Health price transparency bills would expand laws targeting hospitals

Three House measures would increase open pricing requirements in the new health reform law. One measure includes physician prices.

By Doug Trapp — Posted May 24, 2010

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Although legislation that would require hospitals, physicians and others to disclose their prices has attracted some support in the U.S. House of Representatives, the pending bills may be stalled because of a key lawmaker's concerns about them.

Each of the three bills would require hospitals to disclose more of their prices, but they diverge after that. The most sweeping measure would require hospitals, physicians, health plans, drug companies, dentists, nurses and others to disclose wholesale and retail prices for all of the medical care and products they provide. Two of the bills are sponsored by physicians.

Nevertheless, Rep. Frank Pallone (D, N.J.) has some reservations about the bills. He's chair of the House Energy and Commerce health subcommittee, which held a hearing on the legislation May 6. Although Pallone supports price transparency, he is worried that patients might not follow their physicians' orders if they are determined to find a cheaper treatment. Also, publishing all prices might lead competitors to standardize them and not compete as vigorously, Pallone said, citing reports by the Congressional Budget Office.

"The concern is about unintended consequences of too much transparency," he said.

House Republicans and some Democrats, however, said the health system desperately needs more public information on quality and price. Health care is one of the few products in America that one takes on faith where to go to obtain it and how much to pay, said Rep. Joe Barton (R, Texas), ranking GOP member on Energy and Commerce. "We don't even buy used cars like we buy health care in America."

Rep. Christopher Murphy (D, Conn.) agreed. "You can find better reviews about a blender than you can a [coronary artery] bypass."

Price information alone is inadequate, according to issue experts. "You can't divorce price from quality," said Stuart Guterman, assistant vice president for the Commonwealth Fund's program on payment system reform. He said linking meaningful and understandable price and quality information is a key challenge to achieving true transparency.

"We don't have a really good way to measure quality in the health care industry," said Gerard Anderson, PhD, director of the Johns Hopkins Center for Hospital Finance and Management.

Some transparency already mandated

Forty-one states require hospitals to report hospital charges or payment rates publicly, either through posting them on the hospital's website, in a government or hospital association report, or upon request, according to Steven Summer, president and CEO of the Colorado Hospital Assn.

Some states also have adopted some form of health care price transparency for prescription drug manufacturers and health plans, according to the National Conference of State Legislatures. For example, Florida has a website allowing consumers to compare retail drug prices at area pharmacies.

States are not alone in seeking price transparency. Some health insurers offer online price estimators for common procedures, according to NCSL, and the Centers for Medicare & Medicaid Services posts Medicare rates and quality information for 35 procedures on its Hospital Compare website.

The national health reform law adopted in March will bolster price transparency as part of its coverage expansions. It requires health plans that want to participate in health insurance exchanges in 2014 or earlier to disclose subscribers' cost-sharing, including deductibles, co-payments and coinsurance. The information must be provided in a timely manner and be posted on the Internet as a minimum.

"That's a start, but is by no means adequate," Barton said. He's sponsoring a bill that mirrors more expansive language adopted unanimously in September 2009 by the House Energy and Commerce Committee in its version of national health reform -- but which wasn't included in the final law.

Summer, who spoke on behalf of the American Hospital Assn. at the May 6 hearing, said the AHA supports a similar bill authored by Rep. Michael Burgess, MD (R, Texas). Its state-based approach to transparency is best, Summer said, because "all decisions for health care are local." Summer said the measure effectively would set a federal floor for state legislation without rolling back stronger state laws.

Posting all prices

The most sweeping price transparency bill is sponsored by Rep. Steve Kagen, MD (D, Wis.). The measure has 54 co-sponsors, all Democrats. It would mandate public disclosure of virtually every health care price in the nation. Dr. Kagen said patients should know what they will pay for health care in advance and how much the person next to them is paying.

Anderson said the tens of thousands of prices at each hospital are too much information for consumers to sort out in a meaningful way. Dr. Kagen, however, said that if Subway restaurants can standardize prices for their numerous sandwich combinations, then hospitals should be able to do so for health care.

Instead, Anderson suggested that hospitals publish their charges as they compare with Medicare rates, based on the patients' diagnosis-related group. For example, a hospital could say it charges 1.2 times Medicare rates. That still means posting rates for about 750 DRGs, but it would be much easier to understand than sifting through 45,000 individual hospital charges, he said. No state has adopted such a system.

A Democratic House Energy and Commerce aide said Pallone has no plans to hold a vote on the bills. Pallone said he held the May 6 hearing in part because Dr. Kagen insisted on one.

"I don't think anyone is too optimistic anything is going to happen," said Lauren Bean, a spokeswoman for Dr. Burgess.

The American Medical Association does not have a position on the pending bills. AMA policy does support requiring pharmacies to list the full retail price of medication and the required co-pay on the receipt, and standardizing the terminology for hospital charges so that they can be compared.

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Three transparency options

The national health reform law requires health plans to disclose what enrollees might pay out of pocket if they buy plans through health insurance exchanges. Pending congressional legislation would take the concept further.

Health Care Price Transparency Promotion Act of 2009

Sponsor: Rep. Michael Burgess, MD (R, Texas)
Summary: Would require states to adopt laws mandating that hospitals publicly disclose their inpatient and outpatient charges. Health insurers also would be required to estimate their subscribers' out-of-pocket costs. States that do not adopt minimum standards would face reduced federal Medicaid funding. The bill also would instruct federal researchers to examine the influence of charges and out-of-pocket costs on how people seek health care, among other research.

Patients' Right to Know Act

Sponsor: Rep. Joe Barton (R, Texas)
Summary: Would require public and private health plans to disclose covered items and services, plan limitations, potential out-of-pocket cost sharing, actual costs of services, the number and type of participating physicians, and other information. The measure also would require states to adopt laws mandating hospitals and ambulatory surgical centers to disclose certain price and quality data publicly. States that do not would face reduced federal Medicaid funding.

Transparency in All Health Care Pricing Act of 2010

Sponsor: Rep. Steve Kagen, MD (D, Wis.)
Summary: Would require hospitals, physicians, pharmacies, drug companies, insurers and others to disclose wholesale, retail and other prices for their products, services and procedures. The information would be offered online, in print and in person. The Health and Human Services secretary could impose noncompliance penalties.

Sources: Bill text, congressional staff

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