AMERICAN HOSPITAL ASSOCIATION JULY 2014 TRENDWATCH Price Transparency Efforts Accelerate: What Hospitals and Other Stakeholders Are Doing to Support Consumers C onsumers incorporate price information when making most purchasing decisions. While health care peers and national averages. To realize these potential benefits, policymakers and the public increasingly are calling pricing estimates from insurers and health care providers. Simultaneously, a growing number of price transpar- services have numerous unique charac- for greater access to information. ency initiatives are emerging at the teristics that make pricing complex and Historically, limited access to federal and state levels, and among non-uniform across payers, both con- price information has been felt most hospitals, plans and commercial sumers and providers can benefit from acutely by uninsured patients, who vendors of transparency tools. These greater price transparency. Knowing the face greater exposure to health care public and private resources provide estimated cost and quality of services expenses. However, consumers increas- varying levels of detail on price and in advance of receiving care can help ingly are enrolling in plans with higher quality information. They also have patients make informed purchasing levels of deductibles and coinsurance, varying levels of utility in support- decisions, plan for future financial which require more accurate estimates ing consumer decision-making. As obligations and lessen the burden of of out-of-pocket costs. In fact, recent efforts to improve price transparency unexpected medical bills. Price transpar- media and policy discussions have evolve, stakeholders will need to ency also can lead to improved quality illustrated that all patients—not just address consumers’ increased needs and efficiency as providers benchmark the uninsured or those with higher for information and guard against any and improve their performance against deductibles—benefit from timely potential unintended consequences. Price for services varies by payer and depends on the unique course of care. Oftentimes, consumers are not aware the negotiation of any discounts. They and budgetary considerations.1 Hospital of the difference between “charges” and include charges for all services, procedures, charges serve as a starting point for deter- “price.” These terms do not have the supplies and drugs that patients receive mining payment rates that are generally same definition in the context of health and are calculated based on a variety of heavily discounted. On average, hospitals care. Health care charges are based on factors, such as direct and indirect costs, collect 31 cents for each dollar charged hospital-established rate lists before regional competitive dynamics, mission for inpatient and outpatient services.2 “” “You can be a highly educated consumer now and still not understand what bill is going from the field to hit you.”7 — Giovanni Colella, M.D., CEO of Castlight Health PRICE TRANSPARENCY Price is defined as the total amount operating room maintenance fees and is unique, making it difficult to predict a hospital or another type of provider administrative salaries. Some organiza- the exact treatment characteristics expects to be paid for a given health tions have higher cost structures due to ahead of time. For example, surgeons care service by both patients and any high-intensity services, such as trans- may not know if a tumor can be third-party payer, such as an insurance plant, trauma, and neonatal intensive completely excised or whether it has company. Prices vary depending on care, or mission-related costs such as become attached to a vital nerve bundle provider-payer negotiations and are teaching, research, or care for low-income or blood vessel until the surgery is in based on a wide range of factors that populations. These added costs translate progress. Therefore, creating standard influence the cost of care. The cost of into higher prices. list prices, especially for highly com- care consists of medical expenses such The final price for a procedure is plex procedures, is challenging and can as the surgeon’s time, procedure-related contingent on what happens during result in over- or under-estimating the supplies and overhead expenses such as the course of care. Each patient’s case cost to the payer and/or patient. Consumers need information on their anticipated financial obligation in advance of treatment. Regardless of insurance status, price on their estimated total out-of-pocket other kind of health care price infor- information can help consumers evaluate expenses, including deductibles, coin- mation.3 The cost implications of going treatment and provider options and pre- surance and copayments. Because of the to an out-of-network provider are also pare for their share of treatment costs. The high level of cost-sharing, these patients important for privately insured patients; privately insured, especially those enrolled are more price-sensitive. In fact, this out-of-pocket costs for services rendered in high-deductible health plans (HDHPs), population finds estimates of their out- by out-of-network providers can be signifi- need timely and accurate information of-pocket costs more useful than any cantly higher than in-network providers. Definitions of insurance terms. Chart 1: Definitions of Selected Health Insurance Terms Element Definition Cost-Sharing Methods through which employees share the cost of their health care with their employers. Typically, health care costs are shared through premium contributions, copayments, coinsurance and deductibles. Copay A fixed amount (for example, $20) paid by an enrollee for a covered health care service, usually paid when the individual receives the service. The amount can vary by the type of covered health care service. Coinsurance Enrollee’s percentage share of the costs of a covered