Docs’ Pricing, Outcomes Available to the Public

New federal executive order on publishing price and outcome data for hospitals, physicians

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CEO SUMMARY: Transparency of provider prices and outcomes is coming to healthcare. A new executive order directs all federal agencies to collect and publish data on prices and outcomes for healthcare providers serving beneficiaries of government health programs. At the same time, private payers are putting more information on the Web to help consumers learn what physicians charge and which ones provide the best care.

SEVERAL TRENDS ARE CONVERGING that will enable the public to access and scrutinize both the prices charged by individual ob-gyns and the healthcare outcomes they produce. As this happens, the financial success of pathologists will be directly related to how well they compare with
other pathologists.

THE DARK REPORT believes the best name for this development is transparency of provider prices and outcomes. It is linked to the trend of making consumers responsible for choosing their physicians and paying a greater proportion of their bill. To achieve this result, payers know that provider prices and information about their outcomes must be easily accessible to consumers.

Two recent events show the speed with which price and outcomes transparency is evolving. First came the executive order signed by President George W. Bush on August 22 requiring federal health agencies to collect data on the quality and cost of health care and publish that data for the beneficiaries of federal health programs. This action comes on the heels of Medicare’s first steps, taken earlier this year, to publish the reimbursement prices it pays to individual hospitals and physicians on its Web site. (See TDR, March 20, 2006.) Since that time, The Wall Street Journal has reported that state governments and hospital associations in Florida, New Hampshire, Utah, and New Mexico are launching Web services that list hospital charges.

Private Payers Take Action

Medicare’s action to make public the prices it pays providers has been copied by at least five of the nation’s largest health insurers. Since the first of this year, Humana Inc., Cigna Corp., UnitedHealth Group Inc., and Blue Cross Blue Shield plans in several regions announced that they will also publish prices.

The earliest effort for private payer price transparency was the pilot project launched by Aetna, Inc. in the Cincinnati market last year. THE DARK REPORT was first to alert the laboratory profession to this development and its consequences. In the pilot program, Aetna lets its members see actual dis- counted rates specific to their health plan for office visits, diagnostic tests, and minor procedures. In this pilot, Aetna disclosed the prices it paid to 5,000 affiliated primary care and specialty physicians for 600 procedures. The areas covered in the pilot were Ohio; Northern Kentucky; and Southeast Indiana.

Successful Pilot Project

That pilot project must have been successful, because Aetna is expanding its price/outcomes transparency strategy. This is the second event propelling forward the trend of public access to prices and provider outcomes data.

This fall, Aetna began expanding price transparency in a number of markets. Not only would Aetna post prices, but it would make available clinical quality, and practice efficiency information on physicians in Connecticut; Washington, DC; Northern Virginia; Maryland; Cincinnati, Cleveland, Columbus, Dayton and Springfield, Ohio; Northern Kentucky; Southeast Indiana; and South Florida.

Aetna is also posting physician-specific pricing for as many as 30 of the most widely accessed services by specialty and indicators based on adverse events. Further, Aetna will publish 30- day hospital re-admission rates, overall efficiency in use of medical services, and the volume of Aetna members treated. Aetna will do this in an expanded number of markets to supplement physician price information it has already posted. Physician prices will also be posted by Aetna in Kansas City, Las Vegas, and Pittsburgh.

When this round of projects is done, Aetna indicates that clinical quality and efficiency information will be available for more than 14,800 specialists. There will also be pricing information posted for at least 70,000 physicians.

The trend to make information about prices and healthcare outcomes available to beneficiaries and the public is moving faster than expected. When planning strategy, lab managers and pathologists should keep three things in mind.

First, any patients currently seen by the group that enroll in CDHPs tend to quickly get interested in the specific price they are being charged for their healthcare. Thus, laboratories should immediately prepare to make prices and outcomes available to patients upon request.

In communities where CDHP enrollment is minimal, this step can be taken later rather than sooner. However, there are many markets, particularly in California, Florida, and Texas, where laboratories will want to move expeditiously on this point. One easy way to fulfill a customer’s request for price information is to have a written price list available at patient service centers. For the long- term, using the laboratory’s Web site as the place to post patient pricing and outcomes data is an effective solution.

Educate Physicians

Second, the laboratory should educate its physicians and staff on these developments. They should know how and where Medicare and private payers like Aetna are publishing the price information for individual physicians and hospitals. Pathologists and staff should also be trained in how to respond when a patient asks about prices—and then requests a discount. This type of preparation will ensure that the laboratory remains patient-friendly and is not perceived to be holding back information from patients about prices or outcomes because it might be negative.

Third, THE DARK REPORT recommends that laboratories get ahead of this trend by gathering data on how effective test utilization improves outcomes. One benefit from this strategy is that it can help the laboratory become a more effective clinical resource for referring clinicians.

The drive for true transparency in the prices and healthcare outcomes of individual physicians and hospitals is unstoppable at this point. Well-run laboratories should welcome this development. It will eventually eliminate the much-hated HMOs and managed care contracts. More importantly, it restores the physician-patient relationship that was displaced in the 1990s.

Federal Government Is Pushing Transparency In Prices and Outcomes of Hospitals, Physicians

IT IS NO COINCIDENCE THAT THE TWO SECTORS of healthcare which pay the largest bills are interested in seeing the prices paid to individual hospitals made public and easily accessible to consumers.

One sector is the federal government, which funds 40% of all the healthcare services provided in the United States. The other sector is made of up employers, who pay the lion’s share of that remaining 60%. The double-digit annual increases in health benefits costs have pushed both sectors to take aggressive, proactive steps to improve the value of healthcare services.

THE DARK REPORT has provided regular intelligence briefings about these circumstances. The increase in the number of consumer-directed health plans (CDHPs) is directly related to this effort. But this initiative can only succeed if consumers can easily access pricing and outcomes data for individual hospitals and physicians for services. Consumers need both types of information to make informed buying decisions when they select a physician or hospital.

If there is any ambiguity about this goal, Bush removed it on August 22nd when he signed the executive order directing all federal agencies to collect and publish data on prices and outcomes. He stated that it sends a message to physicians and other providers that, “to do business with the federal government, you’ve got to show us your prices. The fact is,” he continued, “if you have excellent information about quality, about service, and about price, people make good decisions.”

This executive order also promotes health savings accounts (HSAs). “There’s a choice between having the government make decisions or consumers make decisions,” declared Bush. “Health care policy ought to be aimed at bolstering the consumer, empowering individuals to be responsible for health care decisions.”

The newly-signed executive order also directs federal agencies and their contractors to promote the use of health-care technology and reward consumers who shop for medical care based on quality and value. For example, where available, the agencies should use computer systems
that are linked, thus allowing a physician in one state to see the records from a veteran from another state if the veteran happens to be traveling when he or she needs care. Federal agencies are also instructed to develop programs that measure the quality of care, and develop those measures with the private sector and other government agencies.

To comply with the order, the agencies must have programs under way by January 1, 2007. Department of Health and Human Services (DHHS) Secretary Mike Leavitt expects this executive order will have impact, stating that “It will fuel a substantial amount of change in the way health care is ultimately purchased, but it will take time for that to unfold.”

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