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87–496—PDF 2013

S. HRG. 113–243 

HIGH PRICES, LOW TRANSPARENCY: 

THE BITTER PILL OF HEALTH CARE COSTS 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JUNE 18, 2013 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

AMBER COTTLE, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

WITNESSES 

Brill, Steven, J.D., contributing editor, Time magazine, New York, NY ............ 5 

Delbanco, Suzanne, Ph.D., executive director, Catalyst for Payment Reform, 

San Francisco, CA ................................................................................................ 6 

Ginsburg, Paul, Ph.D., president, Center for Studying Health System Change, 

Washington, DC ................................................................................................... 8 

Colella, Giovanni, M.D., CEO and co-founder, Castlight Health, San Francisco, CA ................................................................................................................ 9 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 43 

Brill, Steven, J.D.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 45 

Colella, Giovanni, M.D.: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 51 

Delbanco, Suzanne, Ph.D.: 

Testimony .......................................................................................................... 6 

Prepared statement with attachments ........................................................... 59 

Ginsburg, Paul, Ph.D.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 142 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 148 

COMMUNICATIONS

American Hospital Association ............................................................................... 151 

Federation of American Hospitals .......................................................................... 155 

(III) 

(1) 

HIGH PRICES, LOW TRANSPARENCY: 

THE BITTER PILL OF HEALTH CARE COSTS 

TUESDAY, JUNE 18, 2013 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:03 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Rockefeller, Wyden, Schumer, Nelson, Menendez, Brown, Bennet, Casey, Hatch, Crapo, Thune, Burr, and 

Toomey. 

Also present: Democratic Staff: Mac Campbell, General Counsel; 

David Schwartz, Chief Health Counsel; Tony Clapsis, Professional 

Staff Member; and Karen Fisher, Professional Staff Member. Republican Staff: Kristin Welsh, Health Policy Advisor. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The committee will come to order. 

President Franklin Roosevelt once said that the best way to address a problem is, ‘‘In the cold light of day, to analyze it, to ask 

questions, to call for answers, to use every knowledge, every 

science we possess, to apply common sense.’’ 

Journalist Steven Brill’s March 4th Time magazine article, ‘‘The 

Bitter Pill: Why Medical Bills Are Killing Us,’’ detailed the problem 

of skyrocketing health care bills in the cold light of day. We are fortunate to have Mr. Brill with us today to analyze the problem, to 

use knowledge, and to apply common sense. 

Mr. Brill shares the stories of uninsured and under-insured 

Americans who survived life-threatening diseases, but their lives 

were nearly ruined by medical bills they could not afford. We 

learned about Sean Recchi from Ohio. Sean was diagnosed with 

non-Hodgkins lymphoma last year at the age of 42. 

Sean and his wife had just started their own business and were 

only able to afford a limited health insurance plan, but the hospital 

did not accept his discount insurance. So the hospital made Sean 

pay nearly $84,000 in advance for a treatment plan and an initial 

dose of chemotherapy. 

Sean was billed off the hospital’s internal list price, known as the 

‘‘chargemaster.’’ The chargemaster is like the sticker price of a new 

car: it is inflated. Few would ever pay it. In the case of hospitals, 

the list price is not just a 5-, 10-, or 15-percent mark-up; it could 

be 100 times higher. 

2 

But, unlike new cars, some people have no choice but to pay the 

chargemaster price. Who are these people? The uninsured and the 

under-insured, people like Sean Recchi. To start receiving lifesaving care, Sean needed to pay 170 percent of the average American’s salary to a hospital, a nonprofit hospital, and that was just 

for his first treatment. Mr. Brill’s article shines a light on the littleknown chargemaster system used by America’s hospitals. 

Mr. Brill also tells the story of Rebecca and Scott S., a couple in 

their 50s living near Dallas. One day last year Scott was having 

trouble breathing. Rebecca raced him to the hospital. She thought 

he was about to die. Scott stayed in the hospital for about 32 days 

until his pneumonia was brought under control. Rebecca and Scott 

never imagined that this near-death experience would wipe out 

their life’s savings. They exceeded their insurance annual limit and 

were left with a $313,000 bill. 

Thanks to health reform, these stories will soon be a thing of the 

past. The Affordable Care Act will ensure heartbreaking stories 

like Scott’s and Sean’s are no longer the norm. The law got rid of 

lifetime limits, and by next year the law will eliminate annual limits as well. Families like Rebecca and Scott’s will no longer face 

crippling debt as a result of illness. Insurance companies will be required to cover the medical services they need. 

By 2016, the law will also provide coverage to 26 million Americans who were previously uninsured. The health reform law also 

prevents hospitals from over-billing uninsured patients using inflated chargemaster prices. The administration needs to act quickly 

to finalize the regulations related to this provision. 

The Affordable Care Act also helped increase transparency of 

what hospitals charge Medicare. I applaud Medicare for releasing 

chargemaster data on inpatient and outpatient hospital stays over 

the last 2 months. We need to build on this and take a comprehensive look at transparency from the perspective of the consumer. 

