Price & Cost Transparency: Understanding the Issues – Shaping the Agenda
Consumer-Purchaser Disclosure Project: Invitational Working Session
May 25, 2006
© Consumer-Purchaser Disclosure Project, 2006 2
Agenda
• Goals, Drivers & Context
• Audiences for Price Information
• Defining Price & Cost Information
• Examples of Price Transparency
• Major Issues and Questions
© Consumer-Purchaser Disclosure Project, 2006 3
Why New Attention to Price/Cost?• Consumer Demand
– Increased cost sharing– More consumers in plans with coinsurance– Equity concerns regarding pricing for the uninsured
• Private Purchaser– Inclusion of cost/price information in NCQA new health plan
“Physician/Hospital Quality” Accreditation Module– Push for efficiency leading to cost alone
• State Interest– Legislation mandating publication of chargemaster– Concern for equity of pricing for the uninsured– Public reporting efforts
• Federal Interest– Price transparency core element of Administration Initiative – CMS Request for Comment (Fed.Reg. due 6/12/06)– House Ways & Means Hearing
© Consumer-Purchaser Disclosure Project, 2006 4
Goals of Price/Cost Transparency• Promote higher value – linking quality and cost
• Enable consumers to make better informed choices (especially as they bear more direct out-of-pocket exposure)
• Bring market forces to bear on providers to reduce costs
• Encourage payment system overhaul by making transparent current dysfunction
© Consumer-Purchaser Disclosure Project, 2006 5
Administration Comment Request • “Any” ways HHS can encourage transparency in health care
quality and pricing – voluntary or through regulatory authority• How could CMS use of its regulatory authority to enhance
transparency of quality and pricing information?• Would the publication of Medicare rates be helpful or harmful?
– Should CMS publish is risk-adjusted DRG rates for every hospital?
– Should HHS establish conditions of participation for hospitals that require posting of prices and/or policies regarding discounts and other payment options for uninsured patients?
– Should CMS publish total payments over an episode of care?
© Consumer-Purchaser Disclosure Project, 2006 6
Context: Who’s Doing the Spending
© Consumer-Purchaser Disclosure Project, 2006 7
Context: Where’s the Money Going
© Consumer-Purchaser Disclosure Project, 2006 8
Nonelderly Coverage
© Consumer-Purchaser Disclosure Project, 2006 9
Context: The Uninsured
© Consumer-Purchaser Disclosure Project, 2006 10
Plan Enrollment of Covered WorkersConv/FFS
3% HMO21%
POS15%
PPO61%
Source: Kaiser/HRET 2005 Annual Employer Benefits Survey
© Consumer-Purchaser Disclosure Project, 2006 11
Costs in Context – Consumers in PPOs Single Family
Share of Premium
-- Worker
-- Firm
Total
$603
$3,547
$4,150
$2,641
$8,449
$11,090
Annual Deductible
(In-Network) $323 $679
Out-of-Pocket Maximum
For In-Network care; may be larger or no max for Out-of-Network.
“Low”: 29% Single; 25% Family (by Large Firms Offering)
>$1,499 >$2,999
“Medium”: 36% Single; 37% Family
$1,500-$2,499 $3,000-$4,999
“High”: 34% Single; 36% Family
<$2,500 <$5,000
Source: Kaiser/HRET Employer Health Benefits, 2005 Annual Survey
© Consumer-Purchaser Disclosure Project, 2006 12
Costs in Context – Consumers in HDHPsSingle Family
Share of Premium
-- Worker
-- Firm
Total
$423
$3,008
$3,503
$2,654
$5,876
$8,530
Annual Deductible
(In-Network) $1,870 $3,868
Out-of-Pocket Maximum
For In-Network care; may be larger or no max for Out-of-Network.
