After intense lobbying by hospital groups, a provision establishing federal requirements for hospitals to publicly report prices was stripped from the Health Information Technology Promotion Act of 2006 before it passed the House of Representatives in late July.
The provision in H.R. 4157 would have charged the U.S. Department of Health and Human Services with developing standards for inpatient and outpatient price reporting by 2008.
Greg Scandlen, president of Maryland-based Consumers for Health Care Choices, said the increasing number of uninsured consumers, as well as the growing popularity of health savings accounts (HSAs), means there’s a growing need for greater transparency in pricing.
“The number of people paying [directly for] their own health care is growing dramatically,” Scandlen said, noting more people than ever need to know how much it costs.
Hospital Opposition
Mary Beth Savary Taylor, vice president of executive branch relations for the American Hospital Association (AHA), said that while her group generally supports price transparency, it opposed this provision because it was inserted by the House Ways and Means Committee without public debate and would have required hospitals to disclose privately negotiated contracts with insurers.
Also, she said, the provision would not necessarily have provided consumers with helpful price information, since it would not have reflected out-of-pocket costs for insured patients.
“We do want meaningful information for consumers,” Taylor said. “The question is, what is that meaningful information? Consumers want to know [what they’ll pay out-of-pocket before] going to a particular physician or hospital.”
Early Stages
Although consumer advocates and hospital associations generally agree on the need for increased price transparency, Richard Gundling, vice president of the Healthcare Financial Management Association (HFMA), an Illinois-based organization representing 34,000 health care finance professionals, said the medical community is still testing options for improving public reporting. Gundling said the provision was too vague to be valuable.
“We’re kind of in the beginning stages of pricing transparency, and we’re all trying to figure out what’s best for the patient when we’re doing this,” Gundling said. “I’m not sure if a legislative approach is going to be the best thing.”
Taylor said the AHA advocates state-sponsored initiatives. She cited Wisconsin’s program, which has a Web site that allows consumers to compare prices for individual services at different hospitals, as a potential model for other states.
“There [are] already 32 states that require hospitals to report pricing information,” Taylor said. “There’s all sorts of great innovative things going on in the states.”
John R. Graham, director of health care studies at the Pacific Research Institute in San Francisco, shared the skepticism toward federal mandates.
“Laws that force hospital transparency will force hospitals to produce info that satisfies the needs of bureaucrats and not patients,” Graham said.
Complications
Gundling noted several factors make the hospital industry unique, complicating transparency efforts.
“In a hospital, even though two people might have the same procedure, [the cost] might vary based on their age and weight,” Gundling said, or because of factors such as allergies or complicating conditions like diabetes. Also, he said, unclear price information could do more to confuse consumers than to help them.
“A lot of times, seeing a list of prices isn’t helpful,” Gundling said. “You might have insurance coverage; you might have government payments posted. They want to know, what is out-of-pocket to me?”
Taylor said providing individual patients’ payment estimates from both hospitals and insurers would be more useful for many patients than a general list of prices. As part of its transparency initiative, the AHA tells hospitals to work with uninsured patients to explain costs in advance to help them determine whether they qualify for charity care.
Broader Issues
Scandlen noted posting the differences in hospital prices could expose larger problems within the hospital pricing system.
“Self-paid patients are typically charged 400 to 500 percent of what [Preferred Provider Organization] patients are charged. Removing a gallbladder isn’t any more expensive for someone who is paying their own bills,” Scandlen said. “There really are no efficiencies–people come in when they need their gallbladder removed. I think that’s why [hospitals are] resisting the price transparency thing, because then they would have to let people know and it is, quite frankly, a scandal.”
Graham echoed Scandlen’s frustration, but was less optimistic about transparency initiatives’ potential to effect change.
“The problem with the hospitals is that hospital list prices are very high, so you get $9 for an aspirin,” Graham said. “There’s a difference between demanding that the system be reformed and demanding that it be better described.”
Bradley Kreit ([email protected]) is a freelance writer in San Diego.
For more information …
The full text of the Health Information Technology Promotion Act of 2006, passed by the U.S. House of Representatives on July 26, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to http://www.heartland.org, click on the PolicyBot™ button, and search for document #19678.