Some innovative firms like Castlight Health and Change Healthcare are doing just this: they are pioneering analytical tools that 

can zero in on meaningful pricing information. These tools can help 

Americans be smarter consumers. They can help employers and 

plans form better partnerships with providers. They can help keep 

costs down. Unfortunately, these tools are not widely available, 

however—not yet. I hope they will be soon—to the average consumer. 

While increased transparency has the potential to change behavior, we will also expose the real thrust of Mr. Brill’s article: health 

care prices are too high in the United States. Today’s hearing will 

explore the causes of these high prices. 

Specifically, I hope we can examine the consolidation of hospitals 

and physicians. The practice can often help produce more integrated care, but consolidation can also lead to higher prices for patients. 

I also hope to look at the medical device sector that often reaps 

record-high profits, including gross profit margins approaching 75 

percent. We need to see if barriers exist that prevent hospitals 

from more aggressively bargaining for lower prices. If they do, we 

need to tear them down. 

3 

This hearing is an opportunity to start working through these 

issues. We know there is a problem. It has been portrayed in the 

cold light of day by Mr. Brill. We are here, as President Roosevelt 

urged, to ask the questions, to analyze the problem. So let us apply 

a little common sense. Let us continue to make health care more 

transparent and affordable. And let us not stop working until we 

finish the job we started with health reform. 

I look forward to our witnesses. They have spent a lot of time 

thinking about this, and I know they will have a lot to say. 

[The prepared statement of Chairman Baucus appears in the appendix.] 

The CHAIRMAN. Senator Hatch? 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Thank you, Mr. Chairman, for convening this 

hearing this morning. To be honest, I am not sure where to begin. 

As we all know, the original impetus for this hearing was the recent article in Time magazine about the costs associated with 

health care, Mr. Brill’s article. 

While that article did not present much in the way of new information, he reminded all of us how complicated our health care system is and how our system of fee-for-service reimbursement has resulted in tremendous cost growth over the last 2 decades. 

Congress has had discussions about the cost of health care for 

years. Unfortunately, I think the President’s health care law 

missed a real opportunity to address these issues. We know that 

there are many factors that drive up the cost of care, some appropriate and some not. 

Those of us who got through the more than 35 pages of the Time 

article know that each sector of the health care industry must play 

a part if we are going to be successful in creating a more rational 

and affordable system. 

Some have suggested comparing purchasing decisions in our 

health care system to those of other industries, such as airlines, 

cars, or hotels. With those types of purchases, websites and other 

avenues exist that allow consumers to readily find price information and customer reviews. 

While I agree this is a very rational way to shop, we have to acknowledge that health care is very different. Many factors go into 

pricing health care, factors such as specialty of the provider, severity of the patient condition, level of resource use, et cetera. Different payers reimburse at different levels. 

As many have noted, we have one of the best health care systems 

in the world, but there is a significant debate as to whether our 

outcomes are good enough to justify all the costs. This year, Americans will spend $2.8 trillion on health care, and, of that, Medicare will spend $800 billion. In Congress, we tend to 

focus mostly on spending in Medicare and other Federal programs, 

but the enormous amount spent in the overall health care system 

needs to be examined. 

For employers who provide coverage to their employees, the rising cost of goods and services that make up our health care system 

are very real. Increased costs mean less money that can be spent 

4 

on wages or other benefits and, perhaps more importantly, less 

money to spend on hiring additional employees. For individuals, as 

the costs continue to increase and employers have to scale back, 

their out-of-pocket health care costs will only go up. 

The issue that most directly affects people, whether they have 

health insurance or not, is their out-of-pocket costs. Most people 

are not interested in irrelevant hospital chargemasters or the details of health plan negotiations; they simply want to know what 

they will be paying themselves at the end of the day. 

For savvy consumers who will spend time up front researching 

costs and quality data, they want easy-to-understand information 

to help them make decisions. For others, it is as simple as receiving a bill that is, as they say, patient-friendly. 

As I stated, this is a very complicated issue, and many factors 

need to be considered. Most of us would agree that competition in 

health care is generally a good thing. Hospitals, physicians, suppliers, and payers should all compete on quality and price, and consumers should benefit from this. However, in many parts of the 

country, consolidation, whether it is provider or payer consolidation, has often led to higher prices without better quality outcomes. 

Mr. Chairman, I think this is an area that is worth further exploration in the future. Many of the policies that Congress has enacted, like for example Accountable Care Organizations, bundled 

payments, or health information technology requirements, lead to 

greater consolidation. 

It is important that we know the consequences of some of these 

policies. I also believe, as a former medical liability defense lawyer, 

that medical liability costs are driving an awful lot of the costs that 

are eating us alive in our society today and that most of the cases 

that are brought are basically frivolous, to get the defense costs, 

which are enormous. 

