Blog Post: Health Care Cost and Quality Information Remains Elusive by Carolyn Pare, Minnesota Health Action Group President and CEO

Blog Post: Health Care Cost and Quality Information Remains Elusive by Carolyn Pare, Minnesota Health Action Group President and CEO

Scenario 1: Imagine. A gallon of gas is $0.75 instead of $2.85. A pound of filet mignon is $2.99 instead of $16.99. A week-long trip for four to a fine Caribbean resort is $2,000 instead of $18,500. A Ferrari 512M is $25,000 instead of $125,000.

Scenario 2: Now imagine. A strep throat diagnosis is $65 instead of $650. A monthly prescription for an antidepressant is $29.99 instead of $290. A CT scan is $495 instead of $1,495. A surgical repair of torn knee cartilage is $3,525 instead of $9,525.

What’s the difference between these two scenarios? The first one will happen only in your dreams. The second reveals choices patients unwittingly face every day when they purchase health care services.

The U.S. Government Accountability Office (GAO) did some secret shopping here in Minnesota and found that it is a considerable challenge for consumers to get vital health care cost and quality information. The GAO chose Minnesota because of our national reputation for being ahead of the health care curve, transparency included. We have laws that say:

  • Upon request, health care providers must give consumers a good faith estimate of the allowable payment they have agreed to accept from the consumer’s health plan for the service specified. For uninsured consumers, providers must give a good faith estimate of the average allowable reimbursement accepted as payment from private third-party payers for the service specified, along with the estimated amount the consumer will be expected to pay. Furthermore, a health insurance company must provide an enrollee with a good faith estimate of total out-of-pocket costs for a specified health care service.
  • Hospitals are to provide to patients, free of charge, a written estimate of the cost of a specific service or stay upon request, including the method used to calculate the estimate, the specific diagnosis-related group or procedure code, and a statement indicating the estimate may not reflect the actual billed charges.
  • The Minnesota Hospital Association will develop a web-based system, available to the public free of charge, containing hospital-specific performance on certain procedures and charge information “including, but not limited to, number of discharges, average length of stay, average charge, average charge per day, and median charge, for each of the 50 most common inpatient diagnosis-related groups and the 25 most common outpatient surgical procedures as specified by the Minnesota Hospital Association.”

This promising language implies that it is relatively easy for consumers to contact providers for a clear idea of how much they will pay for a particular procedure. Unfortunately, GAO representatives found only a few providers who could deliver such information.

I have been in this business long enough to remember when and why certain legislation was proposed and enacted. In this case, it was a full six years ago, coming at a time when a rapidly increasing number of Minnesota employers were moving to consumer-directed health plans. Since individuals would be bearing more risk for medical services, legislators felt it only fair that people understand their financial exposure. And, recognizing that cost does not always equal quality in health care, there was a need to ensure price information was paired with quality information to give consumers an idea of the “value” of services. The vision was to give consumers the ability to compare providers side by side, so they could make a completely informed choice. Clearly, this has not (yet) come to pass.

This does not mean there hasn’t been a lot of good work done in the past six years. Employers have worked with health plans and third-party vendors to build tools that allow beneficiaries of employer-sponsored plans to calculate their cost for services and procedures based on health plan negotiated rates, co-pays and deductibles. To see how far this market segment has developed, check out the State of the Art of Price Transparency Tools and Solutions from the Catalyst for Payment Reform (CPR). Did you know CPR recently gave Minnesota an “F” for price transparency, largely because the website that was created by the Minnesota Hospital Association, in response to the legislation of 2008, makes it difficult for consumers to compare facilities on price?

The Department of Health has been busy, too. As part of the legislative move toward transparency, the Commissioner of Health was to develop a system that would “grade” and array hospitals and medical providers into value tiers so consumers could see where they might find the highest quality care for the best price (Provider Peer Grouping, or PPG, initiative). As one component of the system, Minnesota Department of Health staff and contractors developed, with input from community advisors, the Minnesota’s All Payer Claims Database (APCD).

This year, the PPG initiative was abandoned and replaced by a legislative mandate that could expand price transparency efforts by using the APCD to study cost, quality and utilization. The 2014 legislation directed MDH to create a workgroup to develop recommendations for a framework that could govern potential future uses of the data and consider questions concerning privacy and security, access to the data, potential acceptable uses of the data by outside organizations, and funding and sustainability of the APCD. MDH will submit a report with the findings from the workgroup to the Legislature by February 2015. Currently, use of the APCD is limited to:

  • Evaluation of the performance of the Health Care Homes program;
  • Studying, in collaboration with the Reducing Avoidable Readmissions Effectively (RARE) campaign, hospital readmission rates, and trends;
  • Analysis of variations in health care costs, quality, utilization and illness burden based on geographical areas or populations; and
  • Evaluation of the State Innovation Model (SIM) testing grants received by the Departments of Health and Human Services

Finally, Minnesota Community Measurement, an organization created to provide comparative quality information, first to service providers and then to the public, has been looking at what metrics can be used and included on its site to serve as a relative price barometer for consumers. A Technical Advisory Group has been convened and is close to making a recommendation for the public reporting of Total Cost of Care measures.

Complete transparency of cost and quality information is a key goal for the Minnesota Health Action Group. Since inception, Action Group members have supported policy, products and tools that help people better understand what they need to do to become better buyers of health care. We want consumers to get the best care, at the right time, in the right place, for the right price. This means we have to serve our employees and their family members so they can have affordable coverage that supports high quality care.

We also need to:

  • Continue our collective work to ensure that data and information is freely accessible to the people who write the checks for health care — individuals, employers and governmental entities — so they can be smart about what and how they buy.
  • Acknowledge that all purchasers are in this together; we can’t continue to shift cost from one group or entity, say government to commercial to self-insured to individual.
  • Understand the real cost of goods and services, the quality of procedures and outcomes, and get a handle on misuse, overuse and mistakes to make health care affordable and available to all.

Action Group membership has grown more in the past year than it has in the previous several years. This bellwether growth indicates that we have reached the proverbial tipping point here in Minnesota. As we often say, we can now do together what none of us could do alone. Namely, to demand transparency on behalf of our constituents so they know whether they are buying filet mignon — or hamburger.