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Business Group Pushes for Health Prices

February 4, 2013
Related Topics: Top Stories - Frontpage, Health Savings Account (HSA), Health Care Costs, Health and Wellness, Health Care Benefits, Benefits

In the ongoing quest to crack the lock box of health pricing, a nonprofit group hopes to exert some big-business pressure.

Late last year, the Catalyst for Payment Reform issued a statement calling on plans and health providers to provide more data to enrollees and do it in a consumer-friendly format that breaks it down by hospital or physician. Self-insured employers also should be allowed to share their claims data with an outside vendor if they prefer to develop their own cost-calculating tools.

"I think what we have done by issuing our statement is to put the health care industry on notice that barriers to price care transparency are not going to be tolerated much longer," says Suzanne Delbanco, executive director of the San Francisco-based organization, which has primarily Fortune 500 members including FedEx Corp., General Electric Co. and Safeway Inc.

For decades, employers and consumers have maintained that health care violates common economic principles by forcing people to choose care without knowing much about its true cost.

Delbanco argues that several factors are changing those dynamics, most notably the significant shift into high-deductible health plans, with workers frequently paying the first several thousand dollars out of their wallets. In 2012, 19 percent of insured employees were covered by a high-deductible plan with an attached savings account—either a health savings or health reimbursement account—compared with 8 percent in 2009, according to an annual survey by the Kaiser Family Foundation and the Health Research & Educational Trust.

National plans from companies like Cigna Corp. and United HealthCare Services Inc. have started introducing more sophisticated pricing tools in the past few years, says Ted von Glahn, senior director at the Pacific Business Group on Health. In 2012, the business group compared cost calculators for six major insurers.

The best tools don't just provide a hospital-by-hospital comparison for a particular procedure, such as the cost of knee-replacement surgery, von Glahn says. They also incorporate all related charges, such as anesthesiology, hospital stay and rehabilitative care. But these comparison charts can contain blanks when hospitals or doctors decline to participate, he says.

Doctors and hospitals, jockeying in a competitive marketplace, are naturally not eager to part with a pricing chart, says Dr. Ateev Mehrotra, a Rand policy analyst and associate professor at the University of Pittsburgh School of Medicine.

"It will have to be external forces that force the issue," he says.

Mehrotra helped author a study, published 2009 in the Journal of General Internal Medicine, in which 353 hospitals were contacted by fictional uninsured patients, asking for a price estimate for three common procedures. (A 2006 law required the release of prices upon request to uninsured patients.) Just 1 in 4 hospitals, 23.5 percent, responded and provided at least some cost specifics.

In some states, state legislatures have gotten involved. A new California law prohibits any insurance contract with a health provider to include a so-called gag clause, which prevents the disclosure of pricing information.

Mehrotra says he agrees with the underlying Catalyst belief that big employers can wield considerable influence given their investment in health care. But he also describes himself as "a bit cynical."

To date, he says, "We have not seen much experience in the health care system where they have effectively leveraged that power."

Will employees use the data? It's still early, von Glahn says. But he predicts that high-deductible users might be particularly price-sensitive with less costly and risky procedures, such as lab work or imaging tests.

"They are not on the hunt for the best surgeon in the Western United States, right? They think, 'Just give me the X-ray.' "

Charlotte Huff is a writer based in Fort Worth, Texas. Comment below or email

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