Lastly, let me echo the point made in Mr. Brill’s article about the 

cost of defensive medicine. As the article stated, much of the high 

cost of health care is due to over-utilization of services as a means 

of protecting the physician against future litigation. That is what 

we advised when we saw this influx of medical liability cases when 

they changed the basic laws to make every case a case that goes 

to the jury. 

Physicians have been very, very concerned about future litigation. In light of this fact, I hope the Congress will work to pass legislation to address medical liability reform. This was another 

missed opportunity in Obamacare, but it is not too late to fix that. 

Chairman Baucus, thank you once again for convening this hearing today. I look forward to hearing from our witnesses and learning about how we can harness the wealth of information available 

to citizens to help them to make good decisions. These consumers 

need that so they can make good decisions about their health care. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator, very much. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. Today our four witnesses are as follows. Mr. Steven Brill is the author of the Time magazine article, ‘‘Bitter Pill: 

Why Medical Bills Are Killing Us.’’ Next is Dr. Suzanne Delbanco, 

5 

executive director of Catalyst for Payment Reform. Welcome. Dr. 

Paul Ginsburg—welcome back, Dr. Ginsburg—is president of the 

Center for Studying Health System Change. And Dr. Giovanni 

Colella is CEO and Co-Founder of Castlight Health. 

We will begin with you, Mr. Brill. You are the star witness here. 

Our usual practice is for statements to be automatically included 

in the record and then for you to summarize your statements cogently. Do not pull any punches. Tell us what you think. 

Mr. Brill, go ahead. 

STATEMENT OF STEVEN BRILL, J.D., CONTRIBUTING EDITOR, 

TIME MAGAZINE, NEW YORK, NY 

Mr. BRILL. Thank you for inviting me, Mr. Chairman and Mr. 

Ranking Member, to discuss what I found when I dissected seven 

medical bills, as you know, line by line to see why health care costs 

so much in the United States. 

I found that, by any definition, this is no one’s idea of a functioning marketplace. In a functioning marketplace, prices are based 

on something that is explainable, whether it is the cost of producing the product, or the laws of supply and demand, or the quality of the product. In this marketplace, no one can explain a hospital’s charge of $77 for a box of gauze pads. No one can explain an $87,000 bill for a 

few hours of outpatient care. That bill included $3 for the magic 

marker that marked the spot where a neurostimulator would be inserted into the patient’s back. He was then charged $49,000 for the 

neurostimulator, which cost the hospital about $19,000, and it was 

paid to a manufacturer whose gross profit margin is nearly double 

Apple’s. 

No one can explain why a school bus driver was charged, and sued into paying, $9,400 after she fell and spent 2 hours in the 

Bridgeport Hospital E.R., where among the charges was $239 for 

a blood test that Medicare, which pays hospitals based on their actual costs, would pay $13.94 for. 

No one can explain anything about what I discovered was a massive, out-of-control internal price list called the chargemaster. All 

hospitals and labs have one, but they vary wildly and have nothing 

to do with quality. 

The reason no one can explain any of this is simple: nobody has 

to, because this is not a functioning marketplace. It is a casino 

where the house holds all the cards. That school bus driver did not 

wake up one morning and say to herself, oh, I wonder what they 

have on sale over at the emergency room today; maybe I will go 

have a look. When she became that hospital’s customer, she not 

only had no price information, she also had no choice. 

The result is an economy a world apart from the economy that 

the rest of us live in. While things have been tough for most Americans in the last half decade, those who run hospitals or sell CT 

scans or drugs or medical devices have thrived, as if living in an 

alternate universe. 

In hundreds of cities and towns, tax-exempt, ostensibly nonprofit 

hospitals have become the community’s most profitable businesses, 

often presided over by the region’s most richly compensated executives. So that is what I saw when I followed the money. 

6 

What can we do about it? Well, the first step, obviously, must be 

transparency. None of this will change until we can see it all, so 

that those involved can be asked to answer for those salaries, those 

out-sized profit margins on drugs and medical devices, and, above 

all, the bizarre differences in prices everywhere you look. 

But transparency can only go so far. Let us consider the man who was asked to pay $13,702 for his first transfusion of the cancer 

drug that he desperately needed. Now, suppose he knew that the 

drug only cost the ostensibly nonprofit hospital maybe $3,500 and 

that it cost the drug company a few hundred dollars. Suppose he even knew that among the $71,000 in other charges, he was getting soaked for $77 for a box of gauze pads or $15,000 

for lab tests for which Medicare would pay just a few hundred dollars. What if knew all that? So what? What could he do? He could 

feel the tumor growing in his chest, his wife told me, and he was 

desperate for his check to clear. 

In fact, they kept him waiting downstairs for his transfusion 

until it did clear. So we need more than transparency. My written 

testimony, as well as the Time article, make a lot of suggestions 

in that regard, but I will close by emphasizing again that, while 

transparency starts the conversation about prices that we did not 

have in the debate over Obamacare, it is only a start. 

