Transparency in Healthcare Pricing

Transparency: Swallowing Healthcare’s Latest “Bitter Pill”​

March 4, 2013 was the day the healthcare world stopped spinning. That morning newsstands across the country proclaimed on the cover of TIME in stark red and gray: “Bitter Pill: Why Medical Bills Are Killing Us.” This watershed article’s author, Steven Brill, won the 2014 National Magazine Award for Public Interest. All of a sudden the lid was off the exorbitant cost of healthcare – the nation’s then-$3 trillion healthcare system, and how it was responsible for 60% of the nation’s personal bankruptcies.

But, a not-so-funny thing happened on the way to publishing his follow-up book on the subject, America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System: Brill was diagnosed with an aortic aneurysm. Suddenly, as he wrote in the book’s opening chapter, “when it’s your life or your child’s life or your mother’s life on the receiving end of those amazing things [the healthcare system can provide] there is no such thing as a runaway cost. . . Even when it’s not an emergency, even those who would otherwise be the toughest customer lose their leverage.”

And that brings us to today’s political battle raging on how to control America’s now-$3.5 trillion cost of care: Medicare for All or Transparency.

According to Politico on July 1st, following the second debate, Democratic moderate Joe Biden’s strong lead dropped to 22% among Democrats and Democratic-leaning independents who are registered to vote. So now three of the top four contenders for the party’s nomination are senators firmly in the “Medicare for All” camp: Kamala Harris is now in second place to Biden, at 17%; Elizabeth Warren is in third, with 15%; followed by Bernie Sanders, with 14%. While, of course, “Medicare for All” wouldn’t automatically cause the country’s healthcare system to shrivel – after all, America’s doctors, caregivers, medical device, diagnostic, and pharmaceutical companies won’t start working for free, if Uncle Sam suddenly became the employer of all of them, potentially a lid could be put on the industry’s growth.

Meanwhile, with 16 months to go before the election, the Republican Administration is addressing the cost issue with an Executive Order, signed last week, that aims to lower healthcare costs by improving price transparency. The central idea is that if Americans have a “clear” idea of what their care will cost before they receive it, they’ll be empowered as informed consumers and make wise choices. According to President Trump, the Order directs HHS to develop rules requiring hospitals to publish prices “that reflect what people actually pay for services in a way that’s clear, straightforward and accessible to all.” Even NPR agreed that the rules “could prompt healthcare to operate more in a way where patient behavior is driven by quality and price.”

If only it were that easy.

As of January 1st of this year, every hospital in the country was mandated “to make public a list of their standard charges via the Internet in a machine-readable format, and to update this information at least annually.” So now, after a fair amount of searching for Cedar-Sinai’s 7,130-line-item ancillary and room-and-board charge master, you can locate, for example, the price for a semi-private room ($8,534 per day), and separately listed pharmaceutical charges – if you know what ancillaries, drugs, tests, devices, etc., will be used during your stay. Oh, and then there’s the charge for the surgical and team and anesthesiology. Without procedural “bundles,” this information is virtually meaningless – particularly since over 91% of Americans – and even a higher percentage of Californians – are covered by either employer-based insurance, or governmental coverage.

It all goes back to Steven Brill’s conclusion, and more recently singer Kelly Clarkson’s experience. Just hours after hosting and performing at the Billboard Music Awards in Las Vegas, while suffering with pain from appendicitis, Kelly flew to Cedars in LA to have an appendectomy the following morning. Chances are excellent she didn’t check the charge master first.

Not surprisingly, industry groups have their “concerns” about the new Executive Order, most echoing the response by Rick Pollack, CEO of the American Hospital Association: “publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.” And the concern expressed by the head of the American College of Physicians, that it “does not impose impracticable or excessive administrative burdens on clinicians, practices, and healthcare facilities in disclosing price data to patients.”

Given that 67% of Americans polled by Kaiser Health Foundation last year said they were worried about unexpected medical bills, one might conclude that the industry’s adapting measures to provide true billing transparency would be an easier “bitter pill” to swallow than the looming alternative.