Philadelphia Inquirer examines health care price transparency issue

Jun 10 2008

The Philadelphia Inquirer on Sunday examined the issue of "price transparency," in which hospitals and health systems make their charges for treatments more apparent.

Patients each pay different prices based on what their insurance companies negotiated with the hospital and usually are not able to find out what those negotiated rates are. Insurance companies generally do not disclose their rates and ask hospitals to keep the rates secret.

According to the Inquirer, the idea behind price transparency is that U.S. residents "might spend a few gazillion less dollars on health care" if they were able to determine prices of procedures in advance and "had a reason to care." The Inquirer reports that as the number of U.S. residents who are uninsured or have high-deductible insurance plans is growing, "more people have a reason to care."

According to the Inquirer, the Bush administration has advocated for price transparency as a method of pushing consumers toward more cost-effective treatments. In addition, presumptive Democratic presidential candidate Sen. Barack Obama (Ill.) and presumptive Republican presidential candidate Sen. John McCain (Ariz.) are both proponents of increased price transparency.

There is bipartisan support for transparency in health care costs, but "many nascent attempts to help consumers compare prices are deeply flawed," according to the Inquirer. Paul Ginsburg, president of the Center for Studying Health System Change, said, "A lot of the price information that's available from public sources is essentially useless." In addition, the Inquirer notes that insured people "with set copayments have little incentive to use one doctor or hospital over another because of price."

According to the Inquirer, federal and state officials have attempted to address the transparency issues. Medicare has begun publishing its payments to individual hospitals, which could help consumers "get a better handle on what care actually costs." In addition, the New Jersey Legislature recently passed a bill to limit how much hospitals can charge the uninsured. The Inquirer reports that "[d]espite the obvious complexity, hospitals, insurance companies and federal and state governments are forging ahead with efforts to make price information more available." Some hospitals and insurers are offering cost and quality comparison information, according to the Inquirer.

One Reporter's Experiment

An Inquirer reporter called eight hospitals in the Philadelphia region to get information about the cost of procedures. According to the Inquirer, attempting to get the information is entering a "Byzantine" world where "a top Medicare administrator pronounced it impossible for a 'human being of average intelligence and limited patience' to understand costs." Four of the hospitals the Inquirer contacted either did not return messages, sent the reporter to non-working voicemail or refused to disclose the information for fear of "scaring poor, uninsured people away." The other four hospitals did provide cost information for either a colonoscopy or an uncomplicated vaginal birth. According to the Inquirer, revealing their prices "really opened Pandora's box" and "shed the most light on how absurdly complicated unearthing cost figures is and how challenging it will be to bring true price competition to health care." In addition, it "also raise[d] questions about how to treat the uninsured fairly."

Comments

CMS deputy administrator Herb Kuhn said as imperfect as price-transparency efforts are so far, "the debate over whether this is worth doing is over. ... We can't let the perfect be the enemy of the good, and we know that the status quo is a far more potent enemy." According to the Inquirer, "Some policy experts said that price information alone will not tame America's health care costs because consumers are not the ones making the expensive decisions." Mark Legnini, a consultant who runs the Healthcare Decisions Group, said a hospital stay is not a typical purchase. He said, "You don't know what you're going to buy," adding, "The doctor determines what you're going to buy." Karen Davis, president of the Commonwealth Fund, said, "I don't think giving patients price information, even quality information, is going to drive the markets very much in terms of patients changing behavior," adding, "I think it's really important to do these things because it will change the hospitals' behavior" (Burling, Philadelphia Inquirer, 6/8).