Healthcare price disclosure aimed at high costs, but is no silver bullet
Patients curious about what health care costs won’t have to guess anymore after the Alaska Legislature followed 30 other states in passing a law requiring providers to disclose their prices.
House Bill 123, sponsored by Rep. Ivy Spohnholz, D-Anchorage, awaits Gov. Bill Walker’s signature after it passed the House by a 34-6 vote in 2017 and was folded into Senate Bill 105 to pass both bodies on the last day of the 2018 session.
Among the states that have passed similar measures, Florida and Colorado are most similar to Alaska’s, Spohnholz said. She was able to learn from Colorado legislative collegues that they regretted not building an enforcement mechanism such as fines.
The bill requires health care providers to publish price information in public spaces and on their websites. They will also need to submit the price information to the Alaska Department of Health and Social Services. A good faith estimate needs to be provided within 10 days of the request.
Each listing will include 10 most commonly-performed procedures from six different sections of medical code for a total of 60 procedures. The six sections are medicine, pathology and labs, anesthesiology, surgery, radiology, and evaluation/management.
No small amount of hope is pinned on the measure to help reduce health care costs, advocates have said. Alaska has the second-highest health care costs per person in the nation, Spohnholz noted when she proposed the legislation in January 2017.
Simply having the price information and then a discussion between consumers can start bringing health care costs down, she said. According to her research, medical price transparency across the nation could save the U.S. $36 billion in health care spending.
Colorado’s law went into effect Jan. 1, calling for hospitals and providers to post self-pay prices of their top 50 diagnosis-related group codes and self-pay prices of 25 leading current procedural technology, or CPT, billing codes.
In shaping the Alaska legislation, Spohnholz started with the same 25 categories as Colorado but simplified it at the recommendation of the Alaska State Hospital and Nursing Home Association.
“Transparency can also begin the public dialogue between stakeholders in the healthcare industry regarding the variation of health care costs within Alaska,” she said.
Whereas several states, such as New Hampshire, require only the good faith estimates, Alaska’s law carries the posting requirement and a separate provision that within 10 days of non-emergency services, doctors, hospitals and insurers need to respond to a customer’s price request. The Municipality of Anchorage passed a similar measure last year that carries a fine for non-compliance.
The law outlines how penalties for providers, facilities and insurers cannot exceed $10,000. Failing to comply by posting information carries a fine of $100 per day and failure to comply with a good faith estimate also carries a $100 per day fine beginning after the 10 days have passed.
Becky Hultberg, the president and CEO of the Alaska State Hospital and Nursing Home Association, said she worked extensively with Spohnholz on the legislation.
“We appreciated her willingness to consider our feedback. ASHNHA supports the concept of price transparency and consumer engagement in health care decision-making,” Hultberg said. “However, the structure of the health care payment and delivery system makes price transparency difficult to implement even when all parties agree on its desirability.”
ASHNHA supports requiring health care providers and facilities to provide good faith estimates. Hospitals already have systems in place to help patients get estimates for what their care will cost, Hultberg said.
Yet, while it seems logical that the health care provider would have access to the best information in helping consumers to understand price, the insurer actually has access to the best data, Hultberg said.
“For those patients with insurance, working with their insurer remains the best way to get accurate information on out-of-pocket costs,” she said.
Jim Grazko, president of Premera Blue Cross Blue Shield of Alaska, said he’s all in favor of price transparency.
Premera rolled out an app earlier this year called Premera Pulse to help its 20,000 insured Alaskans track their health care costs in a year-long pilot program that will record results.
“Everyone benefits from price transparency,” Grazko said. At the end of the year-long pilot program, Premera will analyze the data collected, perhaps modify it, and introduce it to the much larger pool of Washington state customers.
Hultberg said her organization of hospital members also “appreciated the addition of the provision that limits municipalities from enacting an ordinance that is inconsistent with or imposes additional price disclosure requirements.”
She was referring to the Anchorage ordinance that went into effect last year. Ketchikan also considered a price transparency measure. The city council created a committee to consider the requirements, but the committee “decided to wait to see how it turned out on the state level,” said Ketchikan City Clerk Katy Suiter.
“This bill creates one statewide standard and that will help both consumers and providers,” Hultberg said.
Opponents of the bill argued that pricing health care is a complex process and nothing like going to a car lot and picking out a vehicle based on the listed sticker.
Fresenius Medical Care, which has nine Alaska facilities, specializes in kidney dialysis.
Of the 300 people on dialysis in Alaska, only 11 percent have commercial insurance coverage, wrote Wendy Funk Schrag, the vice president of state government affairs for Fresenius. Others are on Medicare, Medicaid or Veterans Administration care.
If they aren’t on one of the federal coverage programs when they begin, they may be switched over soon after, she said, and that will make a difference in the overall costs.
“Posting price information for dialysis serves little, if any useful or relevant information to the patient,” Schrag wrote.
The Alaska State Medical Association also warned of pitfalls in the bill.
“For almost all patients, knowing the ‘rack rate’ or ‘cash rate’ for medical care would be very misleading as to what the actual charge would be… the rack rate will almost never provide price transparency and will almost always provide misleading information,” wrote Graham Glass, president of the ASMA.
For example, one provider might charge $500 for an office visit, while another lists $400.
“The seemingly more expensive provider may have a contract with Premera in which the negotiated rate is only $350 while the seemingly cheaper provider may have a contract with Premera in which the negotiated rate is actually $380,” Glass wrote.
In other words, a doctor’s visit cost depends on whether you’re in that insurance pool or not and then what price your insurance company negotiated.
To help with price variation understanding, Glass recommended that each estimate refer to the CPT code when working up potential invoicing. That way, you “create a culture of using CPT codes in documents that over time increase the ability to pre-inform patients of costs,” he wrote.
The code comparison shows an apples-to-apples approach versus two people comparing their costs for knee surgery, he said.
The bill is just one way to help achieve better price transparency, Hultberg said.
“Health care price transparency is a complex topic and it is important to have realistic expectations about what this bill will achieve,” she said.
“Consumers are usually only engaged in price shopping up to the point of their out-of-pocket expenses and have often met their deductibles when planning expensive hospital procedures. We appreciate that the Legislature took this step toward price transparency, but we do not expect that this bill alone will lead to lower health care costs.”
Naomi Klouda can be reached at [email protected].