Price Transparency - media attention - finally!

Many articles in the news lately are on "PRICE TRANSPARENCY". We have "copied" some for you to read, and of course, give credit to their source. 

A family doctor from Virginia, Dr. David MacDonald works tirelessly for consumers to control costs in most aspects of health care delivery.  Hidden health care prices inflate costs, hurt the poor, and demands "transparency," as he stated in a recent appearance before the Committee On Energy & Commerce Subcommittee on Health. 

Click here to read his entire transcript, which generated much media attention (see below). 

For detailed information on the hearing and other speakers, click here.

Manipulation is the problem and sunlight is the cure, according to Dr. David MacDonald. "Let's
have transparency in everything."

"I started posting my prices in 1997," he said. The doctor said that plain talk and honest prices make
a difference, especially to the uninsured. "I'm here today to ask this committee for help," he said.
MacDonald told the story of an uninsured construction worker who came to him in need of a hernia
operation. "I called a local hospital and found out that the bill was going to be $10,000-plus,
...actually $15,000. So I called a very good surgeon I knew and we got the job done for $1,800. The
guy could easily pay $1,800, but he couldn't fathom paying $15,000."

MacDonald was among a panel of nine, including the former House Speaker Newt Gingrich, R-Ga.,
and two Illinois Democrats, U.S. Reps. Daniel Lipinski and Rahm Emanuel, who discussed
transparency in health care pricing at a hearing.

"The current system is a hopeless mess," Gingrich said. "Outside of health care, we live in the world
of Expedia, Travelocity, CraigsList and Consumer Reports. Health care is the only area of America's
economy where the consumer and the provider have no idea what the goods and services they trade
cost."

Another witness, National Center for Policy Analysis President John Goodman of Dallas, pointed to
"a recent Harris Poll (that) found that consumers can guess the price of a new Honda Accord within
$300. But when asked to estimate the cost of a four-day stay in the hospital, those same consumers
were off by $8,100."

Consumers might be able to "shop for health care the way they shop for groceries," but not as long as
the real costs remain hidden beneath layers of bureaucracy and middlemen, Goodman said.
The full Energy and Commerce Committee chairman, U.S. Rep. Joe Barton, called it "a conspiracy of
silence."

"I cannot think of another sector of our economy where consumers have less say," he added. "Instead
of a marketplace, we have a system that prevents patients from seeing how much their health care
services actually cost. The health care system hides prices and it blurs quality. At its most perverse,
the system treats the poorest like they were the richest and charges them the very most."

"As we have seen in so many other areas, empowered consumers increased the level of quality while
driving out inefficiencies and waste," said U.S. Rep. Nathan Deal, R-Ga., chairman of the Health
Subcommittee. "And it is my hope that we can do the same thing for health care."

"This issue is not Democratic or Republican," said Lipinski, author of the Hospital Price Reporting
and Disclosure Act, H.R. 3139. "When I'm home in Illinois talking to my constituents, they call this
bill one thing - common sense. Because when it comes to health care, information is good for you."
Dr. MacDonald also told of routine lab tests that were projected to cost him $400 to $500. "Through
other venues, we were able to get that same group of test for $89."

Gingrich recommended every state adopt Florida's approach. Florida has two web sites -
FloridaCompareCare.com and MyFloridaRx.com - that display hospital price, outcome data and
prescription drug prices respectively. He said the South Florida Sun-Sentinel recently reported
significant savings for consumers willing to shop. Thirty pills of Nexium fetched $202 at one
pharmacy while costing just $131 two miles away.

http://energycommerce.house.gov/108/News/03152006_1818print.htm 3/20/2006

Cover Story in Modern Healthcare.com Written by Matthew DoBias  
Lifting the lid off of pricings

With HHS moving to post what it pays for common procedures, the debate over healthcare pricing transparency is heating up, Story originally published March 20, 2006

Last week, in policy and in practice, the idea that the general public should be able to see the actual costs of certain medical procedures became Topic A in Washington, with federal lawmakers, policy shapers and physicians facing off over the issue in public hearings and private meetings.

