Price transparency in healthcare: A movement takes hold

In Colorado, officials are working to develop a system in which patients can "shop" for a service or procedure.

Patients are still are a long way from being able to shop around for the best behavioral healthcare, but it's on the horizon. They're closer to being able to shop for medical procedures, thanks to a movement for transparent pricing, taking hold in 11 states. We looked at Colorado, where officials are in the midst of amassing claims data to arrive at a consumer-friendly website where patients can shop around for the least expensive procedure or service.

In Colorado, the Center for Value in Improving Health Care (CVIHC) is coming to the rescue by analyzing clai ms data for various medical procedures. In Denver, the range for a colonoscopy is from $400 to $2,800. CIVHC uses the all payer claims database to help make healthcare prices public. It gets the claims from insurance companies, Medicaid, and Medicare.

Starting with medical procedures which have h igh and extremely variable costs, such as knee replacements, MRIs, and colonoscopies, organizations like CVIHC are beginning to analyze claims data to make it easier to know how much someone really has to pay for care. Typically, hospitals and doctors have kept this information secret - and it really didn't matter to patients, as long as insurance companies were paying the bill.

Led in part by the increasing deductibles and copayments wh ich leave patients responsible for a growing share of costs, and in part by a pressing need to bring healthcare costs down, pricing transparency may for the first time let someone know how much a hospital stay or procedure will cost in advance. In general, people without insurance pay the "rack rate," or the highest charge, which no insurance company or public payer pays. In addition, every insurance contract is different, and the exact same procedure may cost thousands more in one part of a state than another.

Right now the all payers claims database has fully insured commercial lives and Medicaid, said Edie Sonn, CIVHC vice president for strategic initiatives and acting CEO. "We'll be bringing in Medicare and managed Medicaid," she said. Self-insured lives stil I need to be brought into the database.

Although CIVHC has the data from managed behavioral health organizations (MBHOs), it's encounter data and not in the warehouse with other all payer claims, said Sonn. However, she said most commercially insured patients have health plans that have their own behavioral health unit, and don't contract with outside MBHOs.

Pricing is difficult for the Medicaid H MOs because they are capitated, noted Sonn. In the commercial market, if it is fee for service, it's easier to determine prices. "The vast majority of those plans have their own behavioral health unit," she said.

Plans are for Colorado consumers to have a price comparison available later this year for common medical procedures, said Jonathan Mathieu, director of data and research for CIVHC. "The consumer can enter a search code, and find providers and costs in their area." For uninsured patients, the metrics will include median charges, what Mathieu terms "a starting point for negotiation." Contract terms between payers and providers will be masked. "We're focusing on what is actually paid."

Behavioral healthcare

CIVHC has kept the behavioral health community in the loop, said Sonn. But it's not likely that there's as much variation in behavioral health as there is in medical/surgical, especially in the Medicaid system, she said. Furthermore, private practice psychiatrists for the most part don't even take insurance, so no claims would be coming in from them.

The community mental health centers, on the other hand, have contracts with commercial payers in Colorado, and that means they are an important piece of claims data, she said.

"There's definitely a desire to put behavioral health claims in there," said George DelGrosso, executive director ofthe Colorado Behavioral Healthcare Council. "They're starting with the basic physical claims," he told BH.

It's only the beginning of a process, said DelGrosso. "They started by identifying low-hanging fruit, like knee replacements," he said. "That gives them a start to see if this works."

Since 1995, Medicaid services in Colorado have been full risk, meaning providers are paid a per-member fee and must provide all needed services. On the average, Medicaid represents about 58 percent of payments for behavioral healthcare in Colorado, he said. Commercial insurance also covers patients in the state, which had parity even before the federal law.

One of the values of the all claims payer database in Colorado is that the consumers can shop, said DelGrosso. And while behavioral healthcare has been put on notice that it will be included at some point, it's not in the queue yet, he said.

The real benefit of including behavioral health may not be in allowing customers to shop for the best buy, but in providing clear data illustrating that treating mental illness and SUDs reduces costs for the medical/ surgical sector, suggested DelGrosso. "This would lead to the analytical information supporting how treatment drives down overall costs," he said.

42 CFR Part 2

Apparently, insurance companies didn't bother to delete patient-identified claims for substance use disorders, so CI VHC is scrubbingall of that data to avoid running afoul of 42 CFR Part 2, the federal regulation which bans sharing information about patients in treatment for substance use disorders unless the patient has agreed to such sharing. The agreement must be in writing, and directed specifically at each disclosure.

"When the data started coming in, we found out we were getting a lot of substance abuse claims, even though we weren't supposed to be," said Mathieu. Even though all of the personal health information is encrypted, the patient is identified, so the data has to go.

This presents a problem for pricing transparency in behavioral health, said DelGrosso. "If we have hindrances in being able to share substance use disorder information, it will be very difficult" to have real transparency for all ofbehavioral health claims, which include mental illness and SUD diagnoses. However, if data could be submitted without patient identifying information, then the problem would not exist. "At this point in time, I would say we need to check into the possibility" of de-identifying data, said DelGrosso. "Sometimes there are myths about what you can and can't do because of 42 CFR Part 2."

Another fear is that consumers will think the less expensive option is always the best. "Something that's cheap isn't necessarily better," said DelGrosso. "The quality component has to be there too." And even nationally, there is debate about what measures to use to determine quality in behavioral healthcare. "This is still in its infant stages," he said.

High deductibles

When insurance companies pay 100 percent of the bill, the patient isn't even aware of the charges - and the insurance company has a lot more power than patients to negotiate the price down. Now, with many people having insurance that comes with $6,000 to $10,000 deductibles, a patient may end up owing all of that money on even a minor procedure. For behavioral healthcare, that deductible may actually prevent someone from seeking costly care.

Market competition will help keep rates down, if consumers can compare prices. The federal government last year released databases comparing hospital and surgery charges for various procedures, showinghuge price variations, even for common outpatient procedures.

Because funding is running short for the time-consuming efforts of scrubbing the data to make it easily understandable by consumers, there is an effort to sell customized reports to the healthcare industry, which providers can use to negotiate contracts with insurance companies, setting prices that make them competitive in their marketplace. Stay tuned.