care shoppers.

The advent of Health Insurance Exchanges ‘should’ bring greater price transparency to consumers in their local markets. There is a growing list of entrepreneurial firms who are working hard to provide useful tools and interfaces that can help consumers assess complete prices and quality of services in their communities, such as Castlight Health, change:healthcare, Aetna as mentioned, and Thomson Reuters, among others, are looking to fill in the blanks of the health cost/quality transparency picture.

For now, health consumers still have heavy-lifting if they choose to engage, pre-visit, with finding out how much their services will cost. It’s fairly simple for prescription drugs; not so easy for hospital and physician services.

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