health care service. This (for example, 20 percent) is based on the allowed amount for the service provided. Enrollee pays coinsurance, plus any relevant deductibles, for covered services. Deductible The amount an enrollee owes for health care services before the health plan begins to pay. For example, if an individual’s deductible is $1,000, the health plan will not pay anything until he/she has paid $1,000 out-of-pocket for covered health care services. The deductible may not apply to all services. Out-of-Pocket The limit on the total amount a health insurance company requires an enrollee to pay in deductible and co-insurance in a Maximum year. After reaching an out-of-pocket maximum, the enrollee no longer pays co-insurance because the plan will begin to pay 100 percent of medical expenses. This only applies to covered services. High-Deductible An insurance plan with higher deductibles than traditional plans. HDHPs can be combined with health savings accounts Health Plan or reimbursement programs and allow patients to cover out-of-pocket costs on a pre-tax basis. (HDHP) Source: Healthcare Financial Management Association. (2014) Understanding Healthcare Prices: A Consumer Guide. 2 TRENDWATCH Medicare beneficiaries need to understand whether Medicare covers a certain service and their out-of-pocket Section 501(r) of the Affordable Care Act (ACA) expense relative to deductibles and coinsurance. For example, traditional The ACA imposed new patient 4.  onduct a community health C fee-for-service Medicare does not financial assistance requirements needs assessment (CHNA) and provide payment for dental or vision for tax-exempt hospitals, which create an implementation strate- services4 and requires significant are now mandated through gy to address identified needs at cost-sharing for extended hospital or Section 501(r): least once in a three-year period skilled nursing facility stays.5 These (effective March 23, 2012) gaps in coverage can increase out- 1.  reate written financial aid and C of-pocket expenses for beneficiaries, urgent care policies These mandates will be enforced prompting many patients in this popu- (effective March 23, 2010) when the Internal Revenue Service lation to seek supplemental insurance. 2.  imit charges for urgent or L (IRS) issues final regulations (pro- The uninsured are solely responsible other necessary care to patients posed regulations were released for their treatment costs and need eligible for financial aid on June 26, 2012, and April 5, information on what expenses they will (effective March 23, 2010) 2013, and the final rule is pend- be expected to cover for a physician 3.  ake “reasonable efforts” to M ing). In the meantime, the IRS visit, an episode of care or a procedure. determine whether patients are notes that “A hospital organization They also need information about the eligible for financial aid must comply with the statutory availability of financial assistance or (effective March 23, 2010) requirements of § 501(r), which deferred payment options to assist them are already in effect.” in making treatment-related decisions. Irrespective of insurance coverage, it is difficult for patients to get a complete picture of their cost-sharing confusing to patients, most of whom such as deductible, copay, coinsurance responsibilities in advance of treat- do not know that they need to call and out-of-pocket maximum, one ment. A single procedure may involve different providers to assess their total recent study showed that only 14 a broad range of care providers, who out-of-pocket expense. This makes it percent of privately insured patients may bill patients separately for the difficult for patients to plan for their accurately grasp the concepts.9 The same episode of care. For example, portion of treatment costs. lack of understanding of benefit design receiving an out-of-pocket estimate Even when supplied with all related and associated financial obligations for a single hip replacement surgery bills post-treatment, insured patients creates challenges for beneficiaries and requires aggregating estimates from struggle to understand the different for hospitals. Fifty-seven percent of the hospital, surgeon, anesthesiologist, types of financial obligations associ- Americans report allowing medical radiologist and, potentially, a rehabil- ated with their health insurance plan bills to go to a collections agency10 and itation center. The lack of a bundled design. While some patients believe hospitals accrue bad debt if invoices price for the episode across providers is that they understand insurance terms for provided care are not paid. “” “Health care bills are very confusing and [patients] are getting multiple bills not only from from the field the hospital but from their physicians.”8 — George Semko, Vice President of Revenue Cycle at Meritus Health System 3 PRICE TRANSPARENCY Prices without adequate context can be misleading to consumers. Quality data needs to accompany price based solely on price, consumers as valuable to consumers as the use of information to enable consumers to need access to quality data in parallel. evaluative comments such as “better make informed health care decisions. Research shows that when consumers than,” “average” or “worse than.”16 In fact, a considerable number of con- are presented with quality data along- Placing data in the context of what sumers equate higher price with higher side prices, more than 90 percent of constitutes performance excellence quality12 and doubt that high-quality consumers will choose providers with within a metric allows consumers to care can be delivered at low cost.13 low-cost and high-quality scores.15 understand and use data effectively Patient beliefs are so powerful that Further, the way that data are in decision-making. Accordingly, researchers report higher price tags reported can make them more or less benchmarks are essential