I might add that Obamacare itself does nothing about these 

prices, nothing to solve this problem—zero. Once we follow the 

money in this lopsided sellers’ marketplace, we have to act to stem 

the flow by doing something about these prices. 

Thank you. 

The CHAIRMAN. Thank you very much, Mr. Brill. 

[The prepared statement of Mr. Brill appears in the appendix.] 

The CHAIRMAN. Dr. Delbanco? 

STATEMENT OF SUZANNE DELBANCO, Ph.D., EXECUTIVE DIRECTOR, CATALYST FOR PAYMENT REFORM, SAN FRANCISCO, CA 

Dr. DELBANCO. Thank you. Chairman Baucus, Ranking Member 

Hatch, and distinguished committee members, I am here to tell you 

that employers and consumers need price transparency. While I am 

currently executive director of Catalyst for Payment Reform, I was 

the founding CEO of another nonprofit, the Leapfrog Group, which 

pioneered the public reporting of hospital quality and safety information, so transparency in health care is an issue I have been 

working on for 13 years. 

Catalyst for Payment Reform is an independent nonprofit organization working on behalf of large employers and other health care 

purchasers to promote a higher-value health care system in the 

United States. Currently, CPR has 30 members, including Boeing, 

Dow Chemical Company, Safeway, as well as eight State agencies, 

including 4 Medicaid agencies. 

CPR designated price transparency as a top priority because we 

cannot imagine a high-value health care system without it. As you 

know, employers and other health care purchasers, as well as consumers, are facing rising health care costs. 

In response, employers are asking their beneficiaries to take on 

a greater share of those costs, as well as designing benefit plans 

7 

that push users toward more efficient, higher-quality choices. Purchasers believe that pressure from consumers is an under-utilized 

lever, but consumers need information to make good decisions. 

Consumers do not expect prices for the same service to vary so 

much. One example was found that the price for colonoscopy varied 

10-fold within one market. 

Furthermore, employers in health plans cannot implement some 

of those promising strategies to stem costs without price transparency. Something called reference pricing is an example of such 

an approach. Reference pricing sets a standard price for a drug, 

procedure, or service, and requires health plan members to pay any 

amount above it. 

For example, CALPERS, California’s Public Employee Retirement System, set a reference price of $30,000 for hip and knee replacements. If a patient chooses to seek a hip or knee replacement 

from a more expensive facility, they do have to pay the difference. 

CALPERS has said that this program has reduced its costs in this 

area by 30 percent. 

This approach enables purchasers to let providers know that 

their unwarranted price variation is no longer going to be tolerated 

and also gives them a chance to engage consumers in making 

higher-value choices. 

There are many efforts to promote price transparency today. As 

you know, CMS provides an online tool that provides beneficiaries 

with estimated out-of-pocket drug costs, and of course CMS just released some hospital charge information. Thirty-four States also require reporting of hospital charges or reimbursement rates. 

But, in a report card on State price transparency laws that we 

co-authored, we found that most State laws fall far short of making 

sure that consumers get the information they need. Many challenges remain. 

Some health care providers prohibit health plans from sharing 

any information about what they get paid. While health plans are 

working to phase out these agreements—and they are relatively 

rare—in the markets that they affect, they can leave gaping holes 

in the information that consumers need. 

Another barrier is that some health plans feel the information 

about what they pay providers is proprietary, making employers 

have to rely on the health plan to inform consumers even if they 

feel another vendor is better suited to do it. 

CPR has been supporting its members to become a critical mass, 

pushing for health plans and providers to remove these barriers. 

We supply members with questions to ask prospective health plan 

partners and model terms for their contracts for the plans. We facilitate meetings for them to discuss price transparency on a quarterly basis with some of the Nation’s largest plans. 

We have also outlined specifications for how we think price information can best be conveyed to consumers. One of today’s biggest 

shortcomings is the separation of price and quality information, 

making it hard for consumers to choose the best overall choice. 

The Federal Government could facilitate transparency in a variety of ways. First, it could share more charge, payment, and quality information on a broader range of services and providers. 

8 

Second, it could make sure that its own consumer transparency 

tools, like hospitalcompare.gov, incorporate the features that CPR 

highlights in its specifications as being important. 

Third, the Federal Government could, through the federally facilitated exchanges, insist on price transparency from the qualified 

health plans. CPR’s model contract language could help here. 

Lastly, to help employers meet their fiduciary obligations, the 

Federal Government could ensure that employers have access to 

their own claims data for use in consumer transparency tools. 

Again, I am here to tell you that employers and consumers need 

price transparency in health care. Catalyst for Payment Reform 

commends the Senate Finance Committee for delving into this 

issue. Thank you. 

The CHAIRMAN. Thank you, Dr. Delbanco. 

[The prepared statement of Dr. Delbanco appears in the appendix.] 

