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Motivation Needed to Improve Price Transparency in Iowa

Iowa Report Card on Price TransparencyIn Iowa, we can do better. Indeed, we must, as we really can’t get any worse.

Report cards are important for many different reasons. Whether for students, organizations, institutions, legislators, communities or countries, report cards can summarize overall progress by using comparable benchmarks that use similar metrics. If generated appropriately, report cards can serve as a motivator to improve on less-than-desired results – and behaviors.

While attending parochial school in Fargo, N.D., my third grade report card was…embarrassing. Ok, it was downright atrocious. Most subject matter grades were usually ‘Ds.’ My care-free attitude reflected that school was not a central priority for someone my age. In fact, it seemed that many of my friends were equally unmotivated to elevate their grades. When I did care, I would only compare my grades with my closest peers. In that regard, I was still below average.

Report card comments stated that I ‘needed to improve my attitude.’ Fair enough. But it took me another three years to eventually become tired of having less-than-exemplary grades, especially when I began to compare my grades with a broader audience of classmates who had greater academic aspirations. This delayed ‘epiphany’ pointed me in a new direction of pursuing better results – and, I might add, making my parents happier!

Embracing this new transition required a motivation that would alter my behavior(s) to perform differently. To elicit a positive change, finding the ‘right’ motivation is tricky. It must cause a person, organization or community to repeat certain behaviors and actions over and over before it finally becomes ingrained in who we ultimately wish to become. Whether you’re a student pursuing employment after graduation, becoming the employer of choice, or being the healthiest community, motivation is key. Our attitudes, beliefs, intentions and efforts will ultimately drive the cycle of desired change.

In this vein, I was keenly interested in learning about the newly-released the ‘2016 Report Card on State Price Transparency Laws’ by the Health Care Incentives Improvement Institute (HCI3) and Catalyst For Payment Reform (CPR) that graded each state on healthcare price transparency laws. I will refrain from specifics, other than only three states (Colorado, Maine and New Hampshire) earned an “A,” one (Oregon) received a “B,” two (Virginia and Vermont) given a “C,” while one (Arkansas) received a “D.” What about the other 43 states? According to HCI3, they all failed.

The 18-page Report Card provides a good overview on this subject for each state. Each high-scoring state provides a legislated website that shares consumer-friendly resources in formats that are relevant to healthcare prices.

What about Iowa?

Based on this report card, it appears that Iowa must make improvements to:

This report card serves as just one measure – price transparency. The quality of care received by patients is not measured.

APCDs may collect data from all state sources including Medicaid, private health insurers, children’s health insurance and state employee health benefit programs, prescription drug plans, dental insurers, self-insured employer plans (ERISA) and Medicare.

APCDs are often believed to be the best price information resource because they include actual paid amounts, not merely charged amounts. Until we can get real-time ‘settled’ prices by provider for each procedural event, APCDs may be the best option, although somewhat problematic, due to a recent Supreme Court ruling. Some insurers may offer their own ‘transparency’ tools for their customers. However, limitations make it a ‘buyer beware’ proposition when it comes to paying the final price – given the specific medical procedures and services that are eventually delivered.

According to this report card, Iowa has received a failing grade on price transparency tools for the healthcare ‘consumer.’ The question for employers and their employees, along with other payers and consumers of healthcare: Is this grade acceptable? Are we better served clinging to the past and continuing to blindly shoot in the dark while purchasing care?

Iowa can choose to be led by more forward-thinking states that appear to be trendsetters in price and quality transparency initiatives, or we can decide to break from the masses and choose a new mindset to improve a nagging problem that continues to persist for our population.

It’s about having the right motivation and behavior. Most importantly, it is about having the will to break through complacency and self-interests. The word ‘transparency’ is frequently used in healthcare – whether spoken or written – but unfortunately, it is underutilized in the practices and policies in which we live.

Seeking and finding the right motivation and behavior can be done. Take it from a ‘reformed’ third grader!