as they allow improve patient responses to treat- useful to consumers. Reporting data patients to evaluate how an individual ments through the placebo effect.14 in tables without clear explanations to hospital ranks against peers and/or To avoid making health care choices describe provider performance is not against national averages.17 Consumers prefer evaluative, graphical representations of quality and price information. Chart 2: Example of Price Data with a Strong Quality Signal Provider Quality Data Price Data Uses treatments proven Has safeguards to protect Is responsive to patients’ Careful with your to get results patients from medical error needs and preferences health care dollars* Dr. Jackson Worse Better Better Dr. Lew Better Average Better * One circle is less careful (higher costs); two circles is somewhat careful (average costs); three circles is very careful (lower costs). Source: Hibbard et al. (2012). An Experiment Shows That a Well-Designed Report on Costs and Quality Can Help Consumers Choose High-Value Health Care. Many price transparency efforts already exist and are evolving. There are numerous ongoing initiatives Multi-Stakeholder Initiative group recommended that health plans to increase price transparency at the The Healthcare Financial Management are the best situated to provide infor- federal and state levels and among Association (HFMA) released a set of mation to the insured because they can hospitals, health plans and commercial principles and recommendations for price better provide the consumer with the vendors of transparency tools. Each transparency in April 2014. This work negotiated rate and expected out-of- stakeholder group has access to unique was the product of a multi-stakeholder pocket costs, but that providers should data sources that underlie their individual taskforce broadly representative of be the primary source of information price transparency efforts. providers, plans, employers, consumers for uninsured patients.18 An accom- and others, as price transparency will panying consumer guide provides require the commitment and active information to consumers on how to participation of all stakeholders. The seek pricing information.19 4 TRENDWATCH Federal Initiatives common inpatient and 30 most common navigate.21 The dataset does not include The federal government has increased outpatient procedures on the CMS web- consumer-specific information such as transparency around charge and quality site.20 Data for physicians were released annual deductible levels and additional data. Since June 2013, the Centers in April 2014. While available to the cost-sharing requirements for Medicare for Medicare & Medicaid Services general public, the data have limited beneficiaries, which directly impact the (CMS) has published hospital-specific use to patients as they are published in patient’s out-of-pocket expense. average charges and average Medicare an electronic format as a large spread- The ACA requires hospitals to reimbursement rates for the 100 most sheet that is difficult for consumers to establish and make public a list of their CMS-released charge data are not easy to understand. Chart 3: Inpatient Prospective Payment System (IPPS) Provider Level Charges and Medicare Payments for the Top 100 Diagnosis-Related Groups (DRG)* DRG Definition Provider Provider Provider Provider Provider Provider Hospital Total Average Average ID Name Street City State Zip Referral Discharges Covered Total Address Code Region (HRR) Charges Payments Description 039–Extracranial 010001 Southeast 1108 Dothan AL 36301 AL–Dothan 91 $32,963 $5,777 procedures W/O CC/ Alabama Ross MCC Medical Clark Center Circle 057–Degenerative 010001 Southeast 1108 Dothan AL 36301 AL–Dothan 38 $20,313 $4,895 nervous system Alabama Ross disorders W/O MCC Medical Clark Center Circle 064–Intracranial 010001 Southeast 1108 Dothan AL 36301 AL–Dothan 84 $38,820 $10,260 hemorrhage or Alabama Ross cerebral infarction Medical Clark W MCC Center Circle 065–Intracranial 010001 Southeast 1108 Dothan AL 36301 AL–Dothan 169 $27,345 $6,542 hemorrhage or Alabama Ross cerebral infarction Medical Clark W CC Center Circle 066–Intracranial 010001 Southeast 1108 Dothan AL 36301 AL–Dothan 33 $17,606 $4,596 hemorrhage or Alabama Ross cerebral infarction Medical Clark W/O CC/MCC Center Circle *DRG list represented is not comprehensive Source: Center for Medicare & Medicaid Services. Accessed March 2014: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/ Inpatient.html “” “It’s difficult for people to understand it because it’s inherently complicated. Even if you from the field understand each concept individually, it’s still difficult to figure out the cost.”11 — George Lowenstein, health care economist 5 PRICE TRANSPARENCY standard charges for items and services. APCDs can be packaged in a way that is useful to consumers. In the fiscal year (FY) 2015 Inpatient Prospective Payment System (IPPS) Chart 4: Attributes of All-Payer Claims Databases (APCD) proposed rule, CMS reminded hospitals of this obligation and indicated that Data Normally Included in APCDs Data Normally Excluded From APCDs it will provide hospitals with flexibil- ity to determine how they make this information public.22 Encrypted patient identification number Care provided to uninsured patients Since 2005, the government has reported on hospital quality metrics Demographic information (date of birth, gender, etc.) Denied claims for service through Hospital Compare.23 Consumers can compare hospital performance Type of health care coverage (HMO, PPO, etc.) Price of health care premiums across quality measures related to heart conditions, pneumonia, surgery and other procedures. Further, consumers Diagnosis and related procedure Results from diagnostic tests can evaluate hospitals along several performance domains, such as patient Identification of service provider Administrative fees