State would post prices of hospital care
Consumers would be able to look up on the Internet prices that hospitals are paid for specific procedures under a Romney administration proposal intended to encourage comparison shopping and reduce healthcare spending.
Massachusetts would be one of the first states to post what insurers pay hospitals for deliveries of newborns, CT scans, and other common treatments and tests, data that consumers could use to calculate what their out-of-pocket costs would likely be at different hospitals.
``We want consumers to really see the difference among providers," said Amy Lischko, commissioner of the state Division of Health Care Finance and Policy. The price data would supplement detailed information the state already posts about the quality of individual providers, she said.
State officials have proposed posting the prices for the most common procedures at hospitals in Massachusetts by Jan. 1. They want to post the average price the state's 10 largest health insurers pay each hospital for each procedure and the range of these payments. Officials hope to eventually make public average prices paid to doctors as well.
Many insurers and states, including Massachusetts, post general cost information on their websites, but it's often inexact. For example, Lischko's agency lists hospitals with one, two, or three dollar signs, indicating whether a facility's cost for a particular procedure is low, average, or high. But these ratings are based on hospitals' own estimated costs, not on what insurers actually pay.
The state's new health insurance law, which mandates that all adults have health coverage by next July, requires insurers and providers to disclose to the state actual payments, which are negotiated rates that take into account a variety of factors, including discounts for an insurer directing large numbers of patients to a hospital. The law created a new entity, the Quality and Cost Council, to decide what data to make public. The council must approve the administration's plan.
New Hampshire is also collecting this more reliable data and plans to make public median prices of common procedures for individual hospitals, doctors' groups, and clinics by the end of the year.
Massachusetts officials are counting on the release of cost and quality information to 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 -- though the idea is unproven.
Without cost controls, say administration officials and health policy specialists, the state might be unable to subsidize adequate coverage for thousands of uninsured residents, as required by the new law.
Massachusetts's move toward greater transparency for healthcare information has upset some hospitals and doctors. They argue that the data the state uses to compare the quality of providers does not fully account for that fact that some hospitals treat sicker patients, which could result in higher death rates. They say differences in the types of patients hospitals treat also could contribute to differences in prices.
But providers now seem resigned to the release of information that has long been considered private. The Massachusetts Hospital Association said it supports the state's proposal to post payments as long as hospitals can review the information for errors before it becomes public.
Lischko said people with high-deductible health plans could use the payment information to estimate, for example, how much of their own money they would have to spend for an imaging test or other outpatient procedure at various hospitals. Or patients whose insurance requires them to pay a percentage of the cost of a test or treatment could estimate the cost of the co-insurance.
But the information may not be useful for many consumers, especially for those undergoing expensive treatments, said Dr. Thomas Lee, a member of the Quality and Cost Council and president of the physician network of Partners HealthCare System, the parent organization of Massachusetts General Hospital and Brigham and Women's Hospital.
Lee said that ``virtually all hospital stays will blow through the deductible," so differences between hospitals for inpatient care are not pertinent to people with high-deductible plans. And, he said, many people's copayment is a fixed dollar amount, not a percentage, so it wouldn't matter where they got care. Many consumers, he said, don't use the quality and cost information that's already available.
John McDonough, executive director of Health Care for All, a consumer advocacy group in Boston, agreed that it's uncertain whether people would use the information. ``A lot of it depends on the presentation and accessibility," he said.
At this point, Lee said, ``the real audience is the providers themselves. If someone can do good, high-quality work for less, it's important for those who do it for more money to learn from that."
Lee said it's unlikely that Mass. General and the Brigham, which as large academic medical centers generally demand higher prices, will ``go back to the negotiating table and lower our prices." But by becoming more efficient, the hospitals should lessen the need for future price increases, he said.
Dolores Mitchell, also a member of the Quality and Cost Council and executive director of the state's Group Insurance Commission, which manages benefits for state employees, said she supports the state's proposal, but it could have the unintended consequence of raising medical costs. She said she's worried about the ``Neiman Marcus effect" -- that consumers will gravitate toward high-cost providers. ``You assume that if they charge more, it's a sign of quality," she said.
At the request of insurance companies, the Romney administration has agreed to post the average of insurers' payments instead of exactly what each company pays for each procedure. Some insurers argued that letting hospitals know what they pay other hospitals would put the insurance companies at a disadvantage during price negotiations.
Romney has also asked the Legislature for ``technical corrections" in the new health insurance law that include exempting insurers' individual payments from being considered a public record.
