State legislatures take action to improve health care price transparency

Topics: Costs and Prices, State Government, Elections, 2016, Providers

Like many things in health care, price transparency seems simple at first, but quickly becomes complicated. For would-be patients -- and providers trying to ease their access to the care -- it's tough to answer the question, "How much will that treatment cost?" It depends: Are you insured? How much of your deductible have you paid? Is the provider in-network?

As patients assume greater financial responsibility for their health care, price transparency issues are only becoming more important. That may be why policymakers are waking up to the issue: The likely Democratic and Republican presidential nominees, Hillary Clinton and Donald Trump, both call for transparency reforms in their policy platforms. And in legislatures across the country, price transparency seems to be having a moment. 

Legislative activity

State governments have their work cut out for them: In a report released last year, the Health Care Incentives Improvement Institute gave all but five states -- Colorado, Maine, New Hampshire, Vermont, and Virginia -- an "F" grade for price transparency.

But there is evidence of a shift, with several major pieces of state legislation suggesting hospitals and other providers will soon have to up their price-transparency game.

For example, Florida Gov. Rick Scott (R) recently signed into law a bill (HB 1175) that requires hospitals and surgical centers to share pricing information with a state agency, which will be tasked with making the information accessible on a consumer-friendly, public website. The pricing information will be based on what providers actually receive from insurance companies, not so-called chargemaster prices, which typically have little relationship to real-world payments.

In addition, Harris Meyer in Modern Healthcare's "Vital Signs" writes that hospitals and surgical centers will be required to provide access to searchable bundles of services on their website, including estimated payment ranges by facility and comparisons with national and regional benchmarks.

The idea is to equip patients with better information and to promote price competition among providers. In a release, Scott said, "The way patients are charged for services at the hospital should mirror a free market system."

Another law recently passed in Ohio goes a step further. Before providing non-emergency care, health care providers in the state will soon have to offer patients a "good-faith and reasonable" estimate of:

  • A procedure's total cost;
  • How much private or government-sponsored insurance will pay; and
  • A patient's share of the bill.

"We've over and over again tried to contain our costs by using bureaucratic rules," state Rep. Robert Sprague (R-Ohio) told the Columbus Dispatch. He added, "We also want to use the power of the free market."

Devil in the details

Passing legislation is one thing; making it work can be much more difficult.

In Ohio, some worry certain providers will not be able to provide the type of pricing information the law requires by next year. Todd Baker, co-CEO of the Ohio State Medical Association, told the Dispatch, "The difficulty is, as it stands today, there are only small pieces of that (estimate) available" when a patient first comes through the door.

He said trying to get information on all procedures is a bit like trying to "boil the entire ocean." A better approach, he suggested, might be to focus initially on high-cost procedures.

How to prepare?

Regardless of whether you live in Ohio or Florida, experts say health care providers should fully understand the rules and regulations in their local markets -- and how the market will likely change in the future.

More than two-thirds of states are mandating or taking steps toward mandating All-Payer Claims Databases that collect payer claims data, according to the All-Payer Claims Database Council. In addition, over half of states have some form of transparency-related laws.

Given the level of discussion -- and legislative activity -- occurring on the national, state, and local level, experts say it's critical for providers to act now to enact a price transparency plan.

by Sam Bernstein, staff writer