Pricing Transparency

One of the major reasons cited for the increasing costs of health care is that the consumer usually has no idea what the procedure or test costs that their doctor is recommending. As I mentioned in an earlier post, neither does the physician. So why can't you just have providers post their costs?
Three bills recently introduced in Congress attempt to resolve this pricing transparency issue:

Transparency in All Health Care Pricing Act of 2010 (HR-4700): Introduced by Rep. Steve Kagen (D-WI), the bill calls for hospitals, physicians, nurses, pharmacies, pharmaceutical manufacturers, dentists, and the insurance entities to "publicly disclose, on a continuous basis, all prices for such items, products, services, or procedures." The bill would require disclosure "at the point of purchase, in print, and on the Internet," and would allow the Secretary of Health and Human Services to investigate and fine entities that do not comply.

Health Care Price Transparency Promotion Act of 2009 (HR-2249): This bill also calls for pricing transparency, but it would require all 50 states to develop disclosure requirements without involving the HHS Secretary. The states would have to develop rules related to the disclosure of hospital charges as well as estimated out-of-pocket costs. The bill also calls for the Agency for Healthcare Research and Quality to develop a report on charges and out-of-pocket costs. The bill has both Democratic and Republican co-sponsors.

Patients' Right to Know Act (HR-4803): The broadest and most specific of the three bills (also with bi-partisan support), the Patients' Right to Know Act explicitly includes ambulatory surgical centers in the group of entities required to disclose pricing information. The bill would allow HHS to define some of the specifics, but would rely on states to enact reporting requirements. It also would require health insurers to disclose information about the limitations and restrictions of a health plan, the process for appealing coverage decisions, the amount of cost-sharing required, the number of providers participating in a plan, and more.

While having public access to the cost of procedures is helpful, knowing the "retail" price is not very helpful unless you are uninsured. Those who have insurance really need to know the discounted rate negotiated by their carrier. However, many carriers see these discounted fees as proprietary information. The proposed pieces of legislation I believe try to "back-door" this issue by requiring insurers to provide the amount of cost-sharing required.

However, while knowing the cost of a procedure is helpful, it would also be good to know the quality of care provided which the bills do not address in any detail. How important is it to have good cost and quality data?

An analysis by The Fiscal Times says "publishing the cost and quality data has had a far-reaching impact on [Wisconsin, which is considered a front-runner in health care transparency], whose health care system is now considered among the best in the country. It gave hospitals with low quality ratings objective feedback for improving their performance. And the rankings motivated high cost hospitals to begin looking for ways to eliminate expensive but medically questionable procedures that didn't improve outcomes."

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