As the capper to a week that saw healthcare get a congressional workout on Capitol Hill, HHS Secretary Mike Leavitt announced that for the first time, Medicare, Medicaid and other federal agencies would be required to post the prices they pay for some very routine clinical procedures on a Web site as the first step of a larger initiative championed by the Bush administration and many in the Republican leadership.

It proved to be the fulfillment of a promise by the federal government to lead by example on the issue, and it expects hospitals and the provider community to follow that lead -- like it or not.

"People don't have a clue what they are paying and have no way of knowing how it compares to what the person in the next room is paying, let alone in the next hospital," Leavitt said in a prepared statement. "People deserve to know."

While much of Capitol Hill has taken up the issue recently in public and private forums, federal lawmakers have found themselves debating not so much over whether or not prices should be made known-most agree that they should-but at a deeper level, they want to know the motive.

Steppingstone to HSAs
Many health policy analysts see the latest push to make healthcare costs widely known as a steppingstone toward making health savings accounts -- President Bush's preferred method of insurance-a mainstay on the healthcare front.According to the latest reports, only about 3 million Americans use the high-deductible plans. But that number is growing fast, with many major companies increasingly embracing the concept as a way to lower skyrocketing health costs. Posting price and quality data, they say, will help speed the process.The administration's push has been strong enough to draw questions even by some in favor of clearer pricing. A family physician and consultant from Charlottesville, Va., who testified on behalf of fuller disclosure of pricing, David MacDonald, said he's no fan of Washington politics -- especially when it comes to the issue of transparent pricing. He chided the event in an interview afterward as more about making HSAs work and less about clear and understandable costs.

"If I knew that's what it was going to be about, I wouldn't have agreed to testify," he said. "The dilemma we face here is that we're not having a rational discussion about what would be the best source for the consumer," said Chip Kahn, president of the Federation of American Hospitals. "We are not separating one consumer from the other." And that's a problem, Kahn said, because varying factors, such as the type of coverage a person has and how they enter the healthcare system, play a major role in the cost infrastructure.

Simplistic discussion
Kahn said that the current discussion between policymakers is overly simplistic. "It's based on the simple notion that having some kind of price information available will aid consumers in making better choices," he said. But that may not be the case. "The way people are insured and the way that they pay may" not allow that to work, he said. Economist Paul Ginsburg, president of the Center for Studying Health System Change, said he thinks he knows why the discussion has become so polarized: "This is not an obvious policy issue." Ginsburg, who was one of seven health leaders called to testify before a House subcommittee last week, said that the debate among lawmakers tends to mask the complexity of shifting healthcare costs to the consumer from plans and payers. "It's not really about price transparency by itself," he said. "This is just a way to joust on bigger issues, like HSAs." Regardless of the reasoning, Leavitt's announcement was a clear signal that the Bush administration plans to lead by example when it comes to pushing hospitals and physician offices for more transparent pricing of healthcare services.

In testimony at the hearing, former House Speaker Newt Gingrich lashed out at the industry's effort to protect their pricing data, citing the example of one devicemaker who is using the courts to keep such pricing information under wraps. It's a practice that would stop if Gingrich has his druthers -- and ideally, he said, it would preclude the government from contracting with companies that don't make their costs transparent. In one instance, Gingrich said, a device vendor has been quick to claim that pricing information is a trade secret and that hospitals that buy its devices may not disclose the information to the doctors who use them, the private payers who reimburse them or the patients who receive them. "The inevitable result is that no price shopping can take place and price competition -- a fundamental market force -- can't take root," he said in his statement to Congress.

At a briefing earlier this month and in speeches, Gingrich repeatedly ribbed the federal government for enabling a healthcare system he sees as archaic. Because of his stature, he is one of the few people who can praise Leavitt and CMS Administrator Mark McClellan, yet at the same time take jabs at them by calling the CMS "inherently a Soviet-style command bureaucracy."

