Health care is not a commodity. Shopping for health care services is not like shopping for a refrigerator, a tennis racquet or a DVD. Identical commodities can be offered by numerous vendors and consumers can reasonably access their prices for comparison as an important element of their purchasing decision. Consumers, however, can’t (and shouldn’t) compare health services on price alone. Health care is a service, but one unlike most other services we use on a regular basis.
For example, many restaurants provide the service of the preparation and delivery of a meal directly to you in a comfortable and perhaps scenic location. In a restaurant, you generally can see the final prices of meals before ordering, you get one “bundled” price for all goods and services, and you can compare many easily available quality ratings of the restaurant. When you’re finished with your meal, you immediately get a complete and final bill, you pay it and your restaurant transaction is complete.
If this same restaurant operated like the average hospital, however, you may have some sparse quality ratings that may or may not be relevant to the service you plan to receive. You’d have a rough idea of the price of the meal you plan to order, but you’d be more concerned with your out-of-pocket expense. You may only have a $50 co-pay for the meal no matter how much it costs, or you may have that co-pay plus 20 percent of the cost above $250, but you won’t know the final cost until after the meal. Furthermore, you may receive separate bills from the restaurant, the cook, the waiter, and the bus boy. You may be surprised at your high bill for “table bussing services” and find out the high bill is because the bus boy was out-of-network—but you didn’t choose him, the restaurant did! Finally, the next week you talk to your neighbor and find she had the same meal at the same restaurant earlier that same day and paid a completely different price.
My example is somewhat facetious and simplistic, but highlights the complexity of the delivery of and payment for health care services, and the need for greater transparency in the quality and cost of services.
I recently participated on an industry panel addressing the topic, “Health Care Transparency: Will It Work?” at the SAS Global Forum (SGF) in Dallas, TX. The panel was moderated by MaryAnne DePesquo of Blue Cross Blue Shield of Arizona and included Paul Gorrell of IMPAQ International, Daryl Wansink of Qualmetrix, Gregory Nelson of ThotWave Technologies, and myself. The four of us gave a brief overview of transparency from the points of view of patients, providers, payers, and government:
Patients: Although the data available to health care consumers to assist with health care decisions is steadily increasing, consumers have been slow to access it. Recent studies indicate that although most health plans offer consumers easy-to-use cost calculator tools, only about 2 percent of plan members use those tools. Even patients with high-deductible plans (presumably those with an increased incentive to do comparative shopping) only seek prices for about 10 percent of their services.
Furthermore, the quality data landscape can be intimidating to consumers. There are literally thousands of quality measures available to the public through government and non-government sources like the Centers for Medicare and Medicaid Services (CMS), Agency for Healthcare Research and Quality (AHRQ), National Committee for Quality Assurance (NCQA), National Quality Forum (NQF), and consumer-focused Internet sites such as HealthCare.gov, WebMD, and Consumer Reports. Determining which measures are relevant to specific consumers seeking specific services can be a daunting task.
Providers: Health care providers are concerned that public quality or cost data may not adequately reflect the case mix of their patients. Providers who treat generally sicker or more complex patients want that fact to be reflected when comparing their quality to other providers who treat generally healthier patients. Average price data may be too generalized to reflect the experience of specific patients with specific types of insurance and benefit plans.
Favorable quality and price ratings, however, can be very beneficial to providers and facilities who look to distinguish themselves in a crowded marketplace.
Payers: Private payers are concerned that price transparency may release confidential information on negotiated rates for the services of specific providers—information they understandably wish to protect in a competitive business environment. On the other hand, payers benefit from employing quality ratings of providers in the development of incentive programs that reward quality and cost-control.
Government: CMS, the country’s largest payer for health services, has been a leader in the transparency movement. Over the past few years CMS has released large volumes of data on Medicare and Medicaid patients and the providers serving those populations. This information includes the utilization and cost of services, as well as payments for services. CMS also provides star rankings of providers to help assess the quality of care provided to Medicare and Medicaid patients.
In addition to running Medicaid programs, some state governments sponsor All Payer Claims Databases (APCDs) containing various combinations of commercial, Medicare and Medicaid claims. APCDs can provide a valuable source of health care utilization, cost, and quality data for consumers, providers, payers, and governments.
Given the experience that the U.S. continues to spend more on health care than other nations (both per capita and as a percent of GDP) yet does not realize the best results in health status (for example in obesity and low birthweight), there is much room for improvement. Transparency in price and quality are important elements of payment transformation, which is key in improving the U.S. health care system.
As a panel we concluded that although it will continue to be debated by all constituents, the move toward increasing health care data transparency will continue, and our best course of action is to understand and help direct it for the benefit of all.
Paul LaBrec is Research Director for Populations and Payment Solutions with 3M Health Information Systems.
Didn’t make it to SAS Global Forum? Check out Paul LaBrec’s presentation on APCDs.