Average $2,859 $5,075
Contribution to HSA or HRA
Note: only approximately 20% of firms fund accounts or offer HSA eligible accounts employees can fund
Firm Contribution $792 $1,556
Source: Kaiser/HRET Employer Health Benefits, 2005 Annual Survey (examples for “HRA”)
© Consumer-Purchaser Disclosure Project, 2006 13
Medicare Coverage
© Consumer-Purchaser Disclosure Project, 2006 14
Sources of Payment for Medicare Beneficiaries
Source: Kaiser Family Foundation, Medicare Chartbook 2005
© Consumer-Purchaser Disclosure Project, 2006 15
Medicare Out-of-Pocket Spending
Source: Kaiser Family Foundation, Medicare Chartbook 2005
© Consumer-Purchaser Disclosure Project, 2006 16
MedicareOut-of-Pocket
Source: Kaiser Family Foundation, Medicare Chartbook 2005
© Consumer-Purchaser Disclosure Project, 2006 17
Medicare Out-of-Pocket for those with High Costs
Source: Medicare Beneficiaries Out-of-Pocket Costs: Are Medicare Advantage Plans a Better Deal? May 2006, Commonwealth Fund
© Consumer-Purchaser Disclosure Project, 2006 18
Adapted from Regence Blue Shield
SAVE LIVES, S
AVE MONEY
Remember the Value Equation
© Consumer-Purchaser Disclosure Project, 2006 19
Price/Cost Information Users
• Consumers
• Providers
• Plans
• Purchasers
© Consumer-Purchaser Disclosure Project, 2006 20
Consumers’ Circumstances• Plan/Payer Status
– Health plan enrollee– Medicare FFS– Uninsured
• Health Status/Condition– Procedure/Medical– Urgent/Non-urgent– Chronic– Preference Sensitive
• Education/Information Seeking
See Appendix for Consumer Vignettes
© Consumer-Purchaser Disclosure Project, 2006 21
ALL Consumers Need Price Information that is “QUAARP”:
• Linked directly to Quality measures (outcomes, patient experience, compliance with EBM)
• Understandable• Actionable• Accessible• Relevant to their circumstances (health and
coverage status)• Predictive (accurate)
© Consumer-Purchaser Disclosure Project, 2006 22
Consumers’ Needs by Payer Status (“QUAARP” Plus)
Consumer Type Price Information Needs
Health Plan Enrollee • Relative quality/price of plan choice
• Plan design specific (copays, coinsurance, OOP Max, deductible, funded accounts, in/out-of-network pricing)
Medicare FFS • Relative quality/price of plan versus FFS choice
• Terms of Medicare supplement or Part-D plan
Uninsured (or out-of-plan) • Information to shop/negotiate
© Consumer-Purchaser Disclosure Project, 2006 23
Consumers’ Needs by Health Status/Issue (“QUAARP” Plus)
Consumer Type Price Information Needs
Procedures/Medical • IF non-urgent• Total costs of all related care
(facilities, tests, RX, professional)
Chronic Conditions • Total costs of all related care (facilities, tests, RX, professional)
• Plan negotiated pricing
Preference Sensitive • Costs in context of information to inform exercise of preference
© Consumer-Purchaser Disclosure Project, 2006 24
Purchasers’ Information NeedsPurpose Price Information Needs
Select Health Plan(s) • TOTAL Population Cost• Link to quality information for
value assessment• Risk and benefit adjustments
needed
Select “high performing networks” and drive R4P (rewards for performance)
• Episode of care• Link to quality information
Promote consumer engagement in price and quality decisions
• “QUAARP”• At actionable level for consumer• Link between quality information
with price
© Consumer-Purchaser Disclosure Project, 2006 25
Health Plans’ Information NeedsPurpose Price Information Needs
Provider contracting and payment
• Negotiated unit price• Episode of care costs• Need quality information • Risk and benefit adjustments
needed
Select “high performing networks” and drive R4P (rewards for performance)
• Episode of care• Need quality information
Promote consumer engagement in price and quality decisions
• “QUAARP”• At actionable level for consumer• Link between quality information
with price
© Consumer-Purchaser Disclosure Project, 2006 26
Providers’ Information NeedsPurpose Price Information Needs
Benchmarking to maximize income
• Comparison to peers (practice and region)
Support engagement in R4P Programs (Rewards for Performance)
• Comparison to peers (practice, region and quality performance)
© Consumer-Purchaser Disclosure Project, 2006 27
Consumer Care Types• Procedures:
– Outpatient– Inpatient (e.g., Hip Replacement, Delivery, CABG, Disk Surgery)
• Discrete Services– Preventive Screening– Tests (e.g., MRI, biopsy)– Prescription/OTC Drugs
• Ongoing Chronic Care– Diabetes– Asthma– COPD– Depression
• Emergent and Very Expensive – “Never-Relevant Events”– Heart Attack – So expensive – OOP irrelevant
© Consumer-Purchaser Disclosure Project, 2006 28
Cost/Service Categories (1 of 2)• Total Costs All Care: costs for all medical expenses attendant with
