45 States Fail on State Price Transparency Laws

States are slowly enacting laws on healthcare price transparency, but consumers lack adequate access to meaningful price information in most of them, say two reform-driven nonprofit organizations.

The only state with healthcare price transparency laws in place that effectively enable consumers to find the cost of medical procedures before selecting a hospital is New Hampshire.

The tiny New England state was the only one to receive an A for transparency on the report card released in early July by the nonprofit organizations Catalyst for Payment Reform and the Health Care Incentives Improvement Institute.

Meanwhile, neighboring Massachusetts, a medical mecca, plummeted from a B last year to an F. It has plenty of company at the bottom; 45 states flunked.

The only other states that passed were Colorado and Maine, which received Bs, and Vermont and Virginia, which received Cs.

The report card reviewed "whether states had passed laws or regulations requiring healthcare price information be made public and examined how well those laws were being put into action by providing residents with access to meaningful price information through public websites and the use of all-payer claims databases (APCDs) as data sources for those sites."

But despite the dismal showing, Healthcare Incentives Improvement Institute Executive Director Francois de Brantes expects better grades in the next couple of years because legislation in favor of transparency laws has been introduced in numerous states.

"It is not just wishful thinking," he says, "the states that passed new laws just need time to implement them." For example, Connecticut passed legislation in June with aggressive language seeking more healthcare price transparency.

This is the third report card released by the two nonprofits. De Brantes believes the previous cards spurred the flurry of legislation. All states should look to New Hampshire as an example of how to do it right, he says. In one the year, the state rebounded from a grade of F to an A.

"The state's new website, NH HealthCost, is now a prime example of a price transparency website built with consumers in mind," the 2015 report states. "The site accounts for both insured and uninsured patients and provides great details on the methodology in consumer-friendly terms."

Massachusetts lost its previously high rating because, "in 2014, legislation went into effect that placed the responsibility of transparency on health plans, and the government mandated website went dark."

Payers and Providers are Barriers to Transparency
The reluctance of insurance companies and hospitals and health systems to release pricing information is preventing many states from achieving full transparency, de Brantes says.

Some bills will not pass because of "pressure from providers, payers, and other suppliers to the industry that benefit from price opacity," the report states. "That pressure often rests on spurious arguments about price as a trade secret and/or the potential for a state law on transparency to violate contracted terms between payers, providers, and suppliers."

New Hampshire did not need approval from insurance carriers or providers to develop NH HealthCost. "If so, we may not have been successful," New Hampshire health policy analyst Tyler Brannen said in an email. "The carriers and providers resisted the initiative at first. But [they] learned to embrace the tool because it allowed them to better understand their relative position in the market and relieve them from some of the responsibility to provide cost information to patients and plan members themselves."

The path toward transparency in New Hampshire was cleared by the New Hampshire Comprehensive Health Care Information System (NH CHIS), a joint project between the New Hampshire Department of Health and Human Services and the New Hampshire Insurance Department.

It was created by a state statute to make healthcare data available as a resource for insurers, employers, providers, purchasers of healthcare, and state agencies. Under a memorandum of understanding between the two state agencies, NH CHIS maintains commercial claims and eligibility data, Medicaid claims and eligibility data, NH hospital discharge data, and health plan performance data.

A Bumpy Road

 Oregon may get a higher grade in 2016, depending on whether a new transparency website is built by then and how valuable the pricing information proves to be, de Brantes says. SB 900, supported by the Oregon Association of Hospitals and Health Systems (OAHHS), was passed and signed into law in July.

The law requires the Oregon Health Authority to establish a website where consumers can find the median prices paid by procedure to hospitals for 150 inpatient and outpatient procedures, says Philip Schmidt, director of public affairs for OAHHS. The information will come from the state's All Payer All Claims database, rather than the hospitals themselves.

But OSPIRG, a consumer advocacy group, thinks the site's data will have limited value for consumers because it will not reveal what individual payers have paid for specific procedures or tell consumers more precisely what a specific procedure's cost will be.

"It doesn't put any of the responsibility for revealing prices on healthcare providers," O'Brien says. "The industry itself needs to provide their pricing data."

SB 900 was crafted using recommendations from report card sponsor Catalyst for Payment Reforms, Schmidt says. "Our bill took Catalyst's reforms and put them into action." The information will give consumers an approximation of pricing so they can go back to their insurers and tell them they want to go to a hospital where a specific procedure is less expensive, he says.

In New Hampshire, payers and providers more easily accepted transparency because the website's' methodology uses bundled rates, which do not allow the website user to know everything about the underlying fee schedules or the payer-provider contract terms, says policy analyst Brannen.

Payer-provider contract terms are one of the reasons given for not wanting the costs of specific procedures listed on transparency websites, de Brantes says.

As for Oregon, both OSPIRG's O'Brien and OAHHS's Schmidt say the state's report card is likely to improve from an F once the law is fully implemented. How many grades higher is the question.