• Dealing with Calls for Price Transparency
  • May 5, 2006 | Author: Henry C. Fader
  • Law Firm: Pepper Hamilton LLP - Philadelphia Office
  • Ask a provider about the cost of a health care procedure and you'll find the answer may take awhile. After a barrage of questions about insurance, including your place of residence, type of plan, co-pay and deductible, among others, you still may not receive an answer.

    As anyone seeking the best value for their health care dollar has discovered, the search for the actual out-of-pocket cost for a particular test or procedure from doctors, hospitals and outpatient centers can be daunting. While health savings accounts (HSAs) have motivated consumers to take an interest in spending their own hard-earned dollars on health care, recent lawsuits and Congressional interest over indigent care under the current payment system are leading to proposed legislation that would require providers to post actual charge information. The business community also is pushing for price transparency and access to Medicare data for individual providers, believing the information would assist consumers in the search for providers with the best results and the best value.

    An Issue That Won't Go Away

    Providers -- whether an ambulatory center, hospital or physician -- often are paid for the same service in a myriad of ways. The practice is confusing to most providers, who keep track of multiple approaches to payments received from different plans and coverages. In many cases, you simply can't find a succinct description of the numerous individual and discrete services and processes that go into one surgical or medical procedure in any institution or health center.

    Medicare is currently resisting the release of actual provider data. However, Aetna and other carriers are experimenting with the release of some data on the Internet in certain markets -- even though Aetna's Executive Chairman, Dr. John W. Rowe, is skeptical about the information's ultimate impact on reducing overall health care spending.

    If the Bush Administration does not feel comfortable releasing Medicare data, it may press industry groups to voluntarily provide price information. Such declarations would increase pressure on competing hospitals to release information. Imagine if two of three large, competitive hospitals in the same region release price information voluntarily, while the third decides against it. Public and peer pressure would eventually force the third hospital to disclose its price information.

    Several bills are pending in Congress regarding price disclosure, including the following:

    • S. 1827 would require semi-annual reporting by hospitals of the 25 most frequently performed services selected by the Department of Health and Human Services (HHS) in each of the hospital's inpatient or outpatient settings. S. 1827 also would require:
      • the reporting of the average and median charge under a formula to be determined by the Secretary of HHS for such services before any negotiation of an adjustment with a third-party payer
      • posting the information on HHS' official Web site in a way that allows users to do comparisons
      • publicizing within the health care facility that such information is available on the Internet will be publicized in the health care facility.
    • A companion bill to S. 1827, H.R. 3139, also would require that hospitals report the same information for ambulatory surgery centers.
      • Violations under S. 1827 and H.R. 3139 would be treated under the civil monetary penalty provisions of Medicare
    • H.R. 1362, which is titled the "Hospital Price Disclosure Act," would require quarterly reporting to Medicare of inpatient and outpatient data on 25 procedures chosen by the government, as well as similar reporting on drugs used in such procedures, including average and median prices for such drugs.
    • H.R. 4450 -- known as the "Hospital and ASC Price Disclosure and Litigation Protection Act" -- also has provisions relating to the disclosure and subsequent posting of comparative data on the Internet. In addition, this proposed legislation would require providers to provide patients with pre-treatment and post-treatment disclosures, including:
      • a statement indicating that the cost of treatment may be discounted to others who are members of a group
      • the estimated price that the institution will charge for the treatment
      • the rate of payment for the treatment that has been negotiated between the health care facility and its largest health plan without regard to cost-sharing
      • the current Medicare payment rate for the treatment
      • in any bill provided to the patient after treatment, an itemized list of component charges, including charges for drugs and medical equipment charged by the hospital to the patient, along with comparative information on each component and drug for network plans and Medicare.

    In March, HealthGrades, a public company, started reporting comparative information on the Internet that displays by region average list price, health plan portion and out-of-pocket costs for 55 hospital-based procedures. While the information is not provider-specific, it does reflect health plan negotiated discounts. The company hopes that consumers will use this information to better direct their health care decisions.

    The Providers' Dilemma

    While providers can continue to resist efforts to get information about the payments that they receive for treatment, it probably more fruitful to consider planning and implementing other approaches. For example, providers, whether they are tax-exempt or not, need to consider developing policies and procedures relating to:

    • uninsured patients
    • indigent patients
    • patients with high-deductibles or HSAs.

    Providers should seriously consider developing a public statement for patients, payers, other providers and the general community explaining why they maintain various payment schedules and arrangements with various payers. Such a statement should be clear and concise, and explain why patients pay different amounts for identical procedures. To the extent providers feel that they must reassess this multiple acceptable payment policy for their patients, a careful review of the contractual provisions and payment structure is called for, especially for those health care plans which pay a percentage of the Medicare charge structure. This is essential in determining the impact of changes that may be made in the chargemaster.

    As pressure for price information increases, wise providers will focus on clearing the air about past practices and explain how the current system evolved. Certainly, multiple payment structures are not the providers' choice, but have been imposed as the result of decades-long cost reimbursement policies. Providers should be aware that both the media and the politicians are scrutinizing this potentially explosive issue as employers and consumers seek ways to reduce health care costs.