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Expert warns of flawed price transparency effort

By Rich Daly
Posted: June 17, 2013 - 8:00 pm ET

One expert is waving a warning flag at the federal government's race to increase healthcare price transparency.

A hearing by the Senate Finance Committee today will review the growing number of public and private initiatives aimed at publicizing the widely varying prices charged by providers across the country. Those included two rounds of hospital charge and payment data released by the CMS over the last two months for a range of inpatient and outpatient services.

The release of undiscounted hospital prices, known as the chargemaster, spurred cheers from many patient advocates and members of Congress, who hoped the releases would encourage patients to shop for care among hospitals and shame providers into lowering prices. “Patients should be able to compare prices and get the care that's right for them, just like families across America do when they shop for food or consider buying a home,” Sen. Max Baucus, chairman of the Finance Committee, said when the CMS released the first round of data.

But on Tuesday Baucus and other committee members will hear from an expert who warns that the CMS' releases of hospital prices and related efforts to disseminate that information to patients will fail to achieve its goal. “These steps are not very effective if the goal is to get lower prices,” said Paul Ginsburg, president of the Center for Studying Health System Change.

Only a tiny share of patients are charged the chargemaster prices, according to health policy experts, because the vast majority of Americans are covered by employer-provided private insurance, Medicare or Medicaid, which negotiate much lower prices. Encouraging benefit designs that reward publicly and privately insured people who seek care from lower cost, higher quality providers would spur much greater savings.

Ginsburg backs legislation that would spur the release of Medicare physician data. He hopes insurance companies would use such physician charge data to better implement their own physician-quality-based payment initiatives.

Such physician data would be revealed in a searchable database under legislation sponsored by Sens. Ron Wyden (D-Ore.) and Chuck Grassley (R-Iowa). The Medicare Data Access for Transparency and Accountability Act did not advance in the previous Congress but its outlook would brighten if Wyden pursues the committee's chairmanship when Baucus retires next year.

Other legislative initiatives that serve to lower healthcare costs, Ginsburg said, would mimic a recent Massachusetts law that barred hospitals from declining to participate in insurers' tiered networks. Such provider tiers are an effective way to funnel patients toward the highest quality, lowest cost providers, he said.

Hospital advocates argue that the released charge data fails to take into account the differences in severity of their patients' illnesses or the higher costs of some facilities, such as academic medical centers. They insist the charge data is less meaningful for patients than knowing what their share of the cost of their care is.

Hospitals back legislation sponsored by Rep. Michael Burgess (R-Texas), which would require state laws on the disclosure of hospital charge information, including estimated out-of-pocket costs for healthcare services.

Even supporters of the CMS hospital-data release acknowledge that it is not easily accessible to patients and consumers. The inpatient prices charged for procedures representing 60% of hospital discharges in fiscal 2011 by 3,000 hospitals were listed in a searchable spreadsheet on an HHS website.

A report last month from Moody's Investors Service noted that the CMS data does not allow true consumer comparison shopping. The most likely users of the data, according to the report, will be regulators, who may use the discrepancies between charges and payments to force hospitals to justify their pricing schemes.

Without a consensus in the healthcare industry on the best approach to broader price transparency, there's little likelihood that Congress will move quickly after Tuesday's hearing. "It's pretty recent after the HHS data dump and I'm not sure anything has really congealed yet,” said Gerry Niederman, a healthcare attorney for the Polsinelli law firm.

Follow Rich Daly on Twitter: @MHrdaly


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