The CHAIRMAN. Dr. Ginsburg, you are next. 

STATEMENT OF PAUL GINSBURG, Ph.D., PRESIDENT, CENTER 

FOR STUDYING HEALTH SYSTEM CHANGE, WASHINGTON, DC 

Dr. GINSBURG. Yes. Mr. Chairman, Senator Hatch, members of 

the committee, I appreciate the opportunity to talk about price 

transparency. I particularly will focus on policy initiatives. 

Many policy activities related to health price transparency have 

missed the mark. They are focused on transparency for transparency’s sake rather than on getting lower prices for consumers, 

which is what I believe the principal goal should be. 

The best that could be said is that releases of price data have 

increased awareness of policymakers, employers, and the public 

concerning how widely prices vary from one area to another and 

across providers in a single market. 

But this accomplishment is limited when releases focus on billed 

charges which have little relationship to the prices that are actually paid on behalf of virtually all patients. The recent CMS release 

of hospital charge data suffers from this problem. 

A notable exception are the various reports from the Massachusetts Attorney General that released data on what private insurers 

pay each hospital. These releases have in fact led to State policies 

that have facilitated insurance designs that reward consumers that 

use lower-priced hospitals. 

But the data releases alone will not reduce price variation. Policymakers must either take steps to make health care markets 

more competitive or regulate prices, and large employers need to 

change the design of their benefits. 

I also worry about transparency proposals that advocate publication of the specifics of contracts between insurers and providers. 

Antitrust policies throughout the world seek to prohibit the publication of contract prices in markets that are concentrated, because 

of the risks that sunshine will lead to higher prices. These risks 

can be reduced substantially if discretion is used to shield the details. 

The key to price transparency leading to lower prices for consumers is benefit designs that offer rewards to them. Not only will 

such approaches yield savings to those who choose lower-priced 

9 

providers, but, if enough are involved, incentives for providers to 

improve their value will be created. 

High-deductible plans provide such incentives for outpatient 

care, telling patients the prices that they will pay under their plan 

when using different providers—of course, others on the panel are 

discussing this—but they have little impact on choosing hospitals 

for inpatient care, because most enrollees exceed their high deductibles when they go into the hospital. 

I believe the greatest potential for obtaining lower prices comes 

from approaches where purchasers and health plans, rather than 

report prices to enrollees, analyze the complex data on costs and 

quality and provide simple incentives for enrollees to choose 

higher-value providers. 

We see this approach in tiered network designs that major insurers are pursuing in Massachusetts and some other places. In fact, 

in Massachusetts, enrollees tend to pay three different deductible 

amounts for hospital care according to the tier of the hospital they 

choose. 

We see this approach in reference pricing, such as the initiative 

of CALPERS that Dr. Delbanco mentioned for hip and knee replacements. These approaches are less transparent than publishing 

prices for services, but they are likely a lot more effective. 

So what should policymakers do to get lower prices for health 

care? Well, two steps were already taken that will contribute a lot, 

and I am referring to the Cadillac tax and the structure of the premium tax credits in the Affordable Care Act, because these provisions will put a lot of pressure on premiums, and the result will 

be benefit designs that encourage enrollees to choose providers on 

the basis of value. 

Providing employers, insurers, and consumer organizations with 

better data on provider practice patterns, such as the legislation introduced today by Senators Grassley and Wyden to make Medicare 

data more accessible, would accomplish this. 

Also, there is opportunity to prohibit some anti-competitive contracting practices that block approaches, such as tiered networks 

and reference prices. Thank you very much. 

The CHAIRMAN. Thanks, Dr. Ginsburg, very much. 

[The prepared statement of Dr. Ginsburg appears in the appendix.] 

The CHAIRMAN. Dr. Colella? 

STATEMENT OF GIOVANNI COLELLA, M.D., CEO AND 

CO-FOUNDER, CASTLIGHT HEALTH, SAN FRANCISCO, CA 

Dr. COLELLA. Thank you very much. Chairman Baucus, Ranking 

Member Hatch, distinguished members of the committee, thank 

you very much for inviting me today. It is an honor and a pleasure 

for me to be here. 

Almost 29 years ago to the day, I came to this country to complete my medical training. While I have since then become an interpreter, my goal and my dream has remained the same: I want 

to improve the health and the well-being of my fellow Americans. 

I first became aware of price transparency, and admittedly a little bit obsessed with it, a few years ago when my mother, who was 

very sick and ill, needed medical care. As hard as I tried, looking 

10 

everywhere, me, a trained physician, could not get the basic facts 

about the quality and the cost for her care. 

I could not determine if a name-brand hospital, a famous medical 

center, was indeed the best place for my mother to receive care. On 

top of this, I was unable to determine how much that care might 

cost. All this surprised me. 

Now, if I go shopping for a car, I know the price; it is right there. 

It is on the window. I see it right away, and there is plenty of information on the quality of this. Yet, when it comes to our health care 

system, it is virtually impossible to find out cost and quality of 

what I am buying. 

