Health care cost transparency — are we making progress?

The Affordable Care Act will drive up cost and shift more responsibility to the consumer. Two-thirds of all employers offer a consumer-driven health plan and/or high deductible health plan to control cost. These plans represent 20% of all insured, and they ask consumers to be accountable for their choices. There has been significant progress on quality reporting through the Leapfrog Group and Bridges to Excellence, but health care price transparency across the country is almost non-existent.

The Catalyst for Payment Reform, an organization that represents large self-funded employers, completed a study and scored (A,B,C,D,F) each state on its level of health care cost transparency. Twenty-nine states scored an F — only two scored an A (Massachusetts and New Hampshire) and the overall grade-point average was 0.72. Transparency of health care cost and quality must be the founding principle of sustainable change.

Transparency implies openness, communication and accountability — performing in such a way that it is easy to see what’s wrong. There is an enormous amount of opportunity to “fix” health care if we address the variation in unit cost, which drives 50% of health care inflation. On Feb. 26, the National Association of Health Underwriters issued its public policy statement on health care cost transparency and the principles used to measure its effectiveness. It is laying the groundwork for a health care world that begins with the consumer in mind instead of the rule-makers.

NAHU is helping to shape a future where engaged, educated and empowered people make informed choices with their lifestyle and when they buy health care. Premiums and out-of-pocket exposure will continue to rise under the ACA and health care cost transparency must improve with it. We are seeing some signs of progress.

In May 2013, the Department of Health and Human Services released average cost for the 100 most common inpatient procedures. Average covered change for a hip replacement varied by 800%. Then in June, HHS released selected hospital outpatient charges for 30 types of common hospital outpatient procedures (endoscopies & echocardiograms) and the average charge for a colonoscopy varied by almost 400%.

A federal court in Florida lifted a 33-year-old “permanent” injunction that has forbidden HHS from disclosing Medicare reimbursement amounts for individual physicians. According to HHS Secretary Kathleen Sebelius, “We are committed to making the health system more transparent in harvesting data to empower consumers.”

Empowering health care consumers with the cost and quality information necessary to make an educated and informed choice on a particular service, treatment, procedure or appliance before they make a buying decision is the only way we will make real change in health care.

Transparency is a simple idea and the time for it has come. Legislators, health insurance companies and providers will tell you that health care is too complicated and making cost and quality information available to consumers will only confuse them. Insurers resist full transparency because they fear a race to the top, where lower-compensated providers will want their contracts improved.

The problem is, they sell the consumer short and create unnecessary uncertainty. Legislation and regulation don’t have to be the drivers — the power to make change will come from increasing consumer demand. The notion of consumer confusion is a distraction. The “we can’t do it without quality” argument ignores free-market principles and slows down progress.

We must be able to see what a service costs in advance of the treatment. We must have access to quality information scored by objective measures and an independent source who maintains the integrity of such information so we can weigh the cost with overall value.

Can you imagine if all of us behave like consumers with our health care resources? A world where the new norm asks us to make informed decisions to avoid unnecessary care, helps us understand that care can be expensive but not necessarily better in value — and supports us in making better choices where we have the ability. We are making progress. Stay tuned for more.