How To Tell If The Price Is Right: Fostering Transparency in Healthcare Prices for Massachusetts Consumers

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Notwithstanding a Massachusetts law requiring the clear, prompt disclosure of price estimates to patients upon request, recent studies by Pioneer of a sample of hospitals, specialist physicians and dentists throughout the state showed that it is still not easy to obtain this information, often requiring some persistence and longer than the two days allowed by law (“Survey: Price Information Difficult to Obtain by Massachusetts Hospitals,” June 24, 2015; “State Healthcare Price Transparency Law Still Not a Reality,” August 12, 2015). The 2012 Massachusetts law requires healthcare providers to give consumers procedure prices within two business days of request (Chapter 224 of the Acts of 2012, “An Act Improving the Quality of Health Care and Reducing Costs Through Increased Transparency, Efficiency and Innovation”). It also requires that insurance companies provide their members with online cost estimator tools with prices for procedures among competing in-network providers, deductibles and the member’s deductible amount remaining after a particular procedure.  A recent evaluation of carrier transparency performance, by Health Care for All, reported that the three major health insurers in Massachusetts meet some key criteria but are lacking in many areas (Consumer Cost Transparency Report Card, July 14, 2015). So, although Massachusetts has a good transparency law, widescale adoption and robust implementation by the healthcare industry still lies ahead.

National survey data indicate that Americans want healthcare price information and that when they get it, they tend to save money (“How Much Will It Cost: How Americans Use Prices in Health Care,” a Health Affairs report supported by the Robert Wood Johnson Foundation, March 2015). With increasing responsibility for their direct medical expenses via significant deductibles, co-insurance, and higher out-of-network costs, consumers will continue to seek meaningful, reliable price information.

It is worth noting that the transparency provisions of Ch. 224 are not particularly prescriptive.  Nor is previous guidance issued by the state Executive Office of Health and Human Services and the state’s Division of Insurance (Provider Price Transparency Implementation Notice, December 31, 2013; Insurance Bulletin 2013-10, Carrier Compliance with Transparency with Respect to the Estimated or Maximum Allowed Charge for a Service and Insureds’ Out-of-Pocket Health Care Costs, December 13, 2013). Rather, they strongly encourage providers and carriers to develop user-friendly ways for consumers to obtain price information.  While the statute and state guidance allow for industry innovation and creativity in implementing price transparency measures, to date, such innovation in the pursuit of transparency has not made great headway. How might the Commonwealth move toward expanded implementation while allowing room for innovation and creativity? We believe the state’s existing authority to regulate hospitals, health plans, physicians and dentists is sufficiently broad to promote compliance with all relevant state laws, including those concerning transparency in health care pricing.  There are a number of potential approaches that already exist and that could be adapted.  Here are some examples.

Hospitals. The Department of Public Health can conduct unannounced inspections to check a hospital’s compliance with state law and regulations (105 CMR 130.100), and it can require a hospital to submit a plan of correction to address any documented deficiencies.  Using this authority, the state could do sample spot-testing of hospitals to gather pricing information for a set of common procedures.  Since the goal is to improve disclosure, universal notice and guidance before such spot-testing could benefit hospitals and consumers alike. Regulators might suggest prototype request forms and responses and the use of hospital websites to educate potential patients about their right to receive price estimates. They might also consider giving hospitals further direction as to the level of detail required and other parameters.  By using its existing authority and procedures, the Department might spur faster development of clear, concise, easily accessible disclosure of health care prices, letting hospitals decide for themselves how best to design their own protocols.

