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Real Healthcare ‘Consumerism’ Begins with Legitimate Transparency

Almost without exception, price transparency in non-medical-related products and services work extraordinarily well in our consumer markets. When price is coupled with quality metrics and easily available for public scrutiny, consumers ultimately determine which products will become successful.

The exception? Healthcare.
But healthcare is changing, albeit very slowly.  Just last week, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that hospitals will be required to post online a list of their standard charges beginning January 1, 2019. Currently, hospitals are required to make this type of information public only when requested. This new, finalized rule requires hospitals to proactively post the information online to “encourage price transparency” and improve “public accessibility.” Additionally, hospitals much update this information annually.

Pricing – Designed to Protect the Sellers of Care

In healthcare, price transparency is similar to a unicorn. We all hear about it, but have yet to actually see (or experience) it in person. I fully understand that we have healthcare pricing tools provided to the public by third-parties that include, but not limited to, insurance companies, a smattering of medical providers, and crafty entrepreneurs who desire to crack the codes of using historical paid claims to determine ‘approximate’ prices within certain marketplaces. To date, price transparency tools for medical services have only nudged a small number of patients to actually use them, according to a new study funded by the NIHCM Foundation, “Consumer Responses to Price Transparency Alone Versus Price Transparency Combined with Reference Pricing.”

Imagine purchasing consumer products, such as groceries, a bicycle or car, and being told by the grocery store or dealership that you will eventually know the cost of that product sometime AFTER the purchase has been made, but NOT before. This scenario is the current state of our medical pricing – we are given approximations prior to the elective care we receive. But because the services have yet to be rendered, opaque pricing is masqueraded as being at least somewhat transparent with ‘approximate’ pricing.

After Medicare and Medicaid impose reimbursement terms on most medical providers, the payment pecking order continues. Insurance companies with the largest number of insureds in a given geographical area will likely receive better payment terms compared to carriers in the same market with fewer insureds. Terms of pricing details are carefully guarded. In fact, depending on the circumstances, favorable pricing terms are considered to be a ‘competitive advantage’ for dominant insurance companies and medical providers, and it is in their best interest that pricing terms be deliberately withheld from the public. Clearly opaque pricing is the modus operandi in healthcare. The magician that can somehow cleverly demonstrate this level of ‘deep pricing magic’ on the popular television show, “America’s Got Talent,” could possibly win the $1 million prize.

Transparent pricing empowers the buyer, while opaque pricing protects the seller. This is the crux of what is happening in healthcare.

As we continue to ‘break the code’ on transparent pricing, we must also focus on the other decision-making tools desired by consumers – quality. In healthcare, appropriateness of care is a quality component, but so too are the outcomes that result from care. Better outcomes in care should parlay to higher quality, right? Receiving safe care should also be a qualifying factor when determining quality of care.

IOWA Health Scores

Recently, a new website went live for Iowans that compares about 50 Iowa hospitals that encompass over 90 percent of hospital claims incurred by Iowa employer plans. The tool, IOWA Health Scores, is developed and sponsored by the Iowa Employer Group, “a coalition of employers and other purchasers that develop joint initiatives to improve quality and affordability of healthcare in Iowa.” Paul Pietzsch is President of Health Policy Corporation of Iowa, the organization that coordinates the activity of the Iowa Employer Group.

According to Mr. Pietzsch, the IOWA Health Scores website is “dedicated to providing the best comparative tools available for Iowans choosing healthcare. For now, that includes only hospitals – and a selected range of quality/patient safety ratings and metrics – but will be expanded over time. This site is intended to be used as a guide and assist consumers asking questions about care for them and their families.”

Is this website perfect? No, but as Voltaire was attributed as saying, “Perfect is the enemy of good.” Pietzsch himself will acknowledge this is merely the first iteration of a long-term goal of selecting measures from reliable sources – national in scope – that are simple for the average Iowa consumer to use when seeking care. The site currently uses the following primary sources to make hospital comparisons:

  1. Quality Measures – CMS Hospital Compare
  2. Patient Safety – Leapfrog Hospital Safety Grade
  3. Patient Experience – CMS Five Star Rating of Patient Experience

Specific measurements used within this website include:

  • Rate of readmission for heart-failure patients
  • Rate of complications from hip/knee replacement
  • Patients who developed blood clots while in hospitals who did not receive appropriate treatment that would prevent it
  • Surgical site infections from colon surgery
  • Average (median) time that patients had to wait before receiving pain medication after arriving to the emergency department with broken bones.

Finding quality-of-care sources online takes time, and frankly, a good dose of trust that this information is not misleading. The Iowa Employer Group has accessed a handful of national measurements from two well-known sources (CMS Compare and Leapfrog) to enable Iowans to compare up to three hospitals on selected quality metrics. The Iowa Employer Group encourages Iowa employers to add this website link to their webpage so that employees and family members can compare Iowa hospitals on different measures.

Check out this website then prepare your next grocery list!

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