Delegates tackle complexities of price transparency data

Chicago -- The AMA House of Delegates approved a report directing the AMA to closely monitor any pricing "transparency" initiatives by health plans to ensure that plans provide accurate information and to assess the impact of those initiatives on physicians.

Insurers are giving the AMA plenty to monitor. During and prior to the AMA Annual Meeting, held June 10-14 in Chicago, several insurers announced plans to give their members online access to pricing information, enabling them to know the cost of medical services before they walk into a physician's office or a hospital:

• On June 13, Aetna Inc. announced that it is expanding the transparency program it tested last year in Cincinnati, northern Kentucky and southeast Indiana to an additional 11 markets. Effective Aug. 18, Aetna will offer physician-specific information on cost, clinical quality or both to members in those markets as well as Connecticut; Washington, D.C.; northern Virginia.; Cleveland, Columbus, Dayton and Springfield, Ohio; south Florida; Kansas City, Kan.; Las Vegas and Pittsburgh.
• UnitedHealth Group in late May announced it will offer hospital specific-cost and quality data to members in Colorado as part of an initiative that will be rolled out nationwide by year's end.
• The BlueCross BlueShield Assn. in June announced a program involving 17 Blues plans giving their members access to hospital pricing and quality data. Several of those plans, including Highmark Blue Cross Blue Shield and Independence Blue Cross, both in Pennsylvania, also are offering physician cost data.
• And in June, the biggest payer of all -- the Centers for Medicare & Medicaid Services -- began posting online what it pays hospitals for 30 common elective procedures. Physician office prices will follow in the fall.

Many industry players, including insurers and the Bush administration, view transparency as key to the success of consumer-directed health care plans in which employers and insurers shift a greater portion of health care costs to patients. As patients bear more out-of-pocket costs, they will use the pricing information to make more cost-effective decisions, or so the thinking goes.

AMA policies support health plan disclosure to physicians of reimbursement amounts as well as physician disclosure of their fees to patients. But the AMA House of Delegates is concerned that the health plan transparency initiatives could potentially mislead patients into thinking that doctors are getting paid more than they actually get from the plans, which could lead patients to think doctors are overcharging them.

For example, it would be easy for patients to get that impression if plans publish "negotiated rates" or their physician fee schedules, according to the report. That's because the actual payment doctors receive from health plans can be lower than the negotiated rate after the plans apply their automatic payment and payer-specific edits.

"This report makes the point that such public discussion about transparency reflects a lack of [physician and patient] understanding about the way physicians' claims are adjudicated and really paid in the real world," said board Trustee Cyril M. Hetsko, MD, a Madison, Wis., internist. "Without true transparency on the part of health plans relating to physician reimbursement, it is very difficult, if not impossible, for the physicians to provide patients with the information about the patients' out-of-pocket cost."

Thus the house also directed the AMA to communicate to health plans, employers and patients its concerns about current transparency programs and educate them about "true transparency." True transparency can only be realized if the plan's medical payment policies, claim edits, patient-cost sharing portions and benefit payment levels are embedded in the health plan fee schedules or price ranges that the plans post or make available online to their members and in-network physicians, the report said.

"Any model for price transparency must take into account the special circumstances involved in patients' medical decision-making and the peculiar way that we pay for medical care in this country," said delegate and American College of Physicians immediate past chair Donna Sweet, MD, of Wichita, Kan., testifying before a reference committee considering the report.

"We feel that the physician's fee alone is a very poor proxy for determining the total cost of care and, in fact, is an impossibility [given] the way those fees are structured now," said Dr. Sweet.

Barbara McAneny, MD, a member of the Council on Medical Service and an oncologist/hematologist from Albuquerque, N.M., said during the committee hearing that she supported the report, but wished it had gone further.

"I think it would be very important to add a second resolve that says that patients need to be educated about medical-loss ratios," she said.

In an interview with AMNews later, Dr. McAneny said that the term medical-loss ratio is used by insurers to describe the percentage of revenue they spend on health care, but the use of "loss" implies insurers are losing money by paying for care.

Still, the report is a good starting point because the AMA's education effort will help the public understand how physicians are paid, Dr. McAneny said. "They think it's like going to the grocery store and buying an apple. But what they don't understand is that each of the health plans, each of the people that we work for [for] payment have their own fee schedule," she said.

"It's all different, and the amount of the physician fees are often a mystery even to the physicians. We often end up learning what the physician fees are when we get paid for something. ... Knowing the physician's fee is a tiny part of what health care costs are," Dr. McAneny said.