Akshata Malhotra's List: Transparency in Healthcare - costs and quality

• Prices for health care services vary significantly among providers, even for common procedures, and it's often difficult for patients to determine their out-of-pocket costs before receiving care. Some consumer advocates, employers, and health plans are pushing for greater reporting of the prices of health care services as a way to encourage consumers to choose low-cost, high-quality providers and to promote competition based on the value of care. In spite of the challenges, price transparency may be spurred by the growing number of health care consumers who are being required to pay a larger share of their medical bills.
• Prices for health care services vary significantly among providers, even for common procedures, and it's often difficult for patients to determine their out-of-pocket costs before receiving care. Some consumer advocates, employers, and health plans are pushing for greater reporting of the prices of health care services as a way to encourage consumers to choose low-cost, high-quality providers and to promote competition based on the value of care. In spite of the challenges, price transparency may be spurred by the growing number of health care consumers who are being required to pay a larger share of their medical bills.
• It's no secret that the U.S. health care market is unlike any other market: patients rarely know what they'll pay for services until they've received them; health care providers bill different payers different prices for the same services; and privately insured patients pay more to subsidize the shortfalls left by uninsured patients.

  • patients dont have information about the cost of services; diff patients are charged diff amounts by healthcare providers
• What's more, prices for health services vary significantly among providers, even for common procedures such as laboratory tests or mammograms, although there's no consistent evidence showing that higher prices are linked to higher quality

  • prices vary for diff healthcare service providers; no evidence that expensive price= better healthcare
• This, in turn, could encourage competition among providers based on the value of care—not just on reputation and market share. 
• Impediments to Price Reporting

  • Challenges in transparent pricing and info
• including the difficulty of determining in advance the health services any given patient will need.
• The wide variety of insurance benefit structures, a lack of standard formatting for reporting prices, and the difficulty of determining prices when charges originate from multiple providers further complicate these efforts. 
• Legal hurdles to reporting prices, including contractual obligations that in some cases prevent health plans from disclosing their negotiated rates with providers, are also factors, as are concerns from consumer advocates that making patients more price-sensitive requires significant cost-shifting, which may create financial burdens for lower-income patients. 
• A Congressional Research Service study found that early price transparency initiatives, such as one that required California hospitals to publish their charges, did not led to changes in consumer behavior or pricing.⁴  One reason may be that many people equate higher costs with higher quality—an assumption that often holds true when shopping for furniture or appliances, but not necessarily in health care. Studies of the costs and quality of care reveal a more nuanced relationship between the two.⁵

  • Study shows that information wont make a difference in behavior
• Engagement Approaches
   Despite the complications, there is likely to be greater interest in price information from consumers as their cost-sharing responsibilities increase. Researchers have begun to determine the most effective way of engaging and educating them about the relationship between cost and quality data. "It could be counterproductive if quality and cost are not reported effectively [because] people may choose higher-cost providers assuming they are the higher-quality providers," says Judith Hibbard, Dr.P.H., senior researcher at the Institute for Policy Research and Innovation and a professor emerita in the University of Oregon's department of planning, public policy, and management. 

  • The relationship between cost and quality
• The study, which involved 1,421 consumers, found that significant numbers of respondents—though not a majority—viewed higher cost as a proxy for higher quality. This was true even among those with high-deductible health plans that would expose them to a higher share of costs. But when the cost and quality information was reported side by side in an easy-to-interpret format, more respondents made high-value choices.

  • Clear information about price and quality leads to better decision making
• Labels indicating that providers made "appropriate usage" of resources or were "careful with your health care dollars" also led more people to choose high-value providers.
• Aetna was one of the first insurers to provide price information to its members. It does so via its Member Payment Estimator, which provides comparative cost estimates for more than 550 common services, taking into account users' specific plan type and remaining deductible. Users are able to look up total out-of-pocket costs for service "bundles," so they are not surprised by, say, separate charges for a colonoscopy, for the facility, and the professional fees. 

  • Insurance companies providing information about service bundles.
• Health Care Service Corp., the parent company of Blue Cross and Blue Shield plans in Illinois, New Mexico, Oklahoma, and Texas, this month plans to launch a cost estimator tool that reports prices for the individual elements of an episode of care, such as facility costs, surgeon's prices, and costs of durable medical equipment. This disclosure may spur competition within these categories. Other Blues plan will be following a similar approach. Meanwhile, UnitedHealthcare this month launched a price estimator program that enables patients to see the contracted fee schedule for individual providers involved in treating a particular condition. The Web-based program also allows members to see whether their physician has met quality and efficiency standards, as indicated through a star-ranking system.

