State Launches Transparency Initiative
In a move to push greater price transparency in the healthcare setting, the California Department of Insurance has selected UC San Francisco to construct a price and quality database to help patients discover how much their healthcare services cost.
The DOI obtained a $5.2 million grant from the U.S. Department of Health and Human Services last year to promote price transparency in healthcare. As part of an interagency agreement, much of that money will be furnished to the Philip R. Lee Institute for Health Policy Studies at UCSF to construct a database of what the department termed “common medical procedures and episodes of care.” The average pricing for those procedures would be posted online for consumers to review.
Although no specifics were available Wednesday as what services and procedures were to priced, Adams Dudley, M.D., associate director for research at the Lee Institute, noted that they would be fairly common – and often pricey – services.
“They will be things you would expect to be important to consumers,” Dudley said, citing maternity care and elective joint replacement surgeries as among those likely to be priced compared by the initiative.
UCSF will comb through information from private insurers and the Medicare program to provide average prices for geographic regions within California, along with outcomes and quality data, officials said. Dudley noted that the Lee Institute would be hiring staff with experience in data analytics to focus on the project.
Along with gathering price and quality data, the San Francisco-based Consumers Union would be in charge of outreach to patients and helping to design a user-friendly website, according to California Insurance Commissioner Dave Jones.
A website with the first wave of price information should go live by the summer of 2015, Jones and Dudley said. Consumers Union would also assist in the effort by creating a social media campaign and through search engine optimization when consumers make Web queries regarding healthcare prices.
“If anyone can do a patient-friendly website and outreach, it is the good people at Consumers Union,” Jones said.
Jones has been a consumer-friendly commissioner since his election in 2010, repeatedly slamming health insurers for what his agency has deemed unreasonable premium increases. He noted in an interview that patients have been generally left in the dark regarding pricing from hospitals and other providers, citing a quote by prominent healthcare economist Uwe Reinhardt that finding out what things cost from providers is comparable to shopping in a department store with a bag on your head.
“This provides the potential to provide more meaningful information for consumers and patients, as well as the quality of that care,” he said. Jones added that the reason there is such huge price variations for certain kinds of care – the same surgery can cost nearly $100,000 more at one hospital than another nearby facility – is due to price opacity.
Meanwhile, Jones observed that the ongoing cost-shifting by insurers to patients means they must have more price data in order to make informed decisions about how they choose providers.
A movement toward price transparency in the healthcare setting has been growing in fits and starts. But it received a big prod last year, when a special Time magazine report concluded hospital chargemaster rates were mostly useless for consumer purposes.
The Time article led to the Centers for Medicare & Medicaid Services publishing both hospital price data in late 2013 and billing data for individual physicians earlier this year.
While California has several small firms devoted to publishing and comparing healthcare price data, the state received a failing grade for price transparency earlier this year from the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute.
Maribeth Shannon, director of the market and policy monitor program at the California Health Care Foundation, was optimistic that the database would be helpful for both individual patients and other purchases of healthcare services in the near future.
“The parties have been very thoughtful about what they can do with the existing data, and they should be able to make a difference,” she said, adding that it could help employer groups better negotiate contracts with insurers and third-party administrators.
However, Shannon noted that the information that will be made available will fall short of what is known as an all-claims database, which allows individuals to determine what providers charge for virtually every service and what they get paid for it by insurers. Such databases operate in New Hampshire and about a dozen other states.
Shannon expects resistance from hospitals and other constituents regarding the release of such information, which she said they consider highly proprietary and gives them a market advantage.
“It has been a challenge historically to get at this information,” admitted Jones, but he suggested the stance of the provider communty might soften. “The world is beginning to change.”