satisfaction and efficiency. However, these federal initiatives fail to bring Type of facility Back-end settlement amounts  price and quality data together to support consumers in selecting the Service date most-suitable provider for their needs. Further, the price data include only Payment date and amount total charges and Medicare payment rates for hospitals, which can serve as a Insurer reference point, but have little practical value for the uninsured, the privately Source: All-Payer Claims Database Council. (January 2014). The Basics of All-Payer Claims Databases. insured, or even Medicare beneficiaries. State Initiatives Some researchers have been critical all-payer-claims-databases (APCDs); an States are well positioned to increase of state initiatives. In March 2014, the additional three states rely on voluntary price transparency across all local payers Catalyst for Payment Reform rated only contributions.26 APCDs include provid- and providers by supplying consumers two states as having a “B”-level grade on er-level price data on medical, pharmacy with comparative data on services offered transparency laws, and no state received and dental payments from public and pri- within their local/regional markets. To an “A.” This grading system does not vate payers.27 More states are considering date, 35 states require hospitals to release reflect feedback on individual laws, APCDs because of the potential value of information on some charges, and seven but rather looks at the state’s overall the data and analytics to support popula- rely on voluntary disclosure of charge achievement in increasing price transpar- tion health, as well as health care delivery data.24 Pending legislation, the Health ency. States that required the release of and payment reforms. APCDs provide Care Price Transparency Promotion Act charges and payment data for inpatient information on actual prices paid for spe- (H.R. 1326), would elevate further the and outpatient services and provided cific services and can be used to estimate states’ role in price transparency. It would the information in a consumer-friendly the cost of entire episodes of care.28 When mandate that states create laws requiring manner via easily accessible sources such presented in a consumer-friendly manner, the release of hospital charge data and as websites received higher grades. such comprehensive price data can supply patient-specific out-of-pocket estimates. In addition to certain states man- accurate estimates for common health It also would require commercial payers dating hospital disclosure of charges, services and enable consumers to compare to respond to consumer requests for 11 states have passed legislation costs across providers before making a out-of-pocket estimates. requiring payers to contribute data to treatment decision.29 6 TRENDWATCH The Health Care Price Transparency Promotion Act of 2013 (H.R. 1326)25 H.R. 1326 would help standardize The proposed law would require: 3.  he Agency for Healthcare T the requirements for greater price Research and Quality to study transparency across the country, 1. States to enact laws that require  and report to Congress on: and enhance payer and hospital hospitals to disclose their •  he types of price-related data T participation. Furthermore, it would charges for certain inpatient and that patients find useful when facilitate research to deepen the outpatient services evaluating care choices field’s understanding of consumer 2. Private insurance companies,  •  onsumer preference variabil- C preferences for price-related data services and organizations, as ity depending on health care and venues for information sharing. well as Medicaid managed care coverage As of May 2014, the bill has and Medicare Advantage organi- •  ethods for making price M been referred to the Subcommittee zations, to provide out-of-pocket information available to con- on Health of the House Committee cost estimates to consumers sumers in an easy-to-understand on Ways and Means. upon request format APCD initiatives vary across states. Chart 5: State APCD Efforts Across the U.S. Status of APCD Initiatives* Existing (11) In Implementation (5) Existing Voluntary Effort (3) Strong Interest (21) No Current Activity (10) * Status of APCD initiatives fall in the following categories: “existing” includes states with legislatively mandated APCDs; “in implementation” includes states where APCDs have been created through legislation or through conscious effort to create a voluntary APCD; “strong interest” includes states that have expressed strong interest in developing APCDs; “existing voluntary effort” includes states with operational voluntary APCDs; “no current effort” includes states that have not expressed public interest in developing mandatory of voluntary APCDs. Source: APCD Council. Interactive State Report Map. Accessed April 2014: http://www.apcdcouncil.org/state/map 7 PRICE TRANSPARENCY While APCDs contain vast amounts Massachusetts, for example, has Despite the potential of APCDs of regional price information by pro- collected APCD data since 2008 and to further price transparency efforts, vider and payer, only a few states have developed a website designed to help the implementation and maintenance attempted to make the price component consumers select a health care provider of APCDs can face opposition from of this information useful to consumers. based on price and quality indicators of payers, who are the main contributors Specifically, Massachusetts, Colorado hospitals. Patients are able to see whether of data. Multi-state payers face a high and Maine have developed one or more the hospital received payments in line administrative burden in comply- consumer-oriented tools that bring with, below, or above median state prices. ing with non-standardized reporting together price data from APCDs with In addition to costs, patients also are able requirements