Hospitals Try to Avoid Price Transparency by Advancing Phony Bill

The Oregon Association of Hospitals and Health Systems is moving aggressively to stamp out legislation that would force its members to be transparent about their prices, and the association has introduced a transparency bill that provides them with political cover while doing little to help consumers and nothing to foster competition.

The legislation from the hospitals, Senate Bill 900, calls upon the Oregon Health Authority to use the all-payer, all-claims database to list the median prices at hospitals and hospital clinics for the 50 most common inpatient procedures and 100 most common outpatient procedures.

SB 900 would not give the public any information about individual hospitals that gouge consumers, and the legislation shields those high-cost hospitals from competition that such information would generate. The information from the All-Payer, All-Claims Database would also be outdated as soon as it was published, since it would rely on claims data that had been submitted months and years earlier.

Consumers would have no better answer than now as to what their actual costs might be from any given hospital, since such charges deviate so wildly from the median.

“The hospitals’ bill just wouldn’t do anything,” Felisa Hagins, the political director of the Service Employees International Union Local 49, told The Lund Report.

SB 891

The Institute of Medicine estimates that the United States wastes $105 billion on healthcare each year because of hospitals’ opaque pricing schemes, which vary considerably depending on facilities and insurance type for the same procedures.

Patients often have no idea what their out-of-pocket costs will be until after a hospital stay or procedure. Even physicians can’t counsel patients on the most cost-effective facilities, because they don’t know. Hospitals charge each insurance type different rates and each hospital charges differently than the next. All of that price information is kept secret.

“Both as a physician and as a consumer of healthcare services, I have no idea of what healthcare costs,” said Sen. Elizabeth Steiner Hayward, D-Portland, a family physician at Oregon Health & Science University.

Steiner Hayward and Sen. Brian Boquist, R-McMinnville, are the chief sponsors of Senate Bill 891, which requires the hospitals to give real-time information about the costs to consumers and demands that they post their prices by insurance type for common procedures.

Boquist took on a more apocalyptic tone in supporting SB 891, saying that if hospitals were allowed to continue to withhold the prices being charged for their work from both consumers and policymakers, the whole system could collapse. “Anyone who doesn’t want to talk about transparency should take a short course at Chemeketa [Community College] in bankruptcy,” Boquist said.

The situation is so bad that Sen. Lee Beyer, D-Springfield, a former trustee of McKenzie-Willamette Hospital in Springfield, said that when he left his post, “I was convinced our hospital administrator had no idea what things cost.”

SB 891 requires hospitals to list negotiated prices for its 100 most common inpatient and outpatient procedures to Medicare, coordinated care organizations, its top insurers and the state’s public employee health plans, as well as the charges an uninsured person might face.

SB 665

A separate bill, Senate Bill 665, pushed by Beyer and SEIU, calls for a Hospital Rate Commission at the Oregon Health Authority, which would review and approve hospital charges. The commission would be similar to the Public Utility Commission, where he was chairman: “If government didn’t have a regulator, people would be paying a lot more for public utilities -- you don’t have a choice,” he said. “Healthcare is a little different, you do have a choice. But choices are only helpful if you know what you’re choosing between.”

Beyer’s concept is built on a system that has worked in Maryland for 38 years and acts much like the Oregon Insurance Division, which works to keep Oregon’s health and life insurers under control in the individual and small business markets. “The reduced cost-shifting between payers in Maryland has substantially limited the growth of hospital rates, said Donna Kinzer, the executive director of the Maryland Health Services Cost Review Commission.

Maryland’s hospital inflation rates are less than half the national rate as a result, but Kinzer said the hospitals in her state support the transparent system as it creates a more stable and predictable business environment.

Opponents of SB 665, including Tom Holt of Regence BlueCross BlueShield, derided the measure as a poorly thought out system that would stick the state with a fee-for-service business model. But like Oregon, Maryland is moving away from that business model toward a new hospital payment system that caps total revenue growth and holds medical centers accountable for improving the overall health of their patients.

Unsurprisingly, the Oregon Association of Hospitals opposes both measures, which would likely cut steeply into hospital profit margins.

Quid Pro Quo for the Status Quo

Given that SB 900 that has the support of both Health Committee Chairwoman Sen. Laurie Monnes Anderson, D-Gresham and Vice-Chairman Sen. Jeff Kruse, R-Roseburg, it appeared likely yesterday that the hospitals’ bill would reach the Senate floor and not the other, more sincere bills, which attempt to level the playing field between consumers and health systems.

“It’s a good first step toward getting us where we want to go,” Kruse said. “Sometimes biting the whole apple in one bite is too much.”

SB 900 gives Oregon’s politicians the chance to portray themselves as good stewards of the public trust while protecting a lucrative source of campaign donations, and ensuring that hospitals can once again avoid facing real competition or any real price transparency.

“Middle-class lives and fortunes are at risk here,” said Dr. John Santa, the medical director for the Consumer Reports Health Ratings Center. “I want information that’s relevant to me.”

The policy in SB 900 would follow a pattern currently in place with hospital-acquired infection rates whereby the Oregon Health Authority collects information that’s important to the public interest, but then protects the bad actors from the public spotlight.

To add insult to injury, SB 900 leaves hospitals off the hook for even the cost of publicizing the limited claims data about their own costs, and possibly puts the burden on taxpayers for building the website to produce the information.

“In the absence of a specific commitment of outside foundation/charitable funds, I think it is reasonable to assume that the obligation will fall on the state—or that the whole initiative simply will not happen, which is always a possibility,” said Jesse O’Brien of the Oregon State Public Interest Research Group. “It does not make a lot of sense to assume that outside funds will be available for this purpose without an explicit commitment on the record.”

Monnes Anderson said that only one bill would go forward, although she left open a window for compromise between supporters of SB 891 and SB 900. But getting the hospitals to agree to any meaningful reform on price transparency -- i.e., exposing them to competition and cutting into their profits -- seemed remote.

But O’Brien has remained optimistic, noting a number of compromises he could see between the two bills, such as requiring that the system in SB 900 be amended to break down the information from the claims database to the hospital level, or requiring the hospitals to submit an overall estimate for a planned procedure to a patient on request based on their type of insurance. The funding mechanism could also be changed so that the state website giving pricing data about hospitals be paid for through fees placed on the hospitals.

"Our primary objection is that [SB 900] does not create meaningful transparency for Oregon consumers," O'Brien said.

Giving patients an estimate upon request is a separate item in SB 891, and something that Greg Van Pelt, the former Providence CEO and current director of the Oregon Health Leadership Council, said some hospitals had already started doing voluntarily for people who pay for services without the help of an insurance company.

“There’s a lot of middle ground between 891 and 900,” O’Brien said. “I hope we can have that conversation and work it out.”