ALL care received by an individual, family OR population. Issues:• Most relevant information for an employer or public purchaser• Needs effective risk adjustment for comparative purposes• Increasingly “plan chooser tools” are estimating consumers’ total costs including
share or premium and all out-of-pocket• For consumer can address the unknown of future care needs
• Episode of Care Costs: costs for all medical expenses attendant with a particular procedure including all professional costs, therapy, diagnostics and drugs. Issues:
• Rarely available or made actionable for consumers or providers• Annual Treatment Costs: costs for all medical expenses attendant
with a particular chronic condition (e.g., asthma), including all professional costs, therapy, diagnostics and drugs. Issues:
• Average estimates may vary greatly• Difficult to predict actual scope of some visits
© Consumer-Purchaser Disclosure Project, 2006 29
Cost/Service Categories (2 of 2)• Inpatient Costs: costs of particular procedures (e.g., hip
replacement). Issues:• Cost may only reflect partial elements of total costs (e.g., only those of inpatient
facility, not ancillary physician costs)• Outpatient Costs: costs of typical outpatient procedures. Issues:
• Costs likely to reflect facility and professional service fees, but may• Office Visit/Unit of Service: costs for “typical” office visits (e.g.,
physician visit, physical therapy, MRI, x-ray). Issues:• Difficult to predict actual scope of some visits
• Unit of Service: costs for specific tests, services (e.g., charge master-detail). Issues:
• Difficult to predict actual scope of some visits• Prescription Drug: costs of prescription drug associated with
particular treatment. Issues:• Cost for what course of treatment• Whether costs compared to alternatives
© Consumer-Purchaser Disclosure Project, 2006 30
Cost Information Displays
• Full charges (no health plan discounts)• Discounted rates (health plan discount
applied)• Average costs (NOT provider specific; may
be commercial, Medicare or combined)• Range of costs (NOT provider specific; may
be commercial, Medicare or combined)• Provider specific costs – charges, discounted
or relative• Cost to member/Out-of-pocket
© Consumer-Purchaser Disclosure Project, 2006 31
Sources of Price Information
• Health plan
• Multiple health plan
• Medicare
• Provider (e.g., hospital)
© Consumer-Purchaser Disclosure Project, 2006 32
Examples of Price Information In the Market
• New Hampshire: Department of Insurance and Hospital Association
• Consumers Union (Prescription Drugs)
• United Health Plan
• Aetna
© Consumer-Purchaser Disclosure Project, 2006 33
Presentations
© Consumer-Purchaser Disclosure Project, 2006 34
© Consumer-Purchaser Disclosure Project, 2006 35
New Hampshire Price ToolsDepartment of Insurance: “NH Health Cost” @ www.nhcost.org
Hospital Association: “New Hampshire PricePoint” @ www.nhpricepoint.orgNHCost (Dept. of
Insurance)NHPricepoint (NH Hospital Assn.)
NHCost (Dept. of Insurance)
NHPricepoint (NH Hospital Assn.)
Portsmouth General Hospital, Portsmouth
NH
Hip ReplacementNHCost: “Total hip replacement (PROC 8151PricePoint: “Major Hip, Knee, Ankle, Foot Surgery, including Replacement”
Uncomplicated Vaginal Delivery NHCost: “Vaginal delivery without complicating diagnosis, DRG 373PricePoint: Uncomplicated vaginal delivery
“Typical” or “Average” “Price” or “Charge”
$24,162 $35,924 $6,158 $3,714
Facility Cost $17,165 $35,924 Inclusive $3,714
Provider Cost $6,977 Not included Inclusive Not Included
Price Range or Comparison
$11,140-$41,656
$30,0619 = “Comparison Group”
$30,433 = “All NH Hospitals”
$4,400-$8,908
$5,002 = “Comparison Group”
$4,804= “All NH Hospitals”
© Consumer-Purchaser Disclosure Project, 2006 36
Sample Presentations
• Consumers Union (Prescription Drugs)
• United Health Plan
• Aetna
© Consumer-Purchaser Disclosure Project, 2006 37
Major Alternatives: Strengths, Weaknesses and Recommendations
• Price in Absence of Quality Information
• Total Costs of Care – Population or Multi-Condition
• Full charges (no plan/other discounts)
• Actual plan rates
• Average, relative or range of costs
• Others
© Consumer-Purchaser Disclosure Project, 2006 38
Administration Comment Request • “Any” ways HHS can encourage transparency in health care
quality and pricing – voluntary or through regulatory authority• How could CMS use of its regulatory authority to enhance
transparency of quality and pricing information?• Would the publication of Medicare rates be helpful or harmful?
– Should CMS publish is risk-adjusted DRG rates for every hospital?
– Should HHS establish conditions of participation for hospitals that require posting of prices and/or policies regarding discounts and other payment options for uninsured patients?
– Should CMS publish total payments over an episode of care?
