Health Care Transparency - Now More Than Ever
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I’ve been banging away on the transparency drum for almost four years now - and while the progress has been slow, it seems to be directionally correct. More and more people in the health care and public policy community seem to be saying that public disclosure of payment and outcome information would be a good thing. Recent events simply amplify the importance of moving in this direction.
As the economy continues to sour, the pressure on employers and governments to do “something” about the rising cost of health care will intensify. For employers, the choice will be between plan designs that have lower premiums and more consumer cost-sharing, or narrow network products that trade efficiency - and lower prices - for broad network access. For either option to work over time for employees and their families, people will need far more information than they have available to them today on the cost and quality of health care providers.
Governments, on the other hand, will do what they do best in times like this - cut the rates they pay providers for services, and expect the provider community to make it up somewhere else. Medicare’s been playing this game for years - so much so that according to the American Hospital Association, private health plans now pay on average 40% more for the same service than Medicare pays. Today, 4 out of 5 hospitals in the United States would be technically bankrupt if Medicare was their only payor.
Closer to home, state government in Massachusetts is cutting Medicaid payments to providers - both prospectively and retrospectively - as part of its plan to balance its out of balance budget. I assume other states will do something similar. The provider community will seek to get some of the lost revenue associated with these decisions back from the private health plans, which, as you may recall, already pay about 40% more than Medicaid pays for similar services.
In the short term, this massive cost shift from the state and federal governments onto health plans, employers, their employees and their families, will only get worse as the economy sputters and tax revenue falls below expectations. And yet the vast majority of policy makers, business leaders - heck, the public at large - has no idea this is happening. They have no idea this is happening because THERE IS NO PUBLICLY AVAILABLE DATA TO MEASURE, MONITOR OR EXPLAIN THIS FUNDAMENTAL FACT OF LIFE.
This is a travesty. People are wild about rising health care costs (as they should be), but they have no idea why they go up - and will be forced to pay even more in the short term for the public sector’s inability to fund its own programs if the current scenario continues to play itself out. Someone needs to shine a light on this - and the sooner the better.
At the same time, the Patrick Administration has chosen to basically zero out the staffing for the MA Health Care Quality and Cost Council - the agency charged with bringing provider cost and quality data to the public at large - as part of its budget cutting activities. While there’s a budget deficit that has to be dealt with - no doubt about that - substantially reducing the budget of the Council and taking away its staff seems penny wise and pound foolish. It’s been working - for too long, in my opinion (full disclosure, I’m on the Council) - to start publishing provider specific cost and quality data, and is only weeks away from doing so on its web site. It is incumbent on the Administration to make absolutely sure this project moves forward, or we’ll all spend another five years complaining about health care costs, but having no good public data to build policy on what to do about it.
Charlie,
How much would it cost to fund the MA Healthcare Quality and Cost Council? If MA eliminates its funding, couldn’t the insurance industry or some other private sector group step up to pay for it? In light of the potential value of the information, it seems like it would be a worthwhile investment.
What are the key impediments to publishing actual provider (hospital and doctor) specific reimbursement rates? Is it confidentiality agreements imposed by insurers or just resistance from providers or some combination of both? If there are insurer imposed confidentiality agreements, why does the industry insist on sustaining them?
Finally, why don’t employers do a better job of thoroughly communicating to their employees the full cost of providing health insurance as opposed to just the cost of the employee’s contribution toward the premium? The employer should also make it clear that the employee is actually already paying the full cost of health insurance in the form of lower wages than would otherwise be paid if the burden of paying for health insurance were not there. Do unions resist this? Do employees not care? If they more fully understood both the full cost of health insurance and who bears the cost burden, there might be greater interest in everything from high deductible health plans to malpractice reform to strategies to reduce practice pattern variation to evidence based medicine and comparative effectiveness research.
Why is the healthcare industry so opaque and why do we tolerate it? It doesn’t make any sense and its slowly killing us financially, in my opinion.
Charlie - I think the slowdown in the economy and the 30% drop in stock markets is going to really pressure the status quo here in Massachusetts where private health plans “make up the difference” to providers compared to what they receive from Medicare and Medicaid. Already razor thin operating margins are going to be coupled with huge declines in health plan and hospital system investment portfolios that they have been using to supplement their operating earnings. This is in addition to the millions in recent taxes that the Patrick administration applied to plans and hospitals to fund the out of control cost increases in the state healthcare “experiment” (maybe this was somewhat offset to hospitals by the state killing off the mandatory nursing staffing level bill). With hospital and health plan investment earnings tanking and hospitals looking to make up their investment losses in their operating earnings…. well, let’s just say there are going to be some tough conversations all around when providers and health plans sit down to talk about reimbursement. For Medicare and Medicaid to make even further provider cuts and hope that the private plans make up the difference is becoming more and more untenable. Add in that unemployment will force more people from the private plans to the state and federal plans and the problem is even worse. At some point, those employed people actually paying for ALL of this via artifically higher premiums, federal taxes and payroll taxes will say “enough is enough” and tell the state and federal government they can’t cover everybody out of their paychecks and although universal care is a nice idea it is simply not affordable at the present time.
As a member of a consumer-driven health plan and an entrepreneur, I am dedicated to promoting transparency in our health care system. Price transparency after all is simply “good consumer service”.
Consumer driven health plans encourage and reward consumers for savvy behavior. As a result, consumers shop around for the best value and make the most of their health care dollars. Unfortunately, health plans and providers are not always willing to provide consumers with meaningful true price information - before services are provided.