Better access, fewer mistakes
Gingrich said he favors moving healthcare toward a free-market model, which he argues will put a premium on "better systems, fewer mistakes (and) greater access."

"Healthcare is the only area of America's economy where the consumer and the provider have no idea what the goods and services they trade cost," Gingrich said. "The information age has left healthcare behind, and the consequences are tragic." He may not be far off. Healthcare professionals who are far removed from the inside-the-Beltway politicking have seen results by posting real prices --in other words, the exact amount a patient will have to pay for certain procedures.   In 1997, family doctor MacDonald posted the prices for a handful of common procedures on a Web site. He and his colleagues at SimpleCare, a national pay-as-you-go physician group for which he previously worked, saw results almost immediately. "Costs came down in every regard," MacDonald said. Diagnostic tests, CAT scans and MRIs all toppled in pricing. MRIs came down from $3,000 to about $600 and CAT scans dropped to about $300, he said. SimpleCare also worked with several different laboratory companies to ensure that prices would drop even more. The pitch: "We told them that we would collect from the patient, then they would bill us at the end of the month."

By removing the billing and administrative costs associated with lab work, MacDonald said that costs for routine tests plummeted. So the price for a lipid profile, which ordinarily costs the hospital $47, dropped to $8, he said. But hospitals today still charge in the $100 to $120 range for the exact same test, he said. Rep. Daniel Lipinski (D-Ill.) last July introduced legislation that would require hospitals to regularly report to HHS the amount they charge for 25 of the most common inpatient and outpatient procedures, as well as the 50 most frequently administered medications. HHS would then post this data on the Internet for public access. His bill has bipartisan support. During the congressional hearing, Lipinski said that several states such as California, Florida, Georgia and his home base, Illinois, have passed similar legislation. In testimony submitted to the committee, Gerard Anderson, director of the center for hospital finance and management at Johns Hopkins University, said that while he favors more transparency, pricing alone won't compel consumers to become better health shoppers. Anderson said that for meaningful change, patients first need to know what services they will use. "Most patients do not understand what goods and services they may need and so they cannot comparative shop," he wrote. Secondly, he said that prices would have to reflect market forces, adding that list prices are established by hospital and physicians without any market constrains.

One way to do so is to base all rates on a single price standard, such as the Medicare payment rate. Last December, Rep. Joe Barton (R-Texas), chairman of the House Energy and Commerce Committee, suffered a heart attack while ? ironically -- discussing Medicare with some of his colleagues. The popular Texan, who as committee chairman holds sway over much of the health legislation introduced in the House, was rushed to nearby George Washington Hospital in the district for treatment. Now trimmer and healthier, Barton has used his firsthand brush with America's healthcare system, in part, as a guiding force to how he shapes his own health policy initiatives-price transparency included.

"When I was on the gurney in the emergency room, I wasn't really interested in what the cost was," he said last week during a congressional hearing on the topic. "I was very interested in the quality, though." The hospital billed Blue Cross and Blue Shield more than $75,000 for the care, though Barton admits that no one -- not the doctors, nurses or even the top administrators -- could have given him that number had he asked.  And there's the rub: that very personal experience has at least played a part in shaping the congressman's view on healthcare costs, and whether or not they should be made public. From a dollars-and-cents aspect, Barton said he sees a move to clearer pricing as a strong first step to taming a healthcare system he says has run amok.

"I cannot think of another sector of our economy where consumers have less say," he said. "By limiting patients' access to comparative information, we restrict competition and cripple the ability of market forces to make healthcare more affordable." But from the personal side, he is more succinct: "I don't personally know how much they actually paid, but I think it was worth every penny of it."

Consumer advocacy organizations in the healthcare arena include:

Consumers for Health Care Choices http://www.chcchoices.org/
Institute for Health Freedom http://www.forhealthfreedom.org/
American Association for Health Freedom http://www.healthfreedom.net/aahf/default.asp
Health Care Choices http://healthcarechoices.org
Citizens for Healthcare Freedom  http://www.citizensforhealthcarefreedom.org/index.htm
Citizens for Health  http://www.citizens.org/

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