Massachusetts Makes the Biggest Push Yet to Make Health-Care Prices Public

Massachusetts' effort to publicize prices is the most comprehensive so far. But some say it's more important for patients to have information on the quality of care.
by | October 21, 2014

In the United States, it's difficult -- if not impossible -- to find out the price of health-care services in advance, making it hard to get the best deal. Massachusetts has now taken the effort of making prices publicly available further than any other state.

Starting this month as part of its 2012 law that caps health-care prices and establishes new oversight agencies in an attempt to drive down costs, all private insurers in the state had to begin posting the most accurate price estimates possible for an array of procedures on their websites. In addition, doctors are now required to give prices to patients who ask over the phone, so even uninsured people without access to an insurer’s website can find out how much something will likely cost them.

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“This is all about letting the sun shine in on health-care prices,” said Barbara Anthony, the undersecretary of Massachusetts’ Office of Consumer Affairs and Business Regulation. “For too long, we’ve all been in the dark -- we don’t know what the price of a health-care procedure or service is.”

Part of the reason is the complexity of health-care pricing, which can vary based on the doctors, facilities and equipment involved. Beyond price complexity, the components of a procedure itself can be difficult to understand for the general public. Prices are also negotiated between insurers and doctors, so they’ve been confidential agreements either by law or practice, depending on the state.

Other states are requiring insurers and doctors to report price information, but it’s either not ready for public consumption yet or it’s fairly limited. Some private insurers, such as Aetna, have already been posting price information for years.

In Massachusetts, the price information is available to members of a particular plan, so people can’t easily make comparisons between insurers, who might have different deals with the same doctors. That's one way New Hampshire -- the first state to make price information publicly available in 2006 -- is doing a better job than Massachusetts. The state has a tool that allows comparisons between the states’ insurers, but only for about 30 procedures. New Hampshire's regulators compiled a list of common, comprehensible procedures for which insurers are required to report the prices.

Massachusetts hasn't developed a standardized list, but regulators evaluated insurers' price postings to make sure they’re offering a wide array and are hoping a more hands-off approach will better encourage competition. Some insurers in the state say they have price estimates for more than 400 services, but information is bound to vary by company.

While Massachusetts' regulators haven't formally standardized requirements across insurers, what has emerged so far to set the state apart is not only the availability of more procedures but also more detailed pricing information that tells patients what's included -- and not included -- in a price.

But questions among people in health policy both in Massachusetts and across the nation are whether those estimates accurately represent the complete price of a service, to what extent price transparency actually lowers prices in the long run, and whether there’s also enough information about quality along with price.

Brian Rosman, the research director of Massachusetts’ Health Care For All, notes that for many patients, the prices between doctors and hospitals won’t vary much since they’re only obligated to pay a certain amount out-of-pocket, so that actually makes the quality of care more valuable to know. To date, information about the quality of care in the state is inconsistent or only available from a patient satisfaction and access standpoint in the area of primary care, according to Rosman.

“This implies a kind of a shopping model where key info you need is price, but we think key info is quality, which isn’t integrated well with the price, and we don’t have good quality info anyway,” he said.

That problem speaks to the need to combine price transparency with reforms to the way doctors are paid if the goal is lowering costs, said Harold Miller, the president and CEO of the Center for Healthcare Quality and Payment Reform. For example, he argues, there should be reporting on how many people are readmitted to a hospital after a procedure from a particular doctor or hospital, and that should both be accounted for in a publicly available price that also rewards providers with more money for avoiding the readmission.

“The problem today is [that] if I look at two prices, hospital one might look cheaper than hospital two, but if it has a higher readmission rate, a higher complication rate and I end up having to pay higher in total, then hospital two is actually a better deal,” he said. “And the hospital needs to actually be paid that way in a way that doesn’t lead them to lose their shirt [by losing the money they would have received for the readmission].”

Others, like Cathy Schoen, the executive director of The Commonwealth Fund’s Council of Economic Advisors, would also like to see Massachusetts apply some degree of standardization to the procedures that insurers report on and are waiting to see how accurately the estimates account for the full array of costs within a given procedure.

“What people really want to know is what the total cost will be. I think that’s a bit down the road. But up until now, there was no information available whatsoever,” she said.

Massachusetts officials say insurers are generally being upfront when a price doesn’t include every aspect of the total cost. With a baby delivery, for instance, insurers are telling consumers an epidural or extra vitamins might not be covered, and there’s a toll-free number available for them to call to inquire further. State officials say they recognize that there are ways to improve upon the transparency effort, but this marks an important first step.

“We have to start somewhere,” said Anthony, the Massachusetts undersecretary.