Insurers' hospital payments soon online

Massachusetts consumers soon will have access to information long kept confidential by the healthcare industry: The prices individual hospitals are paid by insurers for performing specific procedures - data state officials hope will encourage comparison shopping and reduce medical costs.

State regulators, who approved the plan yesterday, said their goal is to begin posting the information on the Internet by March. They will spend the next few months deciding what treatment and procedures will be included in the data.

The move by the state's new Health Care Quality and Cost Council makes Massachusetts one of the first states to make this normally secret information public. New Hampshire recently began disclosing similar information for care, including emergency room visits, CT and MRI scans, arthroscopic knee surgery, and childbirth.

The state's mandatory health insurance law requires insurers and hospitals to disclose to the state payments for procedures, which are negotiated rates that take into account a variety of factors, including discounts for insurers that direct large numbers of patients to a hospital. The Legislature created the council to oversee the program, among other duties.

Dolores Mitchell, a council member and executive director of the state's Group Insurance Commission, said "shining a bright light" on costs will let "the public know how each institution compares and whether there is a justification for one hospital to be twice as expensive as another."

The council also plans to include quality measures - whether hospitals adhere to best practices and achieve good outcomes for patients - for the procedures for which it decides to disclose payments.

So, for example, if a hospital charges far more than other institutions for treating heart attack or pneumonia patients, but has lower quality scores, consumers might conclude the extra cost is not justified.

Massachusetts officials hope that the disclosure of the information will help reduce healthcare costs. The theory is that consumers provided with detailed information will choose high-quality, low-cost providers for nonemergency care, which in the long run will put pressure on high-cost providers to become more efficient. Without cost controls, many health policy specialists say, the state might be unable to subsidize adequate coverage for thousands of uninsured residents, as required by the new health insurance law.

"The institutions themselves will become more responsive when they know everything is out there," Mitchell said.

The theory is unproven, though, and others involved in healthcare said posting the information may have unintended consequences.

"No one really knows what will happen when you put this information out there," said Dr. Thomas Lee, a council member and president of the physician network for Partners HealthCare System, which includes Massachusetts General and Brigham and Women's hospitals.

"Most people would predict a flattening of the market," meaning that prices for all hospitals will move toward an average.

But, he said, hospitals that receive lower payments than their competitors could use that information to demand more money from insurers during negotiations, driving up costs rather than reducing them.

No Massachusetts hospitals are voluntarily disclosing the payments they receive, according to the Massachusetts Hospital Association, but there clearly is wide variation in what insurers pay. Blue Cross and Blue Shield pays from about $3,000 at one Massachusetts hospital to more than $5,000 at another for its HMO members for a normal delivery, including the cost of caring for the mother over a two-day hospital stay. Care of the infant is a separate charge.

New Hampshire's HealthCost website shows even larger disparities. Harvard Pilgrim Health Care, for example, pays about $4,500 for a normal delivery and care of the mother and newborn at Mary Hitchcock Memorial Hospital in Lebanon, compared with nearly $11,000 at Exeter Hospital.

New Hampshire's program, which began about two years ago, is too new to know the long-term impact on prices in the state.

Lee said that Partners, which includes some of the state's biggest higher-cost teaching hospitals, does not have an official position on the release of payment data. But, he said, he does not know if having the hospitals' payments made public will reduce costs.

"We don't go into negotiations trying to get all we can," he said. "We say, 'Here are our costs and this is what we need.' There is already pressure to cut costs. Everyone I know is doing everything they can think of to lower costs."

The Massachusetts move toward greater transparency for healthcare information has upset some hospitals and doctors. They say differences in the types of patients hospitals treat also could contribute to differences in prices.

But Dr. JudyAnn Bigby, secretary of health and human services and chairwoman of the quality and cost council, said that since the insurance law mandated the disclosure of payments, there were few objections.

Unlike New Hampshire, Massachusetts will begin by posting payments only for procedures that have corresponding quality measures. The Massachusetts law requires the state to post average payments from all insurers combined, while New Hampshire posts average payments from each individual insurer.

The Patrick administration plans to propose a change to the law that would allow the state to post average payments from each of the state's individual insurers.

Liz Kowalczyk can be reached at kowalczyk@globe.com.