Now, this makes absolutely no sense. Consumers ultimately end 

up paying more and getting worse care, and we as a country end 

up spending more on health care than we need to. Years of study 

and real-life experience demonstrate a huge variation in price and 

quality across our country, across individual States, across individual cities, and, even more, across individual doctors practicing 

in the same hospital. 

Now, let me be clear. We can spend much less as a Nation than 

we currently do on health care and still receive much higher quality care. This is because, when it comes to health care, there is absolutely no correlation between price and quality. Let me be more 

specific: almost no correlation between price and quality. 

Now, let me use an example for this. The price of care for a typical pregnancy for a commercially insured woman in the city of 

Chicago—the most expensive hospital in Chicago actually has the 

poorest quality rating, while the least expensive hospital has the 

best quality. The difference in price between them is almost 

$12,000, or more than 300 percent. 

Now, this is real money, real unnecessary costs for her employer 

and eventually for the country. What does she get for the bigger 

bill? Lower quality care. Fortunately, we have found that, when 

given data on price and quality in a user-friendly way, consumers 

use it to make smarter health care decisions. When they do, they 

and their employers save money. 

With these benefits in mind, I believe strongly that we need to 

do much more as a Nation to bring transparency and competition 

to health care so that the health care system can deliver better 

value to consumers. We must start by unleashing the cost and 

quality data that we already collect. 

First, all purchasers of health care should have unfettered access 

to their claims data, which are their receipts, to enable price and 

quality transparency initiatives. 

Second, all payers should be required to submit claims to publicly available, privacy-protected data repositories for quality measurements and reporting. 

Third, the Federal Government should relax qualified entity restrictions on access to Medicare data. 

Fourth, Medicare, which is the biggest payer in the United 

States, recently released prices for 130 procedures. That is great, 

but it should do the same for the more than 1,000 additional procedures in its database. 

11 

Fifth, Medicare should make physicians’ quality data widely accessible. The anticipated release of this data has already been delayed by half a year. 

Finally, all States or the Congress should pass measures that 

prohibit health plans and providers from entering into contracts 

that prevent disclosures of providers’ price and quality. 

By taking these small but bold and meaningful steps towards 

more transparency, you will all go a long way to bringing market 

discipline and better value to the American people. 

Thank you all for the opportunity to speak with you. It is an 

honor and a pleasure to be here. I will be happy now to answer all 

your questions. 

The CHAIRMAN. Thank you very much, Doctor. 

[The prepared statement of Dr. Colella appears in the appendix.] 

The CHAIRMAN. I will start with you, Mr. Brill. You mentioned 

that you outlined the problem by exposing the chargemaster phenomenon, but you also said the ACA does not really solve it. There 

are a couple of ideas here, and maybe there are a couple of provisions that might help a little bit, the Cadillac tax for one. But your 

thoughts? You have thought a lot about this. What is the solution 

here? We hear that transparency disclosure alone may not be sufficient. So, your thoughts? 

Mr. BRILL. Correct. Thank you for the question. I guess what I 

meant by that is that it seems counterintuitive to me, if the issue 

is high prices and the issue is the market power of the providers 

who are able to charge the high prices, that injecting more competition into the entities that have to pay the prices, the insurance 

companies, is going to help things. 

I mean, if you take the New Haven, CT area, where Yale New 

Haven has bought up pretty much everything, if you are an insurance company and you want to sell health insurance in and around 

that area, you have to pay whatever Yale New Haven is going to 

charge. 

Now, the result of that happens to be that the head of the hospital makes 160 percent of what the president of the university 

makes. That is just a world that is upside down to me. I do not 

think that a tax on insurance premiums or a lot of the other efforts 

to inject more competition into the insurance market deal with that 

fundamental issue, which is that the price of everything is just way 

too high. 

Now, as a journalist, my theory about why that was not attacked 

with Obamacare was that, if you do not mess with the profits of 

the key players in the industry, you get to get your bill through 

Congress. To me, that is what happened. 

The CHAIRMAN. So you are basically suggesting that transparency alone is insufficient because many of these hospitals have 

such great market power. 

Mr. BRILL. Hospitals have market power, the drug companies 

have market power. That guy needed that cancer drug. 

The CHAIRMAN. Right. So what do we do about that? Let us assume for the sake of discussion that that is accurate. That is, there 

is very significant market power. In fact, I saw an article in one 

of the papers just a week ago that made that very point that you 

are making, that the drug companies have market power that alVerDate Nov 24 2008 21:10 Apr 22, 2014 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 R:\DOCS\87496.000 TIMD
12 

lows them to charge higher prices than what most people think the 

charges should be. 

What do we do about that? Just quickly, then I am going to ask 

the others that same question. 

Mr. BRILL. All right. Very quickly. I think there is another area 

of transparency, with all due respect to the members of this committee, we need to look at when we wonder about why those issues 

are not dealt with legislatively. 