across states.32 Greater quality-related information to assist to see how a hospital performed in the standardization of payment data consumers in selecting providers.30 areas of patient safety and experience.31 disclosure requirements would reduce Massachusetts uses APCD data to provide consumers with cost and quality information. Chart 6: Massachusetts’ “My Health Care Options” Website (2014) Patient selects desired health care service and provider… …and is able to see how providers compare against state average quality and median state cost. Source: MyHealthCareOptions. Accessed July 2014: http://hcqcc.hcf.state.ma.us/Default.aspx 8 TRENDWATCH burden, facilitate the exchange of Plans with more enrollees are more likely to offer information among states and allow cost estimation tools. for more detailed analysis of national health care trends.33 Chart 7: Percentage of Insurers that Offer Out-of-Pocket Cost Calculators to Beneficiaries Payer Initiatives Increasingly, health plans offer cost estimation tools to assist their enrollees 55% 48% in determining expected out-of-pocket expenses. Today, most large national plans provide such cost estimation 30% tools whereas payers with fewer enrollees are less likely to provide and maintain such features, largely due to associated costs. These tools incor- porate beneficiary-specific copays, Less than 250,000 members More than 250,000 More than 1,000,000 members and less than members deductibles and coverage exclusions to 1,000,000 members provide expected out-of-pocket estimates Source: HealthSparq. (2013). Health Insurance Plans and Transparency: An Industry Benchmark. reported in price ranges.34 Aetna’s tool helps plan members determine their out-of-pocket costs prior to treatment. Chart 8: Aetna’s Member Payment Estimator Tool (Snapshot) Start a New Search ˂ Back to Cost Estimate Healthwise© Knowledgebase Cost Details View Printable Estimate This estimate is for NGMD00 Aetna IntelliHealth© Date of estimate: 03/06/10 Service: Established Patient Preventive Care Visit Ages 50 - 64 Cost of Care Female View Description of Service FAQs Glossary 1.99 miles Doe, Jane, MD Family Practice Directions Your Total Estimated Payment Cost of Service Aetna Deductible Plan Plays Your Cost Your Deductible Payment Your Coninsurance Payment Other $150.03 $0.00 $125.03 $25.00 $0.00 $0.00 $0.00 View Payments Your Total Estimated Payment: $25.00 Source: NaviNet. Overview of Aetna’s Member Payment Estimator. Accessed March 2014: https://www.navinet.net/aetnaestimator/overview.htm 9 PRICE TRANSPARENCY While most payer tools estimate the Estimator.” It provides expected out- are generally only available to a plan’s cost of provider-specific medical encoun- of-pocket costs by taking into account beneficiaries and do not allow patients ters, few provide consumers the ability beneficiary-specific deductible informa- to compare out-of-pocket costs across to compare costs across providers.35 One tion. All cost estimates are in real time insurers during plan selection. private insurance tool that successfully and beneficiaries can compare expect- The Health Care Cost Institute allows for cross-provider treatment cost ed out-of-pocket costs across various (HCCI), a non-profit organization, comparison is Aetna’s “Member Payment providers. Such cost estimation tools announced in May plans to work with Hospitals across the country are making efforts to increase price transparency. Chart 9: Sample of Price Transparency Initiatives Across U.S. Hospitals Spectrum Health: provides aver- age procedure charges and pay- El Camino Hospital: provides ments from Medicare, Medicaid incurred out-of-pocket costs for Cleveland Clinic: releases hospital and private payers; out-of-pocket procedures including non-hospital charge data, including breakdowns estimates are available to holders fees; estimated financial respon- for room rates, diagnostic charges, of the hospital’s insurance plan. sibilities to various providers are etc. All charges are accessible on All pricing information is accessi- aggregated in one dashboard. the hospital website. ble on the hospital’s website. Accessible on hospital website. North Shore-Long Island Jewish: provides out-of-pocket estimates at the provider-level, and in ranges. Hospital pro- vides estimates to patients via online form. Geisinger Health System: provides out-of-pocket estimates that take into consideration patient’s insurance status and coverage via self-service portal, telephonic inquiry or submis- sion of an online request for information. Alegent Creighton Health: provides out-of-pocket estimates for more than 700 procedures that take into consideration patient’s Augusta Health: uses a team of insurance status and coverage financial counselors to proactively details such as deductible, coinsur- Baptist Health South Florida: reach out to each patient with ance, etc. Hospital financial addresses patient requests for a scheduled service to provide assistance policies are integrated estimated costs through a Central pricing information, including the in the tool and uninsured patients Pricing Office. expected out-of-pocket obligation. receive cost estimates that include discounts. Source: Healthcare Financial Management Association. (2014). El Camino Hospital’s Consolidated Patient Bills Speed Self-Pay Collections; Healthcare Financial Management Association. Lessons Learned from Price Transparency Pioneers; Baptist Health South Florida. (2013). Baptist Health: A Leader in Hospital Pricing Transparency; Baptist Health South Florida. Insured Patients. Geisinger Health System. MyEstimate. Spectrum Health. Average Prices for Grand Rapids Area. Estimate Your Personal Expense. The Cleveland Clinic. Patient Price Information List. American Hospital Association-provided information on Augusta Health’s program. 