Small steps don’t quickly solve a complex problem, but over the long haul they can add up. That’s good context in which to weigh an incremental but worthwhile reform enacted by the Trump administration to help consumers better understand the price of medical care.
As anyone who has ever tried to find out the cost of a procedure knows, this is an undertaking rife in frustration, though Minnesota consumers have long had some built-in advantages that shoppers elsewhere do not. Still, all too often questions are met with nonanswers, jargon or estimates that don’t reflect the true cost of care.
The reasons for this are myriad but often rooted in the haggling between health insurers and medical providers over prices, a process regrettably at the heart of the insurance system. Providers charge a high “sticker price,” then insurers negotiate prices down. For competitive reasons, both providers and insurers have an interest in keeping under wraps the contractual process yielding the actual cost.
The opacity disadvantages consumers, especially in an era where many have “high-deductible” health plans, meaning patients must pay out of pocket a certain amount before insurance coverage kicks in. A Jan. 17 Star Tribune story reported a 25 percent surge in unpaid debt at Minnesota hospitals in 2017. This troubling phenomenon suggests many consumers are having trouble meeting their deductibles, and that should drive home the need for comparison shopping in advance when possible.
The health care marketplace must do more to help consumers figure out where to get a better deal, not hinder them as it often does. The new Trump administration measure admirably aims to empower consumers. All hospitals must now post online the prices for services they provide, an under-the-radar change reported Jan. 4 by Kaiser Health News before other media picked it up.
The price listing requirement went into effect Jan. 1. News coverage of the change has generally been critical because there are significant questions about how understandable and helpful the information will be. Still, it is important to note that any effort to pull back the cost curtain for consumers merits praise. Minnesota hospitals have complied with the requirement, even though there’s no penalty for not doing so. Their efforts are appreciated. They could, however, make it easier to find the prices on their website home pages instead of requiring consumers to go several layers in to find the information grouped with bill paying or other less intuitive topic groupings.
Consumers who do decide to comparison shop in earnest will discover soon why the new requirement is of questionable value. The Kaiser story memorably summed up the information provided as a “dog’s breakfast of medical codes, abbreviations and dollars — in little discernible order.” Would consumers, for example, know what a “LAY CLOSE HND/FT=<2.5CM” is? Or whether the $307 charge for it is a bargain? For those who need decoding, that’s how much a small surgical suture costs at a Virginia hospital, according to Kaiser.
The $307 is likely the “sticker price,” meaning it’s not the sum reflecting what insurers have negotiated for payment to the hospital. Also, consumers may have to look up the costs of multiple charges individually: the price of an office visit, the lab test, other care. As one Minnesota health care official put it: It’s a bit like estimating a car’s cost by adding up the sum of its parts vs. buying the vehicle in total.
An interesting phrasing in the Trump administration’s price list requirement — that the data be “machine readable” — provides a strong hint about the information’s future value. It’s likely meant to be “scraped” by an information technology company, compiled and then put into a more consumer-friendly format. Entrepreneurs, there’s a real business opportunity here.
In the meantime, Minnesotans have better options than most for comparison shopping — another reason the state is widely regarded as a health care pioneer. The Minnesota Hospital Association (MHA) began publishing costs for common procedures at the end of the last decade and has since dramatically expanded the services covered. Its “Hospital Price Check” tool allows consumers to compare prices for procedures at nearby hospitals. The cost data are “an average of what the hospital charges all payers — commercial insurers, Medicare and Medicaid,” the MHA states, and the price-check tool provides this caveat: “It does not include charges for the physician or other professional fees, such as pharmacy, diagnostic imaging, or lab work.”
Another pioneering cost comparison resource is MNHealthScores.org. It’s run by the independent nonprofit Minnesota Community Measurement, and its cost data are from participating commercial insurers. It too allows shoppers to compare prices for a variety of procedures such as a child birth between nearby hospitals. It also provides quality ratings. Some Minnesota insurers, including HealthPartners, also have a cost-check tool for enrollees.
All of these efforts are praiseworthy and should be emulated. Nevertheless, there is a limit on price transparency’s usefulness, one that politicians who tout it as a panacea often neglect. The MHA estimates that only around 32 percent of hospital admissions in the state are elective. In other words, most patients need care urgently and can’t shop in advance. The monumental task of reining in health care costs must include solutions for them, too.