State Leadership Needed on Healthcare Price Transparency

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Governor Baker’s recent healthcare proposals include provisions aimed at improving transparency in healthcare pricing. These policies imply that it is necessary to release more information in order to realize cost savings through healthcare price transparency measures, but current state laws already require the disclosure of price information upon request. Enforcing existing laws and creating incentives for carriers and providers to promote consumer friendly price transparency are necessary complements to the Governor’s proposals.

The Governor’s proposal (found in a slide presentation on the EOHHS website) has two major components.  The Center for Health Information and Analysis (CHIA) is to:

  1. “Collect data from the health plans to develop a market-level report.”
  2. Create a list of healthcare pricing data across all providers for the most common procedures.

As regards the first element of the Governor’s proposal, details are sparse on the new publication required of the state’s healthcare data aggregator. While increased public reporting and analysis will be useful, it’s hard to see what data this report will provide that isn’t already included in the annual cost trends report of the Health Policy Commission. What will be in this new report that will have a positive effect on bolstering price transparency?

As regards the second element, the Commonwealth will be following in the steps of numerous other states which have instituted similar transparency practices with varying degrees of consumer friendliness. Generally, these state sites are underutilized.  You might say that as regards healthcare price transparency websites, the maxim is “if you just build it – they WILL NOT COME!”  If the administration is going down this path, it should also think through education, financial incentive, and ongoing programs to promote the website and, one hopes, over time change consumers’ attitudes toward comparing prices for non-emergent care.

While the proposal for a CHIA website is laudable, it does nothing to address healthcare price transparency’s biggest issue: existing tools and avenues to obtain information are not being promoted by carriers or providers and are underutilized by consumers. Layering another website on top of 14 existing carrier websites, is not by itself going to move Massachusetts toward a culture of healthcare price transparency.

In addition, since 96 to 97 percent of Massachusetts residents are insured, the prices most people are interested in are those of providers that are in their insurance company’s network, as well as other providers that may actually be less costly than those in the network. Carrier cost estimator tools only show prices of in-network providers. If CHIA’s price list is able to include prices of lower cost providers (minus any discounts applied for self-pay patients) there would be significant value added for consumers. But the data has to be close to real-time data in order to be useful, and it has to identify providers by name and use specific dollar amounts.

Most people with insurance would also be interested in co-payment and deductible information, such as how much is left of their deductible. No state website can provide this kind of detailed information, but this is precisely the kind of data that carriers’ websites provide to their members under existing law. Such sites are underutilized, hardly user friendly, and carriers seem reluctant to invest in promoting them. When carriers make additional resources available to help members choose low-cost high-quality providers, it comes with an extra premium increase – called a “rider” – for employers. We have to ask whether the Baker Administration has looked at what more it can do under existing law to incent carriers to do more with their existing transparency tools. We think there is an opportunity here for the Governor to use his bully pulpit and the state Division of Insurance to nudge the insurance industry toward more innovative and creative price transparency programs for employers and members alike, by stressing the importance and need for transparency, highlighting successful and promising programs, and otherwise incentivizing the original transparency initiatives.

In addition to these virtual transparency tools, all providers in the Commonwealth must make prices available to consumers who request price information within two business days. But as several Pioneer Institute price surveys have shown, navigating through most providers’ systems to successfully request an estimate from the appropriate person is a daunting task. Providers do not advertise that this information is available, and there is no information about the availability of prices on most providers’ websites. It would seem that this state of affairs is fertile territory for some retooling of state law. Since providers have done such a miserable job of making prices transparent, why not require that providers make the prices and any applicable discounts available online for the 50 most common procedures, or that providers have an online form available so consumers can more easily obtain the price of a procedure?

Pioneer has been focusing intently on healthcare pricing transparency for years, and we have thoroughly examined the implementation of the current transparency laws that apply to providers under Chapter 224. When tested, many providers from across the industry fail to meet statutory obligations, and, as stated above, obtaining a request from hospitals in particular (often the source of the largest and most contentious bills) is an overwhelming task for the average consumer.

While Governor Baker’s plan provides more momentum and a renewed focus on transparency efforts, there are simple regulatory channels that can make existing laws and policies more effective that should accompany the Governor’s ideas.

In October 2015, Pioneer published an op-ed in Massachusetts Lawyers Weekly outlining various existing avenues to enforce Chapter 224’s transparency provisions, with respect to both carriers and providers, through medical licensing boards, the Department of Public Health, the Division of Insurance, or the Attorney General. Even without new laws, there are clear mechanisms for the state to seriously enforce Chapter 224’s transparency requirements.

In Pioneer’s testimony to the Legislative Special Commission on Provider Price Variation, we outlined steps necessary to achieving a culture of price transparency that would help move the market toward low-cost, high-quality providers. The secret ingredient to success is not that complicated – it requires an extensive and relentless public information and statewide education campaign. The Governor has been a vocal advocate for healthcare price transparency and his continued voice and leadership are needed to make this effort a success.

Americans are not accustomed to shopping around for healthcare services, or even thinking about healthcare in terms of price. In order for any transparency initiative to succeed, there must be a relentless and consistent drumbeat of support coming from insurers, providers, and especially the state. The value of executive leadership on this issue cannot be overstated.

It will still take more than the Governor’s proposals to make transparency the norm in healthcare. It will take leadership.