10 TRENDWATCH Aetna, Humana and UnitedHealthcare North Shore-Long Island Jewish provides expected out-of-pocket to develop a free online tool offering costs for common procedures. consumers information on the price and quality of health care services. Pricing Chart 10: North Shore-Long Island Jewish Transparency Tool (Snapshot) information will be based on paid Step 1: Patients submit desired health care service and insurance detail claims data across the multiple plans. The HCCI expects other commercial, Medicare Advantage and Medicaid health plans to provide information for the tool before it is released next year, and to add comparison features and data from fee-for-service Medicare and Medicaid programs in the future. Provider Initiatives Despite challenges related to contractual obligations restricting providers from releasing rates negotiated with payers, hospitals have launched a number of price transparency efforts. Some hospitals help patients estimate hospital out-of-pocket costs for common proce- dures based on their insurance status. Geisinger Health provides price esti- mates via telephonic or online requests,36 and Alegent Creighton Health maintains an online cost calculator that provides Step 2: Patients receive estimated out-of-pocket costs out-of-pocket estimates applicable to the prevalent types of insurances among the hospital’s patient population.37 North Shore-Long Island Jewish Hospital pro- vides expected out-of-pocket expenses in a range that reflects costs incurred by 95 percent of similar cases. Other providers help self-pay or uninsured patients evaluate treatment estimate facility costs by releasing charge data and determining patients’ eligibility for hospital financial assistance. The Cleveland Clinic provides all-inclusive charge information, including room rates via a website,38 and Spectrum Health provides average procedure charges along with payment rates from government and private insurers.39 Moreover, some state hospital associations gather and disseminate average and median outpatient and Source: North Shore-Long Island Jewish. Accessed April 2014: http://www.northshorelij.com/hospitals/financial-assistance/ estimate-cost 11 PRICE TRANSPARENCY inpatient price data. The Wisconsin these information silos, the field needs data, etc.) and deliver information in Hospital Association (WHA) was the tools that combine reimbursement and a format patients can understand and first state to publish hospital charge beneficiary utilization data to provide use. Tools also are tailored to deliver and utilization data via its PricePoint accurate out-of-pocket cost estimates information depending on patient website. WHA contracts with 10 for consumers. The private sector has preferences for obtaining transparen- other states that have developed their taken the lead in developing such cy data. Some utilize a “high touch” own PricePoint websites.40 WHA tools and marketing them to hospitals, model, which involves telephone calls pairs its pricing data with quality and health plans and employers. and frequent interaction via electronic patient safety data available through media such as email; others rely on its Checkpoint website. Checkpoint is Commercial Vendor Initiatives web-based platforms to share cost and licensed to two other states. The need for health care price and quality information.41 Despite their best efforts, hospitals quality information has attracted the Increasingly, commercial vendors may not be able to provide complete attention of commercial vendors. offer transparency tools that help cost estimates for consumers because Private companies have developed hospitals estimate each patient’s they lack access to specific necessary tools that bring together disparate data financial obligation. Technologies such information, such as the portion of the sources (including but not limited to as the Emdeon Patient Responsibility consumer’s deductible that has already all-payer claims databases, plan data, Estimator help hospitals to provide been met in any given year. To overcome employer datasets, patient-reported real-time out-of-pocket cost estimates PricePoint provides median and average price data. Chart 11: Wisconsin PricePoint System (Snapshot) Source: Wisconsin PricePoint System. Accessed June 2014: http://www.wipricepoint.org/Report_INP.aspx 12 TRENDWATCH Castlight Health helps patients assess treatment costs and quality data prior to service. Chart 12: Castlight Health Price and Quality Transparency Tool Source: Castlight Health. Accessed May 2014: http://www.castlighthealth.com/solutions/ to patients, who are able to evaluate expenses by highlighting cost-savings change. For example, as health care and consider the cost of treatment opportunities. Castlight Health,44 for reimbursement moves away from tradi- prior to or at the point of service.42 example, provides not only estimated tional fee-for-service payments, wherein The type of information provided out-of-pocket costs and quality data, each provider involved in a procedure differs across vendor tools. Some offer but also pinpoints opportunities for is paid separately, to bundled payments physician and hospital out-of-pocket lowering employees’ health care spend- for all the services provided during estimates in one repository. Other ing by using lower-cost care settings.45 an episode of care, patients will need tools allow patients to obtain an Despite the numerous price trans- a clear understanding of what is and estimate for longer-term care episodes, parency efforts by the government, is not included in the price provided. such as pregnancy, that include all providers, payers and commercial Achieving complete and relevant price checkups as well as delivery costs. vendors, no single stakeholder group transparency will require collaboration Many of these tools report quality data has access to all the data necessary to between various stakeholder groups, in addition to price, allowing consum- provide consumers with an accurate each of which has access to unique ers to evaluate their available treatment estimate of their out-of-pocket costs. pricing data and resources to provide options.43 Yet other tools assist Price transparency efforts need to consumers with appropriate informa- consumers in lowering out-of-pocket evolve as care and payment modalities tion to support decision-making. 