  • Solutions by Insurance companies
• Private firms are entering the price transparency market as well. Castlight and Change Healthcare, both founded within the past five years, are using proprietary software to analyze claims data to estimate the costs of common medical procedures

  • Solutions by private firms
• The reports also include performance data on various providers, enabling users to take into account both cost and quality. They sell these health care "shopping" tools to self-insured companies and, in the case of Change Healthcare, health plans, which in turn encourage their employees and health plan members to use them to choose providers based on their quality and costs. 
• who notes that most behavior changes (i.e., switching to lower-cost providers) are for laboratory tests or imaging services—routine procedures with widely varying price tags for which consumers may feel more comfortable comparison shopping than, say, office visits or surgical procedures

  • Insight
• "We are already seeing true consumer behavior—not just a flight to the lowest-cost provider," he says. "People seem to be asking: 'What kind of tradeoff do I want to make if I have to make one?'" 
• Change Healthcare proactively alerts people via text or e-mail if they have an opportunity to save money on routine care or prescription drugs. "We look at consumers' existing claims data and identify opportunities for savings," says Doug Ghertner, the company's president. A message might say, for example, 'You can save $250 a year on your health care costs,' and then provide instructions about how to look up lower-cost providers. Some of the alerts incorporate principles of behavioral economics such as loss aversion or social norming to prod action: 'Did you know that your peers are spending $500 less than you are on their blood sugar tests?'

  • Alerts about savings (like shopping)
• The Healthcare Blue Book, which is freely available to consumers, publishes what it determines to be a "fair price" for various medical services, based on a review of claims data as well as consumer-submitted reports. Employers and insurance companies can pay for access to a version that lists in-network providers ranked by value. Recently, Healthcare Blue Book launched a subscription service for patient-centered medical homes, so that primary care physicians can work with their patients to make referrals to high-quality, lower-cost providers. "This is the best way to make these kinds of decisions, with patients alongside their doctors,"
• Some have argued that all physicians have a responsibility to become aware of the costs of their services as well as laboratory fees or drug costs, and to help patients explore various treatments.
•  Costs of Care, founded by a medical student, seeks to use social media and other communication tools to help physicians understand how the decisions they make affect patients' out-of-pocket costs. And a few providers, including members of the Wisconsin Hospital Association, are making price information available to patients. Some comparative price reports flag providers that refuse to allow insurers to share the claims data that makes price estimates possible—which in itself might be a spur to providers to allow more widespread price reporting.
• Price Transparency: One Piece of Cost Control Puzzle 

  • Important
• Because consumers have been slow to make use of health care quality reports, it remains to be seen if price information will be enough of a hook to engage them in comparison shopping for care.  
• Interest may increase as growing numbers of insured Americans pay more of their health care bills, due to greater use of high-deductible health plans and greater cost-sharing in traditional plans.⁸  
• One study found these plans led to lower use of name-brand medications, less inpatient care, and lower use of specialists, as well as a troubling reduction in preventive cancer screenings and childhood immunizations.⁹  In addition to the increasing use of consumer-driven health plans, there are a growing number of "retail" consumers buying coverage for themselves.¹⁰  These trends suggest that in the future Americans may become more price sensitive—and more willing to take cost into consideration when seeking care. 
• "As Americans have been called on to pay more for essential and non-essential services, the evidence has shown that they spend less on both," says A. Mark Fendrick, M.D., director of the University of Michigan Center for Value-Based Insurance Design. "There's strong evidence that small price differentials matter—even a $1 difference in a drug co-pay can lead to behavior change."  

  • Important: Price sensitivity
• Some innovative employers are seeking to use value-based insurance designs to engage their employees in making high-value purchases.

  • Opportunity Area; important leverage point in the system
• Delhaize Group
• offers to eliminate copayments and pay travel expenses for employees willing to get hip and knee replacements (and soon cardiac and back procedures) in certain facilities in other markets where costs are lower and quality higher. The program works well until patients meet their deductible for the health plan. "Once you get to your coinsurance level and it's paid at 100 percent, we seem to see a slowdown in the uptake of medical tourism,"
• "In our experience, when patients don't ask about prices, they don't ask about quality either," says Healthcare Blue Book's Rice. "When they start to become consumers [by comparing prices], they start to ask good questions about quality too." 

  • Insights
• "Young people—who use their phones to choose restaurants and buy airplane tickets—might be predisposed to use price transparency tools," says Brent Parton, director of health policy and programs at

  • Insight- Consumer behavior

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• Providing reliable cost and quality information empowers consumer choice. Consumer choice creates incentives at all levels, and motivates the entire system to provide better care for less money. Improvements will come as providers can see how their practice compares to others.

  • How transparency will help
• Transparency is a broad-scale initiative enabling consumers to compare the quality and price of health care services, so they can make informed choices among doctors and hospitals.

