You are here

Most States Do Little to Encourage Health Cost Transparency

‘Gag clauses’ thwart reform efforts

Consumers with health insurance shouldered more of the expense for their medical care in 2014, but most states did little to require that prices for hospitals and doctors be made public –– hindering comparison shopping and allowing dominant hospital systems and insurers to drive up costs overall, according to a report from two nonprofit groups, Catalyst for Payment Reform in California and the Health Care Incentives Improvement Institute in Connecticut.

Forty-five states received failing grades for neglecting to adopt laws that give patients the data they need to plan for their health care expenses. The authors looked only at state actions regarding health care price transparency, and not at the increasing number of health insurance companies that offer their members online tools to estimate out-of-pocket costs for medical care, such as Cigna and UnitedHealthcare.

Free websites, such as Healthcare Bluebook and Fair Health, also offer some price information, but in many cases, data are limited or are restricted to members of specific health plans.

State legislative efforts, however, could help to create a uniform experience for all consumers, whether they have insurance or not, said Suzanne Delbanco, executive director of Catalyst for Payment Reform.

Some states, such as Florida, provide average charges for specific procedures and allow consumers to compare hospitals and other providers.

Averages, however, don’t give enough specific information for consumers to plan their finances, Delbanco said, and charges are unreliable because no one actually pays those prices. Instead, health insurance companies negotiate steep discounts on charges by promising to steer members to the contracted hospitals and doctors.

Delbanco noted that legislative efforts to pull back the curtain on contracted prices often meet resistance from hospitals, physicians, insurers, and other suppliers, who raise arguments about trade-secret protections and contractual obligations.

For instance, hospitals and insurers often sign nondisclosure agreements or “gag clauses” requiring that both parties keep contracted rates confidential. Other contracts prevent insurers from creating incentives for their members to choose lower-priced options, or they prohibit a hospital from giving a more-favorable price to any other insurer.

The report recommends addressing such contractual issues, citing some states, such as California, that banned “gag clauses” on cost information in contracts between insurers and all health care providers, including hospitals and doctors. Similar legislative efforts have failed elsewhere, most recently in Missouri in 2014.

A study published in Health Affairs found that while millions of Americans gained health insurance coverage in 2014, many of those consumers struggled with high out-of-pocket expenses that caused them to forgo non-emergency care.

Delbanco acknowledged that states have a ways to go to help consumers budget personal medical expenses, especially given that only one state achieved the top rating in the price transparency report: New Hampshire, which created a website that allows insured and uninsured residents to estimate their health care costs.

Source: Bradenton Herald; July 9, 2015.


Recent Headlines

Despite older, sicker patients, mortality rate fell by a third in 10 years
Study finds fewer than half of trials followed the law
WHO to meet tomorrow to decide on international public heath emergency declaration
Study of posted prices finds wild variations and missing data
Potential contamination could lead to supply chain disruptions
Declining lung cancer mortality helped fuel the progress
Kinase inhibitor targets tumors with a PDGFRA exon 18 mutation
Delayed surgery reduces benefits; premature surgery raises risks
Mortality nearly doubled when patients stopped using their drugs