Lower-Cost May Mean Better Health Outcomes

[funologist.org]

Proponents of health care price and quality transparency believe that by providing cost and quality information about physicians and hospitals, individuals will choose those providers with high quality scores and lowest costs. The argument is that providing this information to patients, the demand for high-quality health care at the lowest cost will reinvigorate competition in the health care market, thereby driving down the overall cost of care.

Because higher costs are not always indicative of the best quality, the goal is to showcase the connection between quality scores and price so that patients can more easily make informed decisions about their health care.

This disconnect between lower costs and better care is not unusual. An analysis by Modern Healthcare reported this weekend indicated that in seven of 12 cities examined, the hospital with the lower average cost for inpatient and outpatient percutaneous coronary intervention ("PCI") also had the lower readmission rate for PCI patients.

This analysis emphasizes the importance of providing side-by-side cost and quality data. In order for the U.S. healthcare market to start behaving like other markets, consumers (or patients) must have access to the same kinds of information for their health care insurers and providers as they do for cell phones and cars. Then, hospitals will no longer be able to add a large markup over their actual costs of delivering the services because the value-add simply won't be justifiable.

Demystifying Hospital Bills

A new price transparency law in North Carolina now requires hospital bills to be "in plain, easy-to-understand language without obscure codes and medical jargon." (Raleigh News & Observer.)  

Beginning next June, North Carolina hospitals must post pricing and payments for their most common admissions, surgeries, and imaging procedures.  Hospitals must also list prices and reimbursement rates for Medicare, Medicaid, large private insurers, and uninsured patients.

The bill also provides increased patient protection from bill-collecting, requiring hospitals to provide written notice to patients before sending the patient's bill to a collection agency, and to not refer unpaid bills to collection agencies while a patient request for charity care is pending.  Finally, the bill prevents hospitals from collecting unpaid bills from pateints' state tax return or lottery winnings.

"Financially speaking, patients soon will find visits to North Carolina hospitals to be a less painful and less mystifying experience." (Raleigh News & Observer.)

Read more here: http://www.newsobserver.com/2013/07/28/3064787/under-new-law-patients-hospital.html#storylink=cpy

Read more here: http://www.newsobserver.com/2013/07/28/3064787/under-new-law-patients-hospital.html#storylink=cpy

A 30+ Year Injunction Vacated, the ACA To Thank

On May 31, the 11th Circuit Court of Appeals vacated a 30+ year injunction that prevented disclosure of Medicare claims data.  It did so in the name of the public's interest in increased transparency and the ACA's efforts to facilitate it. 

In 1979, a district court in Florida issued a permanent injunction against HHS (then the U.S. Department of Health, Education & Welfare) barring the department from releasing lists identifying physicians who received a certain level of Medicare reimbursements. Even though HHS had made such a disclosure two years prior and had amended its regulation to specifically allow such disclosures, the Florida court invoked an exemption from the the Freedom of Information Act and the Privacy Act to enjoin HHS from individually identifying how much specific physicians receive in Medicare payments. 

However, two years ago the court reopened the case.  When doing so, it allowed two key parties to intervene -- Real Time Medical Data, LLC, a company that uses Medicare claims data to assist hospitals with marketing and strategic planning, and Dow Jones and Company, Inc., which publishes The Wall Street Journal.  Both companies arguments pointed to changing times with regards to transparency.

Real Time Medical Data argued that since the 1979 ruling, there has been a shift in balance between physician privacy interests and the public interest in disclosure of Medicare reimbursement amounts.  To bolster that argument, it noted that a specific ACA-created program expressly permits disclosures of Medicare Part B (physician insurance) to qualified entities to generate provider performance reports. Qualified entities are companies, not unlike Real Time, who have been approved by The Centers for Medicare & Medicaid Services (CMS) to collect claims data for evaluating quality performance of providers and suppliers. 

Dow Jones made similar arguments, noting Medicare claims data could be invaluable in identifying fraudulent conduct of physicians and physician groups.

Although the court does not anticipate an immediate release of Medicare claims data after this ruling, it's cases like this one that are steps in the right direction -- toward a more transparent and palpable healthcare system.

Shopping Without Price Tags

Imagine walking into a department store to buy a pair of shoes, only this time there are no price tags and many of the shoes look identical.  Welcome to the healthcare market.

Three months ago, Steven Brill's article in Time Magazine sparked a lot of discussion around this already heated topic -- the lack of price transparency in healthcare billing.  From the extreme variability of procedure costs, even within the same county, to the sheer incomprehensibility of one's own medical bill, the cost of medical care continues to be a mystery to consumers.

In an effort to make health costs more transparent, the U.S. Department of Health and Human Services (HHS) released a list of what hospitals across the country charge for their 100 most common in-patient procedures.  This list for each hospital is known as a chargemaster. While hospitals are required to list the official value of their procedures on the chargemaster, private insurance carriers, as well as Medicare and Medicaid, all negotiate their own reimbursement rates. So even though the public has this newfound access to the chargemasters, the amount each insured individual ends up paying is subject to a private negotiation between that hospital and the insurance company -- and those figures remain a secret.

Yesterday, the Obama Administration released a memo stating that exchanges set up under the ACA will offer the consumer more choices, thereby spurring on competition and potentially lowering the cost of healthcare overall.  The goal is to increase the options for insurance coverage, particularly in those states dominated by one insurance carrier.



So far, only four states have confirmed the carriers that will be competing on their exchanges: California will have 13 carriers competing, Washington state will have nine, Maryland five, and Rhode Island just two.

While we wait for more states to lock in their insurers, here are some important takeaways from the White House memo promising more consumer choice will create more competition:

• The data in the memo comes only from states in which the Federal government will run the exchanges, coupled with the states running their own exchanges that have already released the relevant information (California, Washington, Maryland, and Rhode Island). 

•  The majority of states will have new health insurance choices that are not available today. 

•  In 75% of federally-run exchanges, at least one new insurance company intends to enter the market. 

•  About 90% of Americans buying individual insurance from the state exchanges will have at least five companies to choose from.

The effects of these new insurance choices, however, won't be clear until the country goes shopping for health insurance beginning October 1, when open enrollment begins on the state exchanges.