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The Healthcare ‘Consumer’ and Eye of a Needle

Camel and Eye of NeedleAgain I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.
Matthew 19:24

Recent research from the Health Care Cost Institute (HCCI) suggests that savvy shoppers in healthcare may only have limited market power to drive costs downward. Coming from 2011 health claims data provided by a handful of national commercial carriers, HCCI examined medical claims for people under age 65 who were covered by employer-sponsored health insurance.1

Researchers looked at total spending for ‘shoppable’ health services, which consists of care scheduled in advance – such as flu shots, non-emergency hip or knee replacement, colonoscopies, urinalysis and other non-emergency services.

Only seven percent of total healthcare spending in 2011 was paid by ‘consumers’ for shoppable services. This out-of-pocket spending total includes deductibles, copayments and coinsurance required by health plans. Many health plans use copayments for doctor visits – such as $20 per visit – which offers little, if any, incentive to price shop when seeking care. In 2011, about a quarter of the total paid out-of-pocket was from copayments. Deductibles accounted for almost half of the dollars spent by consumers for shoppable services, while 27 percent was tied to coinsurance payments. HCCI analysts summarized this report as follows: “Overall, we come to the conclusion that the potential gains from the consumer price shopping aspect of price transparency are modest.”

Dovetailing this assessment, in July 2015, the Catalyst for Payment Reform issued a ‘Report Card on State Price Transparency Laws’ that shows only three states garner a letter grade of ‘A’ or ‘B’ for price transparency – New Hampshire, Colorado and Maine – while all other states receive failing grades (Iowa included). Just recently, the U.S. Supreme Court rendered a decision on the Gobeille v. Liberty Mutual case making it difficult for states to include ERISA-based self-insured medical claims in ‘all-payer claims databases.’ From this decision, it appears that price transparency for medical costs will need to discover alternative paths to eventually reach the healthcare ‘consumer.’

As deductibles and other cost-sharing arrangements continue to move upward due to increased health costs, carriers and self-insured employers use cost-relief measures to keep coverage affordable – one of which is limiting the number of providers within networks. Fewer providers in a network may allow for competitive price breaks, but a potential problem can erupt for the unsuspecting patient – surprise medical bills from out-of-network providers who contract with in-network facilities. This happens when an in-network hospital contracts with out-of-network medical staff, including emergency-room doctors, anesthesiologists, surgical assistants or lab technicians. Hospitals are typically not obligated to tell the patient BEFORE surgery that certain services will be performed by out-of-network providers – who are allowed to charge above and beyond the patient’s in-network financial responsibilities.  According to a 2015 survey by Consumer Reports, this situation happens to an estimated 1 in 3 American adults every two years. Sometime AFTER the service was provided, usually when the invoice(s) arrive, the patient is shocked to learn of this practice.

So much for allowing the patient to become a more proficient healthcare ‘consumer.’

Driving costs downward in the future will require all payers (government, employers and insurers) to find innovative solutions to deliberately incent the provider community to deliver higher-quality outcomes at affordable costs and eliminate nonsensical surprises. But doing this is much easier said than done. Finding and implementing appropriate financial incentives to elicit the right behaviors without causing perverse consequences is akin to fitting the camel through the eye of the needle. From the provider (and carrier) perspective, there must be a good business case to hold costs down while those insured are reasonably protected from unintentional financial harm.

Market-driven healthcare enthusiasts will view the HCCI report as a somber message about the progress made since the dawn of ‘consumer-driven healthcare’ earlier this century. Price and quality transparency is a moral obligation to the American public, and it all begins with having the right payment incentives that drive a new, intentional culture of care delivery.

From today’s perspective, the eye of that needle looks awfully minuscule.

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1A five-year lag on claims data is a testament to the archaic tools we have at our disposal when analyzing healthcare usage. Unfortunately, we continue to live in a tapestry world of siloed, fragmented data, that attempts to solve a complicated jigsaw puzzle with missing puzzle pieces.