Health Plans. Chapter 176O of Massachusetts General Laws, Section 23, required every carrier to establish a toll-free telephone number and website to permit consumers to obtain the estimated or maximum allowed amount or charge for a proposed admission, procedure or service and the estimated amount the insured will be responsible to pay.  As of Fall 2014, the insured must be able to obtain this information in real-time and since then the Commonwealth has hosted a portal with links to web-based pricing estimators of various carriers, Although most carriers participate in this effort, the portal is not well-known to the general public, and carriers have done some advertising of their own estimators to their members. Almost every carrier has its own cost estimator tool, and they vary in degree of consumer-friendliness and the range of procedures for which estimates are available. We believe the Division of Insurance has sufficient existing authority over carrier licensing and operations to encourage greater compliance with the state’s transparency laws.  The Division can conduct various types of examinations of carriers to gauge compliance with relevant state insurance laws.  Moreover, the Division of Insurance could promulgate a new regulation under Ch. 176D to encourage more expeditious compliance with Ch. 224.  In short, the path is open towards more fulsome implementation.

Physicians and Dentists. The state Board of Registration in Medicine has jurisdiction over doctors and the state Board of Registration in Dentistry has jurisdiction over dentists pursuant to Chapter 13, Sections 10A and 19, respectively, of Massachusetts General Laws. The applicable Board oversees licensure, investigates complaints and can impose civil penalties and suspend or revoke a license.  One possible measure to encourage compliance with the state’s transparency laws would be to update license renewal standards for each to include a certification by the licensee as to compliance with the transparency law.  Even without revising the standards, under Section 61 of Chapter 112, M.G.L., the applicable Board could hear complaints for violations of law by practitioners who do not furnish price quotations within two working days as required. To promote compliance by its respective licensees, each Board might consider disseminating expectations and guidance in advance of enforcement.

GIC as Market Player. The state might be able to use the bargaining power of the Group Insurance Commission, or GIC, to require satisfactory price disclosures as a contractual provision. By its own report, the GIC is the largest employer-purchaser of health care services in New England, and although its status is not completely clear, a plausible argument can be made that the GIC is an executive agency. As such, by executive order, the state could condition third party administrator contracts and/or payments under GIC plans upon compliance with all state laws, including the price transparency law.  Alternatively or in addition, it could require periodic certification as to compliance by the respective carrier or provider.

Consumer Protection Law.  A final potential means of encouraging greater compliance may lie with the state’s Consumer Protection Act., M.G.L. Ch. 93A.  Under Ch. 93A, a violation of any state law designed for the protection of consumers may also be deemed a violation of the state’s Consumer Protection Act.  This would permit both the Attorney General’s Office and any private plaintiff to bring legal remedies to bear for non-compliance with these transparency laws.

Cost-sharing is a cornerstone of health care reform, with consumers expected to spend health care dollars in accordance with their means and values, playing a collective role in curbing spending.  Given the opportunity, they can weigh cost among other factors in determining whether and where to pursue a given test or treatment. But consumers cannot budget for care, much less identify efficient providers, without advance price information. Regulators have both the rationale and the legal basis to help them.

About the Authors

Barbara Anthony, lawyer, economist, and public policy expert, is a Senior Fellow in Healthcare at Pioneer Institute focusing on healthcare price and quality transparency. She is also a Senior Fellow at the Harvard Kennedy School’s Center for Business and Government where she leads seminars and writes about Massachusetts healthcare cost containment efforts. She served as Massachusetts Undersecretary of the Office of Consumer Affairs and Business Regulation from 2009 to 2015 and has worked at the intersection of federal and state commercial regulation and the business community for many years. Among other positions, Anthony served as the Director of the Northeast Regional Office of the Federal Trade Commission in Manhattan, and was a top deputy to the Massachusetts Attorney General. She began her career as an Antitrust Trial Attorney at the U.S. Justice Department in Washington, D.C. Anthony is a well-known consumer advocate and regularly appears as a media commentator on consumer protection and business regulation issues.

Sarah Idelson is a PioneerLegal Fellow and a practicing lawyer with international and domestic experience in health and human services and public utilities, among others. She has written and presented on corporate governance, health policy and ethics and most recently was a partner at a regional law firm.  Sarah holds a bachelor’s degree in Psychology from Brown University and a JD, cum laude, from The University of Michigan Law School.