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Price transparency rule hurts rural, small hospitals
The writer is a healthcare consultant with Ascendient.
As a healthcare consultant, I believe in transforming the U.S. healthcare system to provide the right care, in the right place, at the right cost. But slapping vulnerable hospitals with million-dollar fines over a price transparency regulation that never made sense in the first place? That’s not transformation. It’s a travesty.
It’s a bad idea for at least four reasons.
First, transparency is not the same as clarity. Duke Regional Hospital does a wonderful job of compliance and patients can easily download a spreadsheet listing 15 different price ranges for more than 85,000 items. Is that transparent? Yes. Is it clear? Hardly.
Second, transparency is not the same as comparability. Need a lung transplant? With insurance from Cigna, it’ll cost between $306,000 and $541,000 at Duke Regional. Every hospital reports these broad ranges due to a complex coding system established years ago by the federal government to account for “complications and co-morbidities.” That’s great for auditors and payers, but not for consumers trying to compare costs.
Third, transparency does not encourage comparison shopping. Consumers simply don’t “buy” gall bladder surgery the way they do a gallon of milk. Consumers tend to choose a hospital based on convenience, familiarity, or safety because insurance limits their out-of-pocket expense.
Finally, transparency does not come cheap. Regardless of size, every hospital will find itself reporting millions of data points on thousands of services and dozens of payers. Much of this information must be manually gathered and reported, plus additional costs for website upgrades to make it all machine-readable and public facing as required.
For smaller nonprofit systems and rural hospitals, the price of all this is just too high. If these hospitals are failing to comply with the transparency rule, it’s not because they want to hide anything, but rather because they can’t afford it.
Dawn Carter, Chapel Hill
State health plans need more transparency
The writer is an entrepreneur and founder of the Cicero Institute.
Imagine your daughter is buying her first car. I’m guessing you wouldn’t blindfold her, walk into the nearest dealership, and tell her you’ll buy the first car she touches.
Yet that’s the current approach used by North Carolina to pay for healthcare for teachers, nurses, state troopers and retirees on the state health plan.
State law prohibits transparent healthcare costs for public employees. Why? Because powerful healthcare interests know that transparency creates consumer choice and enables competition, eating into their billions of profits.
Some states, like New Hampshire, Kentucky and Utah have even established “right-to-shop” programs that allow workers and taxpayers to share in the millions in savings when state employees use more affordable healthcare options. California and Montana use “reference-based” pricing to equalize wildly different pricing for the same care at different locations. Prices paid in California’s program fell by one-quarter in the first two years. Montana saw a savings of nearly $50 million in the first two years.
But these benefits are not reaching North Carolinians.
Courageous leaders like state Treasurer Dale Folwell have identified this problem and are fixing it. The State Employees Association supports him helping its 55,000 members afford high quality healthcare. But behind closed doors, special interests fight to keep price information secret. Some go as far as to send the Treasurer completely blacked out contracts, as if they were hiding a classified national security plan.
I started multiple multi-billion dollar companies before getting involved in pro-consumer policy with the Cicero Institute, but you don’t have to be a CEO to understand what’s happening. The more information hospitals and insurers keep to themselves, the more money they make off everyone else. North Carolina patients are in the dark. As a result, public employees incur exorbitant medical bills when more affordable options are right across the street.