13 PRICE TRANSPARENCY Transparency will bring many benefits, but can result in unintended consequences. Increased price and quality transparency such price transparency in advance of higher prices to be treated at academic results in numerous benefits. Making treatment improved point-of-service medical centers that typically have such price and quality information easily collections. While patient-specific price mission-related expenses.50 Absence of accessible will encourage providers to estimates currently are available only for adequate patient volumes and revenues to benchmark and improve their perfor- high-cost services such as outpatient support teaching and research could put mance against peers.46 Research shows surgery and endoscopies, Oaklawn these social goods at risk. Organizations that hospitals that observed quality Hospital is planning to expand avail- that have higher cost structures due to improvements at neighboring providers able estimates to include chemotherapy high-intensity services such as transplant, enhanced their own performance on and obstetric procedures.49 trauma and neonatal intensive care, those quality indicators by 0.2 percentage While the benefits of greater trans- which may be inadequately reimbursed points, regardless of their performance parency are considerable, several unin- from payers, may also be at risk. during the previous year.47 Easily under- tended consequences may result. Price Price transparency also could lead stood price and quality data also could transparency could lead to price-driv- policymakers and other stakeholders to focus the consumer on value. en competition that endangers the demand price controls, severely eroding Information on expected out-of-pock- public benefits of mission-driven care. the margins that providers require on et costs prior to treatment can prepare Hospitals provide social goods that insured patients to support payment patients for their financial obligations benefit the general population, such as shortfalls from Medicare, Medicaid and and potentially reduce the burden of conducting medical research, training uncompensated care. Finally, unman- bad debt on hospitals.48 Michigan-based tomorrow’s physicians and other health aged transparency efforts could lead to Oaklawn Hospital offers patients who care professionals, and providing care increases in health care prices. Some choose to pre-register a week in advance for disadvantaged populations, the hospitals that are poorly reimbursed of treatment an estimate of their out- costs of which are included in hospital compared to their local peers might of-pocket costs, including copays and prices. One study found that 78 percent renegotiate reimbursement rates with required deductible. The hospital found of consumers are not willing to pay insurance companies, driving up prices.51 Conclusion The push for greater transparency like- vendors to increase the availability greater visibility into price and quality ly is here to stay. Hospitals and other and usefulness of price information data is necessary as consumers become providers recognize the need to work for consumers. While the potential increasingly engaged in their health with federal and state governments, unintended consequences of enhanced care decisions. insurers, employers and commercial transparency need to be monitored, POLICY QUESTIONS •  hat safeguards can be put in place to avoid unintended W •  ow can funding for social goods be protected as consumers H consequences of price transparency? become more cost conscious? •  hat research needs to be done to develop tools that bet- W •  hat else can policymakers do to promote the sharing of W ter engage consumers? meaningful pricing data? 14 TRENDWATCH ENDNOTES 1. MedPAC. (2005). A Study of Hospital Charge Setting Practices. 24. American Hospital Association State Transparency Survey data. (2014). 2. Avalere Health analysis of American Hospital Association Annual 2012 Survey data, for 25. iHealthBeat. (2013). Bill Aims to Boost Transparency of Health Care Cost Information; community hospitals. Congress.gov. (March 2013). H.R. 1326 – Health Care Price Transparency Promotion 3. American Institute for Research. (2012). Consumer Beliefs and Use of Information Act of 2013. About Health Care Cost, Resource Use, and Value. Robert Wood Johnson Foundation. 26. APCD Council. Interactive State Report Map. http://apcdcouncil.org/state/map 4. Medicare Rights Center. (2011). http://www.medicareinteractive.org/ 27. APCD Council. (2014). The Basics of All-Payer-Claims-Databases. The Robert Wood 5. Congressional Budget Office. (2013). Change the Cost-Sharing Rules for Medicare and Johnson Foundation. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/ Restricted Medigap Insurance. rwjf409988 6. IRS.gov. (2014) New Requirements for 502 (c) (3) Hospitals Under the Affordable 28. Freedman HealthCare. (2014). Realizing the Potential of All-Payer Claims Databases. Care Act. http://www.irs.gov/Charities-%26-Non-Profits/Charitable-Organizations/ The Robert Wood Johnson Foundation. http://www.rwjf.org/content/dam/farm/reports/ New-Requirements-for-501(c)(3)-Hospitals-Under-the-Affordable-Care-Act; IRS.gov. issue_briefs/2014/rwjf409989 Reliance on Proposed Regulations for Tax-exempt Hospitals. http://www.irs.gov/pub/ 29. The Commonwealth Fund. (2010). All-Payer Claims Databases: State Initiatives to irs-drop/n-14-02.pdf Improve Health Care Transparency. 