Health care transparency in Florida

One major problem in trying to hold down health care costs is the fact that consumers historically have not felt the impact of price when deciding where to seek medical treatment. With insurance picking up the tab, why choose a less-expensive facility for a common procedure like an MRI?

In the health care world, “prices” for procedures are based on negotiations between insurance companies and doctors and hospitals, rather than on the provider’s costs of treatment.

Prices for the same procedure end up varying widely — in Miami, for example, a lower-back MRI can range from $963 to $3,465 for people with employersponsored health insurance. In Tampa, a CT scan of the head costs anywhere from $218 to $1,630, according to a recent analysis by medical information company Castlight Health, which looked at the “in network” prices paid by insurers in major U.S. markets.

As health care costs — and out-of-pocket deductibles — have continued to rise, however, employers, insurers and consumer advocates are pushing for data that lets people see how prices vary from one provider to another. Letting people compare prices for a doctor’s visit, lab test or other medical procedure should enable them to make better-informed decisions and, ultimately, help contain health care costs.

“Health care costs are one of those things that keep going up and up. A lot more consumers need and want to shop around, and they can’t do that if they don’t have price information,” says Nicole Kohleriter-Perelman, a spokeswoman at employer-backed Catalyst for Payment Reform in San Francisco. “Price transparency is an idea whose time has finally come.” 

But it’s not arriving fast. In May 2013, Steve Sonenreich, chief executive of Mount Sinai Medical Center in Miami Beach, pledged during a local radio interview to publish the contractual rates the hospital accepts from insurers for medical services.

“We will post our prices relative to Blue Cross and Aetna, our contractual prices, and we’ll challenge Baptist and other systems in the community to do the same,” he told radio host Tom Hudson of WLRN.

In subsequent meetings with his man agement team, Sonenreich learned that non-disclosure agreements between the hospital and insurers prevent him from posting the pricing data. “There’s just no way around it,” he said in another WLRN interview this past September. “We asked the various carriers we do business with if we could disclose the information, and they asked us not to.” 

For all the talk about creating a consumerist movement in health care, price transparency is proving very hard to achieve. While insurance companies say they want consumers to be able to shop around for cost and quality, they also aren’t exactly eager for their competitors to know how much they pay for certain services. Likewise, hospitals don’t necessarily want others to know what they charge for the same procedures.

Sonenreich says large hospital systems in particular use their market dominance to negotiate higher payments from insurers, driving up health care costs for businesses and their employees. He became an advocate for price transparency because, as a large employer who provides health insurance benefits, he’s privy to claims data from other hospitals that charge significantly more than his for the same services. He says price disparity, and scant information about it, has puts Mount Sinai — a standalone teaching hospital — at a competitive disadvantage.

“We don’t have any leverage with insurance companies,” he says. “Mount Sinai is threatened by the lack of transparency.” 

In addition to Sonenreich’s pledge, there have been some quasi attempts at price transparency in Florida. Under a decade-old Florida law, the Agency for Health Care Administration regularly updates a government website, FloridaHealthFinder.gov, with the prices that in-state hospitals charge for common procedures.

Like most major health insurance plans, Florida Blue has an online calculator that estimates a patient member’s out-of-pocket costs upfront. The insurer’s website also enables members to shop around and compare prices for up to five providers of a particular service.

But many people don’t appear to be using the sites. In a national survey of health plans last year, Catalyst for Payment Reform found that only 2% of patient members use insurers’ cost calculator tools.

And Florida’s HealthFinder website, while easy enough to use, shows only what hospitals charge for a service, not what they actually are paid. About 20 other states have established or are establishing “all-payer claims databases,” which can shed light on the various prices that providers and insurers privately negotiate for medical services. Florida is considering a law to create such a data- base but has no “definite plans,” according to the APCD Council, which helps states develop the claims data sets.

Meanwhile, hospitals in Florida don’t appear eager to jump on the transparency bandwagon. No one took Sonenreich up on his challenge to make pricing data public. Some hospitals have argued that treatment varies from one patient to another and that no single price list applies to everyone. Even a seemingly routine gall bladder surgery can be complicated by a patient’s age and medical history.

“If the asterisk is big enough, what’s the real value in posting the price?” says Paul Duncan, a health policy professor at the University of Florida. He cautions that price transparency has its limits as a tactic for reducing health care spending. Even if consumers are aware of the huge variances in price, it’s unclear they’ll choose the least-expensive providers. Some may choose the most expensive providers instead.

“There’s that cliché that says you get what you pay for,” Duncan says. “We actively seek health care that is better. And we use price as a proxy, since we don’t necessarily know what is better.” 

Some advocates for more transparency have seized on the fact that people are spending more out of their own pockets for health care through high-deductible plans. The average annual deductible increased nearly 50% in the past five years to $1,217 for individuals with employer-sponsored coverage, according to a survey by the Kaiser Family Foundation and Health Research & Educational Trust. More than a third of covered workers at small firms — those with three to 199 employees — are in a plan with a deductible of $2,000 or more.

“If you’re on the hook for your first $2,500, it really pays to ask the price,” says Susan Dentzer, a senior health care policy analyst at the Robert Wood Johnson Foundation. “Consumers rarely know how much prices vary. And when they find out, they’re shocked.” 

For now, at least, the main beneficiaries of the push for price transparency may be technology companies selling cost-comparison services. Publicly traded Castlight, which aggregates data for employers and provides personalized cost-of-care information to their employees, is part of a transparency-tool market that’s projected to grow to $3 billion by 2016.

Another big player, Nashville-based Healthcare Bluebook, shows users the “fair” price for a doctor’s visit, lab test or surgical procedure based on what many providers accept from insurers in their local area.

Sonenreich says he’ll continue to push for price transparency and encourage others to do the same. He cites data showing that a large hospital system can demand 45% more for the same services than its local competitors.

“These high prices are then passed onto businesses and employees,” he says. “If we make health care pricing information available to consumers — particularly employers — they will be able to make better decisions about health care and health insurance purchasing.”

Tags: Healthcare