© Consumer-Purchaser Disclosure Project, 2006 39
Template: Considering Price Reporting Options
Strengths Weaknesses Recommendations
• E.g.,• Relevance to
consumer• Ease of collection• Accuracy for
consumers
• E.g.,• High potential
unintended consequences
• E.g., • Don’t use• Context needed• How to improve
© Consumer-Purchaser Disclosure Project, 2006 40
Price in Absence of Quality InformationStrengths Weaknesses Recommendations
• May drive more rapid development of quality measures
• Only partial (and not most important) picture
• Belief of many consumers that “more expensive means better care”
• Promote quality measures ASAP
© Consumer-Purchaser Disclosure Project, 2006 41
Annual Total Costs of Care (Population or family/multi-condition)
Strengths Weaknesses Recommendations
• Most relevant to purchaser
• Informs plan selection
• For consumer recognizes unpredictability of care needs
• Not actionable at time of “teachable moment” of illness
• Costs often not adequately risk-adjusted
• Purchasers often don’t encourage enrollment in highest value plan
© Consumer-Purchaser Disclosure Project, 2006 42
Full charges (no plan discounts) Strengths Weaknesses Recommendations
• Easy to collect• Does not facilitate
provider negotiating up
• Very misleading for insured
• Misleading for all
© Consumer-Purchaser Disclosure Project, 2006 43
Actual Plan RatesStrengths Weaknesses Recommendations
• Highly relevant to insured
• May foster lower price providers to raise prices (negatively impact plans’ negotiating strength)
© Consumer-Purchaser Disclosure Project, 2006 44
Average, Relative or Range of CostsStrengths Weaknesses Recommendations
• Recognize inaccuracy of general prediction
• Huge variation by provider, geography
© Consumer-Purchaser Disclosure Project, 2006 45
Major Outstanding Questions
© Consumer-Purchaser Disclosure Project, 2006 46
Price TransparencyAppendix
• Consumer Vignettes
• Covered Workers’ Cost-Sharing and Coinsurance
• Medicare Benefits and Cost-Sharing
• Consumer-Purchaser Disclosure Project Information
© Consumer-Purchaser Disclosure Project, 2006 47
Consumer Vignettes (1 of 2)Personal Circumstance Price/Cost and Quality Interests
Joan has allergies or hypertension – has predictable medical services needs albeit w/ swings.
She would value provider choice support – what’s the relative difference in cost if she uses MD/Practice A versus MD B/practice B for a year of care…don’t need exact $$; potential interest in relative RX costs and options.
Diane is pregnant or wants a preventive care checkup/5 yr H&P.
She is purchasing a transaction with relative certainty and she needs the exact $$ amount of service from provider A vs. provider B; adjusted for her benefit design.
Bob is choosing his health plan and deciding on funding an HSA/FSA. He is in good health/low risk factors.
He can predict reasonably well expected costs but always an element of uncertainty; he wants help making plan choice (considering his share or premium) and a budget with average OOP cost of service given the provider network he uses.
Victor needs therapy for cancer or major degenerative disease.
Potentially very large RX costs (especially for biologics or injectables) – often huge markups in this world – Victor wants the price schedule posted just like FTC mandated for funeral homes in 1980s so he knows cost of each element of the care package; he wants a market clearing price to drive down the markups. He may also want costs of in versus out-of-network providers as he is condition is so serious he wants ability to consider “all options.”
© Consumer-Purchaser Disclosure Project, 2006 48
Consumer Vignettes (2 of 2)Personal Circumstance Price/Cost and Quality Interests
Roberta needs surgery that includes implantable device/part (knee replacement, pacemakers etc.)
She’s don’t the math and knows that regardless she will hit her OOP maximum – she’s not price sensitive, she wants information on quality.
Steve has “Quality of Life” purchase interest and wants to use up his funded HRA.
He wants price information that is as precise as possible to comparison shop and purchase (e.g., cosmetic repair, Lasik).
Angela has chronic disease that is not well controlled, peaks/valleys in service use.
She may need more advanced decision support to parse the cost components that are predictable (like medications or bimonthly office/therapy visits) to price shop those components to get average $$ cost if I use MD/practice A vs. MD/practice B.
OR
She want comparison of average episode costs to her for year comparing providers AND comparing higher severity cases versus well managed chronic condition.
OR
She may want help in selection health plan that generally does a better job on mix of quality and cost.
© Consumer-Purchaser Disclosure Project, 2006 49
Coinsurance for Covered Workers
© Consumer-Purchaser Disclosure Project, 2006 50
Cost-Sharing for Covered Workers
© Consumer-Purchaser Disclosure Project, 2006 51
Medicare Part A: Benefits and Cost-Sharing
Source: Kaiser Family Foundation, Medicare Chartbook 2005
© Consumer-Purchaser Disclosure Project, 2006 52
Medicare Part B: Benefits and Cost-Sharing
Source: Kaiser Family Foundation, Medicare Chartbook 2005
© Consumer-Purchaser Disclosure Project, 2006 53
The Disclosure Project
The Consumer-Purchaser Disclosure Project is a coalition more than 50 of the nation’s leading consumer, labor, and employer organizations that working to advance publicly reported, nationally standardized measures of clinical quality, efficiency, equity, and patient centeredness for health plans, hospitals, medical groups, physicians, other providers, and treatments. The Disclosure Project is supported by financial and in-kind support of participating organizations and by financial support from the Robert Wood Johnson Foundation.
For more information:
Visit our website: http://healthcaredisclosure.org/
Contact: Katherine BrowneManaging DirectorEmail: [email protected](202) 238-4820