• Steps to Transparency

  1. The federal government, individual private employers and health plans commit to sharing information on price and quality in health care. Together, the government and major employers provide health care coverage for some 70 percent of Americans.
  2. The federal government and individual private employers commit to quality and price standards developed with the medical community. This will help guarantee a fair and accurate view of the quality of care delivered by individual providers, as well as providing consistent measures for quality.
  3. The federal government and individual private employers commit to standards for health information technology (IT). Health IT will be important for gathering and using the best information for consumers. These standards are also crucial to the goal of achieving electronic health records for all Americans.
  4. The federal government and individual private employers commit to offering plans that reward consumers who exercise choice based on high quality of care and competitive price for health care services.

  • Govt. and major employers seen as leverage points
• For every other purchase that they make, consumers can easily get information about price and quality. When consumers have this information they can make better decisions. Consumers should share in the savings, in the form of lower premiums and more effective care, when they take an active role in health care decisions.

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• However, most of healthcare is not the aftermath of a mass casualty disaster. Most of healthcare is a checkup, an X-ray, an operation or a single emergency visit. And we cannot treat everyday healthcare as if it were a no-holds-barred disaster for which money and rules are not to be considered.
• But even if all of healthcare took place in extremis  –  every situation a major disaster  – that would still not be a reason to exempt providers from accountability. On the contrary, the importance of healthcare is exactly the reason we must hold the system to the highest possible standards.
• The lack of transparency in healthcare (and the unchecked cost growth that results) put us on track to sacrifice much of what we’ve built in our country for healthcare. Health costs threaten our economy and indeed our way of life — with projections of healthcare eating 40 percent of our GDP in a couple of generations. This means that if current trends continue, health costs will elbow out education, business, defense, energy, manufacturing, arts, science, entertainment, and on and on.

  • Why it's important: Figures and Facts

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• AMERICANS spent $2.6 trillion on health care in 2010, a staggering 18% of GDP. Yet few of them have the faintest idea what any treatment costs or how it compares with any other treatment. Prices vary wildly and seemingly without reason (see chart). Insurance terms require a dictionary. For most Americans, buying a procedure is akin to choosing a house blindfolded, signing a mortgage in Aramaic, then discovering the price later. Slowly, however, this is changing.

  • Facts and figures
• In 2006 only 10% of workers had to pay at least $1,000 before their insurer picked up the rest of the bill. By 2010 that share had more than tripled.
• When employees asked doctors for prices, the doctors were baffled. They had no clue how much different insurers paid for the same procedure, or what share a patient would pay
• Barack Obama's health reform requires hospitals to list standard prices each year, and more than 30 states have either proposed or passed laws to promote price transparency, according to the GAO. None of these measures has come close to solving the problem. Few provide enough data to allow people to shop around.
• Another company, Castlight Health of California, has made transparency its sole mission. Working with big firms, Castlight assembles data from past transactions so that employees can shop for doctors online and read reviews posted by patients. Castlight wants to do for health what Travelocity did for air travel, explains Giovanni Colella, the founder. Mr Colella's co-founder is now the chief technology officer
• These plans face several obstacles. Health care is more complicated than flying. A traveller knows she wants to get from A to B, and that more or less any airline will get her there in one piece. So it is easy to rank air tickets by price. By contrast, someone with a heart problem may be unsure whether to pop pills, operate, change his diet or do nothing. Informed medical decisions require a tonne of information.
• Meg McCabe of Aetna hopes that consumers will soon be able to use their smartphones to enter symptoms, find doctors, compare prices and schedule an appointment.
• The easier the plan is to understand, the more people may pick it. A fully transparent market is years away. But a bit of sunlight is creeping in.

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• Both stories continue to bring to light how the disconnect and lack of transparency between producer and consumer has allowed the growth of a vast labyrinth of middlemen we call the U.S. medical system.
• Had he opted to use his insurance, his provider would have paid only a maximum of $5,000 of the surgery’s $23,000 “list price.”
• The $23,000 figure simply represents a starting-point for negotiation with third parties.
• In this case, unbound by any legal agreements, the surgeon proposed simply to accept the man as a “self-pay” patient, and negotiated a reasonable price with him; he did the same for the services of the anesthesiologist. The total payment for the surgery? Just over $3,000.
• The only difference? Direct communication of price signals between provider and consumer.
• army of intermediaries -- and this is the fundamental reason why American health care is the most expensive in the world
• Americans who try to find out a real price for medical services are often unable to do so -- lost in a maze of proprietary and secret negotiations between producers, distributors, and providers
• traced the path of a humble medical commodity from production to use
• The bottom line is that the maze of contracts and preferred relationships and hidden negotiations, coupled with third-party payment, has allowed consumers to become frogs being boiled alive in a slowly heating pot of water -- with their health-insurance premiums funding an ever-expanding network of intermediaries comprising an industry with extremely robust growth.
• As we have noted before, they may also opt to travel to Europe or even Asia to receive major medical care.
• namely, the lack of price transparency

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