Rather than wait around for insurance plans to agree to publish contracted rates, providers to publish reimbursement rates, or complicated programs to be implemented so the industry can provide meaningful transparency tools, consumers today are starting to collaborate to share & compare health care prices with each other.
I am founder of http://www.outofpocket.com. OutofPocket.com is a community search engine to help consumers look up prices for routine health care services, compare what other consumers paid for similar services and help consumers find the best value – before visiting a provider. Because insurance plans do not publish true price information for health care services, the site relies on consumers to post/share prices they paid for actual visits, to share with other consumers.
Mona Lori
Founder
OutofPocket.com
Folks - really good comments. Barry, I won’t try to answer all of your questions here - but would say the following. The Council - or the Division of Health Care Policy & Finance - which is taking over virtually all of the Council’s functions (and reducing the Council to an Advisory role), is a publicly funded, independent entity. I’ve always thought anything operated by or paid for by the health plans would be considered too biased to serve as the primary source of cost and quality data. Both sides share the reluctance to put the payor/provider payment data in the public domain. Mona Lori is pretty much right about that. I think this will change - slowly - over time. I think what Mona’s up to is kind of a cool way of getting at this information in a grand way.
And many employers do make their share of premium available to their employees - but many don’t - and we’re also heading toward more transparency/information sharing here, too.
Sean - I think your projected scenario - and the difficult times it presumes - is a reasonable one. But I still think it’s possible for the Medicare and Medicaid to cost shift for some period of time - especially in the absence of any publicly available information that informs the public and the policy makers about the size of the disparity.
It’s always been a slow, incremental game - and that can continue - for some period of time. You’re right about saying it can’t happen forever. It won’t. But I really don’t pretend to know when the whole thing comes to a head.
Would it be helpful if people had better access to internatinal health cost data?
Here’s Karen Davis arguing that administrative costs are THE big issue in health care. She uses Germany as one example of low admin costs. But Germany, though it has an over-65 population that is considerably larger than ours, has fewer angioplasties and coronary bypasses per 100,000 than we do, and lower input costs. But people don’t question KD on her excessively narrow foucs, partly, I suppose, because the international data is awkward to get at.
The best study I’ve ever seen comparing health care costs across multiple nations was done a few years ago by McKinsey. My recollection of the study was that they concluded that administrative costs in the U.S. were high, relative to other countries, and we should work on that. Okay. No dispute here on that one. But the study also showed that the biggest cost differences between the U.S. system and the systems in other countries came primarily from a more expensive delivery system. Let me clear - we can and should do more on administrative costs. But at the end of the day, taming the rising cost of health insurance and health care generally will mean focusing on the 85-90 cents of each dollar that pays for care delivery.
Charlie –
You make some good observations here, but completely overlook key points concerning the Health Care Quality and Cost Council’s planned public reporting and the information it will – and won’t – provide.
Medicaid cutbacks that are part of the fallout from the current state budget cuts will indeed be devastating to many hospitals, particularly those faced with retroactive cuts. There will also be a cost shift to consumers and employers to help pay for this shortfall and what can’t be shifted will fall upon hospitals, their employees, and the services they provide.
But the information that’s due to be posted publicly on the HCQCC web site will do little or nothing to highlight this cost shift. The web site will simply post “median” payments by private insurers to hospitals. Interestingly, although MHA specifically requested that the site include information about payer mix, precisely for the reasons you mention, the council decided not to do this. If a hospital has a high volume of government payers and they shift costs to private payers, their insurance payments will generally be higher. Payer mix tells a lot about why hospitals differ, so a valuable information resource has been short-changed.
As for the demise of the HCQCC staff, the hospital community also has concerns about whether the state’s Division of Health Care Finance and Policy will be able to accomplish the Council’s mandate on top of their many other responsibilities. DHCFP’s duties have expanded considerably in recent years – even before it was tasked with implementing, running and maintaining the HCQCC web project. This “mission creep” is another form of cost shift, one in which a vast majority of the payment responsibility falls on just one segment of the health care community: acute care hospitals.
Given that the entire Commonwealth has increasingly been benefiting from the Division’s work, it is unfair for the majority of the financial burden to continue to be placed solely on one category of providers.
Funding DHCFP and ensuring that the Division has adequate resources to do its ever-expanding jobs should be shared with other key health care stakeholders including health plans.
Lynn Nicholas, FACHE
President & CEO
Massachusetts Hospital Association
Lynn - the initial items to be posted on the Council’s web site are, admittedly, baby steps in the grand scheme of things. As I’ve said before (in fact, said a few posts up the blog from here), any public web site worth its salt will have to include Medicare and Medicaid payment data, too.
The sooner the better, as far as I’m concerned. Without that information, the whole “cost shift” discussion will be based more on anecdote than reality - and it’s hard to make policy on mythology. Who got what from who is the favorite game for many in the health care world - and the whole thing is one big shadow dance that people use to suit their own arguments or world view. Public disclosure of all payment data ends the folklore, once and for all.
As you know, I was not in favor of having DHCFP absorb the Council’s activities and responsibilities, because, among other things, it turns the Council into an advisory group to the Administration. It is no longer an independent, policy making entity. This means its priorities will be viewed as “advice” - not policy.
Your point about the fact that a big piece of DHCFP’s budget is paid for by the hospital community (it isn’t all of it, is it?) is another argument for not consolidating the work. And the question you ask - why should the hospitals fund the whole thing? - is a good one, given the circumstances. I’m not sure the answer is to tax the plans. We are, after all, being taxed to fund all kinds of things these days. The answer is to have the general fund pay for it - since the work is designed to benefit everyone in Massachusetts.
Thanks for writing.