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43 States Flunk Health Care Price Transparency Test

September 28, 2016

A report card published by organizations favoring state-mandated all-payer claims databases gives most states an "F" for price transparency in health care.

State lawmakers convening in January 2017 will have less than six months to improve their states’ standing on an annual report card whose latest edition graded three states as “acing” health care price transparency, four more as skating by, and 43 as failing to provide adequate price information for patients.

States that collect health care cost figures from health insurers in an all-payer claims database (APCD) and mandate the data be published on a high-quality website earned grades of A, B, or C on the 2016 “Report Card on State Price Transparency Laws,” released by the Health Care Incentives Improvement Institute (HCI3) and Catalyst for Payment Reform in July.

The report card also gave states high marks for reporting prices of medical facilities and providers, instead of only one of these, and for reporting the prices patients actually paid for services, as opposed to the amounts the providers charged.

The six highest-scoring states were Colorado, Maine, New Hampshire, Oregon, Virginia, and Vermont.

Arkansas, the only other state to receive a passing grade, earned a D and a recommendation the state post data from its newly established APCD on a publicly accessible website. The report card also suggested improvements for the 43 states it ranked as failing.

Calls for Mandate

Elizabeth Cronen, communications leader at HCI3, says states should create systems for compiling, sorting, and publishing health care prices.

“We call on states to actually implement the transparency,” Cronen said. “We find that the very best way to obtain and publicize meaningful price data for consumers to use and inform their decisions is for a state to legislate an all-payer claims database. This is a database that contains true paid amounts of all kinds of payers.”

Objects to Proposal

Twila Brase, a public health nurse and president and cofounder of the Citizens’ Council on Health Freedom, says mandating price transparency does no good for patients who rely on third-party payers, such as insurers or government programs, to pay for health care.

“I don’t believe that states should require price transparency,” Brase said. “The problem with price transparency is that the people who are getting the service don’t care about prices. Even if you posted them, they really don’t care.”

Government policies pushing people onto insurance plans have greatly distorted the market for health care, which patients could buy more efficiently and transparently on their own, Brase says.

“Price transparency is natural in every other nook and cranny in the market because consumers will not buy something if they do not know what the price is. So [for insured patients] the only price transparency in health care is between those who provide the service and those who pay for it, and in this case, it is not the patient.”

Transparency would naturally increase if more patients paid their providers directly instead of through third-party middlemen, Brase says.

“The real solution to transparency, cost, access, and quality is in getting the insurance companies out of the delivery business,” Brase said. “There is really a need to get the patients back into the position of buyer and payer. Price transparency will happen naturally because consumers will ask every time.”

Michael McGrady (mmcgrady@mccgradypolicyresearch.org) writes from Colorado Springs, Colorado.

Internet Info:

François de Brantes and Suzanne Delbanco, “Report Card on State Price Transparency Laws,” Health Care Incentives Improvement Institute and Catalyst for Payment Reform, July 2016.

Marcus Rech, “New Florida Law Protects Patients from Surprise Out-of-Network Bills,” Health Care News, The Heartland Institute, June 9, 2016.