State Gets ‘F’ On Medical Cost Transparency, But Future Is ‘Cautiously Optimistic’

Arkansas, like 44 other states, gets an “F” for its medical pricing transparency from one report, but a statewide effort could raise the score and help consumers better understand what various medical procedures will cost.

The Catalyst for Payment Reform (CPR) and the Health Care Incentives Improvement Institute said in their July 2015 “Report Card on State Price Transparency Laws” that only five states received anything other than an “F”: New Hampshire, which received an “A,” Colorado and Maine, which received a “B,” and Vermont and Virginia, which each received a “C.”

States are graded according to price transparency laws and regulations and whether or not they have an all-payer claims database providing price and quality comparisons that can be accessed through a public website.

CPR is a nonprofit working on behalf of large employers and other health care purchasers. Health Care Incentives Improvement Institute is supported by provider organizations, large payers and charitable foundations, said its executive director, Francois de Brantes.

De Brantes wants consumers to have access to full information about the potential costs of a medical transaction, including extra costs that could ensue if complications occur. The information provided would be an average of what payers are disbursing in a geographic area, with consumers responsible for obtaining information from their own insurance company.

The report criticizes contractual barriers and trade secrets protections that it says inhibit price transparency. De Brantes said states sometimes offer incomplete information that consumers cannot use to make an informed decision about value. For example, hospital providers will provide only the cost of room and board, not the many other charges that can accompany a medical event.

The report insisted that the publicly available website must be openly funded. Efforts offered by the private sector create too much variability in definitions, leading to incomplete information, it said.

“You cannot have functional markets without having transparency at the consumer level in the cost and quality of services, or goods or any (kind) of service,” de Brantes said.

New Hampshire’s grade went from “F” to “A” because its new website, “NH HealthCost,” “is now a prime example of a price transparency website built with consumers in mind,” the report said. “The site accounts for both insured and uninsured patients and provides great details on the methodology in consumer-friendly terms.”

The report did not take into account legislation passed anywhere in 2015, including the Arkansas Healthcare Transparency Act of 2015. Sponsored by Sen. David Sanders, R-Little Rock, the act requires all payers to submit claims data to the Arkansas Healthcare Transparency Initiative, a previously voluntary program that no insurance provider freely provided information. Data will be available for researchers, providers and consumers.

That initiative is being undertaken by the Arkansas Center for Health Improvement through a grant awarded to the Arkansas Insurance Department. by the federal Department of Health and Human.

Joe Thompson, ACHI director, said one of the goals of the center is to help consumers make informed decisions about both price and value. Thompson said when he was Arkansas surgeon general, his daughter sustained a softball injury. The Health Department told him there was a threefold difference in infection rates among potential hospitals, but it was against the law to tell him those scores.

Asked if consumers would be able to see what various procedures would cost, Thompson said: “I think that’s the ultimate vision. It’s a ways away. We’re just now kind of building the on-ramp for carriers to provide the data.”

The act also requires AID to create a governance structure and establish rules to protect patient privacy. It also authorizes AID to assess penalties for noncompliance. The data cannot disclose trade secrets.

Caryol Hendricks, executive director of the Arkansas Employers Health Coalition, understands why insurance companies have been reluctant to disclose information about their business models. Her organization represents about 20 employers with self-funded insurance plans.

“As employers who most of us make a product to sell, we understand the hesitancy to share pricing. We really do,” she said.

De Brantes is “cautiously optimistic” about Arkansas improving its grade, particularly given its efforts with the Arkansas Payment Improvement Initiative. Groups of providers are being paid an overall fee for “episodes of care,” he said, with financial incentives awarded for holding down costs.

“It’s not a bleak picture in the sense that I could see how Arkansas could get from an ‘F’ to maybe a ‘C’ or a ‘B’ in a relatively short period of time and potentially get an ‘A’ in the space of two or three years,” he said. “I mean, Arkansas is one of the states that is leading the country in payment reform.”