Healthcare Business News
Suzanne Delbanco

Commentary: Catalyst for Payment Reform calls for price transparency by 2014

By Suzanne Delbanco
Posted: November 1, 2012 - 12:01 am ET

“We all know we need to be careful stewards of our healthcare dollars. But if we can't get at the price information, it's just not doable.”

It is a complaint and concern we hear frequently working with large employers and other healthcare purchasers, such as state public employee and retiree systems. Along with everyone else in our healthcare system, purchasers know costs are going up, but they have no idea if their employees and their families are getting the right care at the right price as a result. Given that prices for the same procedure can vary tremendously—as much as an eight-fold difference in the price for colonoscopies in the San Francisco Bay area, for example—they do know they are likely paying too much in far too many instances.

Ask almost any purchaser what the solution is and they will tell you we need to make employees more aware of quality and value—employees must understand higher-priced care isn't always better. They must learn that quality and prices vary and that they can, in theory, shop for higher-value care.

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Absent access to timely, understandable information about prices paired with meaningful data about quality, this solution remains a pipe-dream. Ask large purchasers why they can't deliver such data in a usable format to their consumers and they will answer you clearly: because of their contracted health plans and healthcare providers.

This week, Catalyst for Payment Reform, a nationwide coalition of healthcare purchasers working to reform how we pay for care in this country, issued a landmark statement, calling on plans and providers to release price data by 2014. Several leading large employer coalitions including, among others, the Pacific Business Group on Health, the National Business Coalition on Health, the Leapfrog Group, and the Corporate Health Care Coalition joined our call.

Building on health plan sourcing and contracting tools that Catalyst for Payment Reform had created earlier for employers and other purchasers, the statement spells out the needs of consumers and the expectations of purchasers. Consumers need access to meaningful, comprehensive information about quality and the price of care to make informed decisions.

Too often, provider systems obscure their prices, leaving the purchaser and consumer blind to their actual prices. In other cases, that information flows through the plan to the plan's members—in theory. But frequently plans share price data with consumers through online tools that are not comprehensive or easy to use. Some have prices for only a handful of procedures. The Pacific Business Group on Health conducted a “secret shopping” expedition last summer and concluded that many health plan tools just don't make the grade (See related story, “Value shopping,” June 23).

Catalyst for Payment Reform has articulated that useful, comprehensive, consumer-friendly tools must integrate information about quality, price and patient experience; offer thorough information about providers and convey information in an easy-to-understand platform or portal. The most useful tool offerings will pair these functions with online or telephone support from physicians, nurses, coaches or other customer service representatives trained to help patients use the tools to maximize their health.

And when their plan's tool doesn't make the grade, purchasers may be thwarted again. Several large, self-insured employers have had difficulty getting their plans to give them their own claims data, particularly the price information. This situation makes it impossible to work with another vendor to develop alternative consumer shopping tools.

It makes some sense, given health plans have invested heavily in developing their own tools and don't relish competition from others. However, their protectionism doesn't serve purchasers or consumers well, when their tools are incomplete or simply not user-friendly. And even when there is price data coming from providers and health plans, allowing purchasers to create alternative tools, the consumer shopping experience is still not ideal. Tools often do not have real-time claims data and may also require medical, pharmaceutical, behavioral and other clinical claims data from multiple sources, which can complicate the process.

Perhaps the real solution was best suggested by former Intel CEO Andy Grove in an article he wrote recently for Wired Magazine, advocating for a medical Freedom of Information Act so that healthcare services have an obvious sticker price. Detractors will argue that this kind of full transparency may embolden lower-priced providers to set their prices higher after noting the prices charged by their competition. However, current antitrust laws can and should be enforced to ensure transparency fosters competition, as it does in other industries.

Given the complexity of our system and the different forces at work, Grove's sticker-price solution may be a long way off. In the interim, those who pay the healthcare bills have the right to know where their money is going.

We believe Catalyst for Payment Reform's statement is a strong first step, publicly expressing purchasers' concerns and articulating what they need from providers and plans. Purchasers will continue to support ways to make price and quality data more accessible, such as all-payer claims databases, and educating employees about value. Nationwide campaigns like Choosing Wisely help underscore that variation in quality and cost is pervasive, and that more care and more expensive care isn't always better.

All of this work will be a challenge, and we have far to go before reaching Andy Grove's excellent vision. For starters, health plans and providers need to do more to partner with those who are paying the bills.

Suzanne Delbanco is executive director of Catalyst for Payment Reform, San Francisco.

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