Since 2007, the health care industry has contributed over $32 

million to the campaigns and PACS of the members of just this 

committee, with it split basically evenly on both sides the aisle. 

The member receiving the least got just over half a million, and the 

member receiving the most got over $2.5 million. 

Maybe, in the interest of transparency, reporters covering hearings like this ought to list the contributions whenever an elected 

official holds hearings like this or votes on issues like this. Maybe 

even C-SPAN could put it as a chyron under each member’s name, 

how much money they got. 

The CHAIRMAN. Well, a lot is being disclosed these days, which 

is almost all good. But putting that issue aside for a moment, you 

are still suggesting that a concentration of market power is the essential problem here and the effect of which causes these high 

prices. 

Mr. BRILL. Well, in part it is concentration, in part it is that it 

is not a market. In other words, no one buys health care voluntarily, with the exception of maybe plastic surgery, maybe Lasik 

surgery. 

The CHAIRMAN. My time is expiring. I would like you to answer, 

if you could, Dr. Delbanco. 

Dr. DELBANCO. So Catalyst for Payment Reform held a national 

summit on provider market power last week in Washington, DC, 

and Paul Ginsburg was one of our expert speakers, so I think we 

can both comment on this. Market power certainly enables providers to not be transparent about their prices. It also enables 

them to charge higher prices, and many think that price is the 

leading driver of health care costs right now. 

So, when you think about the role of price transparency in trying 

to enhance competition among providers, if you are a purchaser 

like the members of our organization and you do not know what 

the price differences are across your choices, or as a consumer you 

do not know, you may mistakenly believe that higher prices are 

higher quality. 

If we have greater transparency in both cost and quality, then 

I think we can come up with all kinds of benefit designs and networks of providers which people have access to that are highervalue options. Our members are beginning to experiment with this. 

There was the reference pricing example; there is the tier network 

example in Massachusetts where the State has cut out some of the 

highest-priced providers. 

The CHAIRMAN. Right. Very quickly, let me just ask the others, 

is reference pricing a good thing? I know it is not going to solve 

everything, but is that something that makes some sense? Does 

anybody disagree with that? 

13 

Dr. GINSBURG. No, I think it is a good example of how to change 

a benefit design so that consumers, for the first time, care about 

which provider they go to. In a sense, a lot of the provider market 

power comes from the fact that the typical insurance that people 

have leaves the patient indifferent about which provider they go to, 

the very expensive one or less expensive one. 

I think the challenge is to not raise deductibles so much. They 

focus on whether to get care or not, but within the context of a benefit design, saying you will pay less to go here. Even in New 

Haven, CT, where, as Mr. Brill mentioned, there is just one hospital, I am sure there are some freestanding outpatient facilities, 

physician offices, that provide MRIs and offer colonoscopies. 

So in a sense I do not think there are that many areas where 

there is absolutely no competition, but the key thing is for people 

to have incentives in their insurance that get them to think about 

this issue. 

The CHAIRMAN. Thank you. My time is way expired. 

Senator Hatch? 

Senator HATCH. Well, thank you, Mr. Chairman. 

Mr. Brill, I have followed you for years, and I have a lot of respect for you and your tough reporting. 

Mr. BRILL. Thank you, sir. 

Senator HATCH. There is no question, this article is very, very 

tough. For years, though, we have known that our health care system lacks transparency and that the uninsured and under-insured 

do receive staggering health care bills. So why write this article 

now? What is different now, say, than 5 to 10 years ago? 

Mr. BRILL. Well, maybe I am just late to the party. It could be 

that. 

Senator HATCH. No, I want the real answer. 

Mr. BRILL. Well, that is part of it. The other part of it is, I think, 

when you look at something, as I did, that is rapidly approaching 

a fifth of our economy and is so much now a part of people’s lives 

because deductibles are higher, co-pays are higher, and everything 

else, it begs to be looked at. 

I mean, I guess I can put it to you this way. I remember listening 

to a debate on one of the cable shows about, should we pay a million dollars to pay for the last 6 months of life of a terminal patient? It is an anguished debate, a really hard question. The way 

my mind works, I kept saying to myself, why does it cost a million 

dollars? Who is getting that money? 

It turns out that, when you look at it, it is this alternate universe where the hospital CEOs are all rich, everybody who works 

in a hospital makes a lot of money, the drug companies’ profits are 

higher than Apple’s and higher than the software companies that 

we all admire, ambulances have become a private equity play. 

Something is going on here. 

So it is a combination of a market that is not accountable, the 

regulations are not doing what they are supposed to do, and the 

incentives are not rightly placed. I think all my colleagues here 

have all the right answers, because we need multiple answers. 

Senator HATCH. And I think most of us realize we are not doing 

what we should do, either. I mean, there have to be some changes 

14 

in the Congress as far as getting this under control. But I appreciate your testimony. 

