Medicare Compliance & Reimbursement
Hospitals Must Bare It All Under New Price Transparency Initiatives
Hospitals' pricing structures and quality data will soon face full exposure under President Bush's new price transparency strategy.
In the Bush Administration's ongoing efforts to stem out-of-control health care spending, the nation's federal health care programs will begin reporting the prices they pay to hospitals for various services and medical procedures. Pricing information from Medicare, the Federal Employees Health Benefits Plan and the Department of Defense's TRICARE program will all become readily available to beneficiaries under a new initiative the President's economic policy assistant Roy Ramthun revealed at an Alliance for Health Reform panel discussion on March 10.
Talk about pricing transparency snowballed after National Economic Council director Alan Hubbard told executives at the Federation of American Hospitals' annual meeting to reveal hospital prices to consumers in lieu of Congressional action. Four transparency bills are already making their way through Congress.
"If you think [coverage] is free, you don't care what the price is," Hubbard argues. "So you have over-consumption and a price-insensitive consumer."
Although price transparency may equip savvy benes with information to make cost-effective health care decisions, it's a change that providers will likely resist.
"Don't underestimate the ingenuity the providers will bring to the table to block price transparency," Uwe Reinhardt, chairman of the Coordinating Committee of The Commonwealth Fund's International Program in Health Policy and Practice, cautions the Alliance panel. "It's been promised for 20 years, and maybe this time around it will come, but I wouldn't bet the farm on that," he projects.
Price reporting is "very difficult to do, number one, and then there's great reluctance to have transparency in prices in the American health system," Reinhardt says. "The docs and the hospitals will fight you tooth and nail."
The President's transparency initiative could also get stuck in the mud if the HHS Office of Inspector General continues to sit on a 2003 proposed rule that would give HHS the power to identify when Medicare providers overcharge for services--so warns House Ways and Means Committee chair Rep. William Thomas (R-CA) in a March 10 letter to HHS Secretary Michael Leavitt.
"The OIG apparently chooses to sacrifice the interests of taxpayers over those who wish to keep real prices shrouded in order to gouge the public, employers and insurers," accuses Thomas. "Congress provided clear statutory authority for their oversight in this area, and the OIG should not abdicate its responsibility to protect taxpayers and beneficiaries."
Private Sector Already Experimenting With Voluntary Transparency
White House support for price transparency is in line with the administration's focus on consumer-driven health care. Consumer-driven health plans such as high-deductible plans and health savings accounts aim to give consumers "more skin in the game," motivating them to make cost-conscious decisions about their health care. The President's price transparency initiative may serve to further CDHC's effect on spending growth by arming benes with the details they need to make informed decisions.
President Bush spoke frankly with reporters about price transparency at a National Newspaper Association Conference on March 10. "I think it's very important that there be more transparency in pricing in health care. It's really the only industry, when you think about it, where somebody else decides whether the price is worthwhile," reflects Bush. "The consumer isn't directly involved in health care decisions, a third-party payer is. And so there's really no interaction between the provider and the customer when it comes to health care," he notes.
The federal government isn't the first to experiment with price transparency as a way to encourage competition and curb health care spending. Some insurance companies have already started to reveal prices voluntarily, points out Roy Ramthun, special assistant to the President on economic policy, at the panel discussion. "Most of the major insurance companies have plans if they're not already doing these types of things, so we believe those are steps in the right direction. If we can get Medicare's information out there, in theory, every American would have access to how much Medicare is paying."
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