There is a lot going on regarding transparency in healthcare.
HHS Secretary Mike Leavitt has called for price and performance transparency to help consumers make more-informed decisions. Online databases such as Hospital Compare offer free comparative hospital quality information. Others, such as HealthGrades, offer, for a modest fee, proprietary reports on both hospitals and physicians on metrics such as cost, quality and physician disciplinary actions. Payers are offering members access to more information on hospitals and physicians, including their own proprietary assessments of efficiency and quality. And the Robert Wood Johnson Foundation recently announced $16 million in grants to combine Medicare and private insurer claims data to create “a complete and accurate picture of the quality and cost of care that doctors deliver.”
Hospitals and physicians are criticized for having complex and arcane pricing. What is overlooked, however, is that our pricing is driven by the equally complex and arcane reimbursement policies of public and private payers. Left to our own devices, most hospitals and physicians would opt for more straightforward pricing schemes—akin to the “no haggle” pricing that some auto dealers have begun to espouse. Instead, we are forced by payers into multiple combinations of discounts from charges, cost-shifting among payers and, in some cases, unilaterally determined, nonnegotiable payment rates (i.e., Medicare). It is not unusual for a medical practice to receive hundreds of payment rates for the same service. Many of those rates are for different insurance products or different patient groups within a single insurance company.
What the patient really wants to know, preferably in advance, is: “How much am I going to have to pay?” But the answer to that question is far from simple. It starts, of course, with the services the patient is going to receive. And accurately answering that question in advance, even for a physician office visit, much less for an episode of hospitalization, is almost impossible. But if you can give a reasonable estimate of those services, then the next issue is the provider’s price or charge for them. But issues such as the insurer’s discount, the patient’s copayment and deductible, and the amount of the deductible that has been satisfied then come into play. In theory, the insurer should be able to supply that information, but in practice, it is often impossible for medical practices or hospitals to obtain it in a timely manner.
The final complication is that many insurer contracts still contain confidentiality provisions that forbid hospitals and medical practices from disclosing to any third party—even the patient—the amount the insurer pays for any particular service. Accordingly, providers find themselves in a Catch-22 dilemma, unable to give patients the information they want without violating their insurance contracts.
While price transparency is difficult, performance transparency is even more so. Since the stakes are high, accurate data and careful reporting are essential. To date, efforts to standardize efficiency measures have been painfully slow. Because each payer looks only at its own insured population, getting an accurate picture of a physician’s performance for all of his or her patients remains elusive. For example, one OB/GYN colleague of mine showed me reports from two insurers, one praising him for his low C-section rate, and the other warning him that he must lower his C-section rate. Neither figure, he reported to me, accurately reflected the true rate of C-sections in his practice.
Despite laudable efforts by the American Medical Association-convened Physician Consortium for Performance Improvement, National Quality Forum, AQA alliance and others to standardize physician quality measures, different insurers still use different measures. To date, no similar effort to standardize measures of efficiency has occurred. As a result, there is a patchwork of information that makes it difficult, if not impossible, for consumers to figure out what it all means. Nonetheless, insurers often use these data to create tiered networks, directing patients to physicians who are “better performers”—those who scored higher on that insurer’s particular array of measures.
Hospital quality measurement has been somewhat less problematic, perhaps because of the longer experience in that sector of the industry. The Joint Commission’s Oryx measures and the Medicare measures reported through the Hospital Quality Alliance have been around long enough for most of the bugs to have been worked out. What remains to be seen, however, is how much use consumers will make of these data when making decisions about where to receive care.
Despite the difficulties, transparency on both pricing and performance is a desirable goal. Without it, any semblance of a healthcare “market” is impossible. But to make it a reality, some things need to change.
First, health plans must release their fee schedules, showing total allowed charges and the methods used to calculate fees, to physicians and hospitals. Plans must then provide information to their customers (the insured individuals) on what the total estimated cost of a particular service is, what proportion they (the insurer) will pay, and what amount will be the patient’s responsibility.
Second, health plan contracts with physicians and hospitals must clearly specify that disclosure of insurer fee-schedule information to patients, for services that are to be provided to the patient and charged to that insurer, is permissible.
Third, physicians and hospitals should adopt the terminology and format recommendation of the Patient Friendly Billing Project to increase clarity and accuracy in patient billing.
Fourth, all health plans and others publishing performance information must use a standard set of quality and efficiency measures, which have been approved by the NQF. Measurement data must be pooled across payers so that any data released measures the performance of the physician or hospital—not the performance of the health plan.
Transparency is certainly worth achieving. But we have a long way to go.