7. Journalgazette.net. (2013). Out of Pocket: Shopping Around Before Surgery Can Slash 30. APCD Council. (2014). The Basics of All-Payer-Claims-Databases. The Robert Wood Costs. Johnson Foundation. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/ 8. FierceHealthFinance. (2013). Meritus Health: Improve Patient Experience One rwjf409988 Medical Bill at a Time. 31. My Health Care Options. http://hcqcc.hcf.state.ma.us/Content/ 9. Carnegie Mellon News. (2013). Press Release: Consumers Don’t Understand Health FrequentlyAskedQuestions.aspx#answer4 Insurance, Carnegie Mellon Research Shows. 32. The National Conference of State Legislatures Briefs for State Legislators. (2010). 10. Intuit Health. (2011). Intuit Health Survey: Americans Worried About Collecting Health Data: All-Payer Claims Databases. http://www.ncsl.org/portals/1/ Costs; Want Greater Access to Physicians. Accessed May 2014: http:// documents/health/ALL-PAYER_CLAIMS_DB-2010.pdf about.intuit.com/about_intuit/press_room/press_release/articles/2011/ 33. Miller, P., (2012). Testimony Presented to the Public Health Committee Supporting IntuitHealthSurveyAmericansWorriedAboutCostsWantGreaterAccesstoPhysicians.html House Bill No. 5038. APCD Council. 11. WashingtonPost.com. (2013). Do You Understand Health Insurance? Most People 34. The Wall Street Journal. (2009). How to Research Health Care Prices. Don’t. 35. HealthSparq. (2013). Health Insurance Plans and Transparency: An Industry 12. The National Business Coalition on Health. (2012). Price Transparency: Now More Benchmark. Than Ever. 36. Geisinger MyEstimate. http://www.geisinger.org/patients/business_services/estimator/ 13. California HealthCare Foundation. (2012). Value Judgment: Helping Health Care 37. Alegent Creighton Health. https://www.alegentcreighton.com/body.cfm?id=4735 Consumers Use Quality and Cost Information. 38. The Cleveland Clinic Patient Price Information List. https://my.clevelandclinic.org/ 14. Waber R et al. (2008) Commercial features of placebo and therapeutic efficacy. Documents/Patients/HB197_MAIN_2010.pdf JAMA;299:1016-1017. 39. Spectrum Health Average Prices for Grand Rapids Area. http://www.spectrumhealth. 15. Hibbard, JH., et al. (2012). An Experiment Shows That A Well-Designed Report org/AveragePrices On Costs And Quality Can Help Consumers Choose High-Value Health Care. Health 40. Deloitte Center for Health Solutions. (2007). Health Care Price Transparency: A Affairs, 31, no.3 (2012): 560-568. Strategic Perspective for State Government Leaders. 16. Kurtzman, E., (2013). Using Performance Information—What Presentation Formats 41. Catalyst for Payment Reform. (2013). The State of the Art of Price Transparency Tools Support Consumer Decision Making? Presentation delivered at the National Summit on and Solutions. Health Care Price, Cost and Quality Transparency. Robert Wood Johnson Foundation on December 3 2013. 42. Emdeon Patient Responsibility Estimator. http://www.emdeon.com/ responsibilityestimator/ 17. Kurtzman, E., (2013). Using Performance Information—What Presentation Formats Support Consumer Decision Making? Presentation delivered at the National Summit on 43. Delbanco, S., (2013). Price Transparency Tools: The Good News, The Challenges, and Health Care Price, Cost and Quality Transparency. Robert Wood Johnson Foundation on The Way Forward. Health Affairs Blog. http://healthaffairs.org/blog/2013/11/20/price- December 3 2013. transparency-tools-the-good-news-the-challenges-and-the-way-forward/ 18. Healthcare Financial Management Association. (2014). Price Transparency In 44. Full disclosure: Avalere is an investor in Castlight Health. Health Care. https://www.calhospital.org/sites/main/files/file-attachments/hfma_ 45. Castlight Health. http://www.castlighthealth.com/solutions/ pricetransparencyreport_2014-final.pdf 46. The Commonwealth Fund. (2007). Health Care Opinion Leaders’ Views on the 19. Healthcare Financial Management Association. (2014). Understanding Healthcare Transparency of Health Care Quality and Price Information in the United States. Prices: A Consumer Guide. https://www.hfma.org/WorkArea/DownloadAsset. 47. Baicker, K. and Chandra, A. (2009). Improving Health Care Quality and Values: Local aspx?id=22288 Challenges and Local Opportunities. Harvard Kennedy School. 20. HealthLeaders Media. (2013). CMS Releases Hospital Pricing Data. http://www. 48. Ubel, P., et al. (2013). Full Disclosure — Out-of-Pocket Costs as Side Effects. The healthleadersmedia.com/content/hep-292001/CMS-Releases-Hospital-Pricing-Data New England Journal of Medicine, 369, 1484-1486. 21. Center for Medicare and Medicaid Services. (2013). Medicare Provider Charge Data: 49. Healthcare Financial Management Association. (2009). Strategies for a High- Inpatient. Performing Revenue Cycle. 22. Center for Medicare and Medicaid Services. (2014). Hospital Inpatient Prospective 50. PWC Health Research Institute. (2012). The Future of Academic Medical Centers: Payment System for Acute Care Hospitals and the Long Term Care Hospital Strategies to Avoid a Margin Meltdown. Prospective Payment System and Proposed Fiscal Year 2015 Rates. 51. Catalyst for Payment Reform. Price Transparency An Essential Building Block for 23. Center for Medicaid and Medicare Services. (2013). Hospital Compare. http:// High-Value, Sustainable Health Care System; http://www.leapfroggroup.org/media/file/ www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/ PriceTransparencyActionBrief.pdf HospitalQualityInits/HospitalCompare.html 15 TrendWatch, produced by the American Hospital American Hospital Association Avalere Health LLC Association, highlights important trends in the 800 10th Street, NW 1350 Connecticut Avenue, NW hospital and health care field. Avalere Health supplies Two CityCenter, Suite 400 Suite 900 research and analytic support. Washington, DC 20001-4956 Washington, DC 20036 TrendWatch—July 2014 202.638.1100 202.207.1300 Copyright © 2014 by the American Hospital Association. www.aha.org www.avalere.com All Rights Reserved