Dr. Ginsburg, I have great respect for you as well, and for all 

four of you. I think this has been terrific. I compliment the chairman for having you all come. But, Dr. Ginsburg, I am interested 

in your thoughts surrounding how we move forward in providing 

better information for consumers. 

I am concerned that policymakers have focused too much on the 

amount of information to make available rather than the reliability 

and the usefulness of that information. Where should we focus our 

efforts in making sure that the right information is being released? 

Dr. GINSBURG. Senator Hatch, I believe the best opportunity to 

inform consumers on issues of value is through insurers and employers. I think what government can do is, sometimes, provide the 

raw materials for insurers and employers to make their calculations so that they can draw on the experience of Medicare in doing 

that, but I think that this production of information is something 

that has to be customized to consumers; it has to reflect the details 

of their particular health plan. I think insurers and employers are 

best positioned to do that. 

Senator HATCH. Thank you. 

Dr. Colella, in your testimony you state that your company has 

an 80-percent take-up rate among enrollees. Now, that strikes me 

as incredibly high and frankly a little hard to believe. Are initial 

enrollment activities, such as simply signing up for coverage, included in this percentage? 

Dr. COLELLA. Yes, Senator. Well, sorry. Can you repeat the question? I want to make sure I understand it. 

Senator HATCH. Yes. I am concerned about, in your testimony 

you stated that your company has an 80-percent take-up rate 

among enrollees. 

Dr. COLELLA. Correct. 

Senator HATCH. That does seem to be awfully high to me. I find 

it a little hard to believe as well. But are initial enrollment activities, such as simply signing up for coverage—— 

Dr. COLELLA. Oh, no. Absolutely not. Sorry. 

Senator HATCH [continuing]. Are they included in that percentage? 

Dr. COLELLA. No. We are very proud of our uptake. Yes, we 

focus, in our company, a lot of resources to making sure that engagement happens. In order to do that, we have built an entire 

product team around consumerism and understanding how consumers use applications. 

I joke about the fact that, when we started the company, everybody we hired in product actually did not come from health care, 

because we wanted people who really understand how consumers 

engage with technologies like ours. So the 80 percent, which is not 

with every employer but across the board is around those numbers, 

is a number we feel very proud of and has nothing to do with the 

enrollment in the health plan. It is the enrollment in the Castlight 

system. 

Senator HATCH. Well, thank you. 

Mr. Chairman, I have one more question for Dr. Delbanco. We 

have heard from hospitals that chargemasters do not matter and 

15 

that attention should be placed on the rates negotiated between 

providers and insurers. If chargemasters are only marginally relevant, what steps should be taken to move away from the system 

entirely, and what should replace it? 

Dr. DELBANCO. That is a great question. Well, I think one of the 

most valuable things about CMS releasing the hospital charge data 

is, it was a great education for all about how much variation there 

is, even in the charges, much less the payment amounts, and the 

fact that the charges really have little to do with what people end 

up paying. 

What we need to work toward, and it is going to take a lot of 

work and a long time, is understanding exactly what the underlying costs are of delivering care and what cost it takes to deliver 

high-quality care. Without having good information on both of 

those fronts, many hospital systems, health care systems, really do 

not know what it takes in terms of the cost to deliver a unit of 

care. If we do not know what that is, it is going to be very hard 

to come up with a rational system of deciding how much care, a 

procedure, should cost. 

Senator HATCH. Thank you to all four of you. We really appreciate this panel. 

The CHAIRMAN. Thank you, Senator. 

Senator Thune, you are next. 

Senator THUNE. Thank you, Mr. Chairman. I want to thank our 

panel today, too, for some really good insights. Mr. Brill, thank you 

for shining a light on this with your lengthy piece and all that it 

told us about what is going on in the health care business and how 

it impacts real people who are looking for health care services in 

our country today. 

I want to ask the question, and I guess I would direct this to Dr. 

Delbanco, on the issue of price lists and hospitals posting prices for 

common procedures. We have in the State of South Dakota the 

South Dakota Health Care Organization that is responsible for 

compiling a price list of the 10 most common procedures in their, 

what they call a price point system. 

I am curious to know how effective those types of listings are in 

using market forces to put downward pressure on prices, and really 

do consumers use those? In your experience, do consumers use 

those types of price listings to make choices about elective procedures? 

Dr. DELBANCO. Thanks for the question. I think we know very 

little about whether consumers use that information. There are 

many States that are posting information of a variety of types, and 

there is very little research on whether consumers use it. 

I think posting that information is the beginning of a process to 

identify how the market is working and the variation across providers. It is a step in the right direction that says that transparency is something that we are moving towards, but I do not 

think that posting a short list of prices is that relevant. 

If you do not connect it back to the consumers’ insurance plan, 

what their account balance might be in their insurance plan, what 

is in network or out of network for them—so it really takes a serious amount of customization, which States like New Hampshire 

16 

and Massachusetts have been working toward in their public 

websites, for it to really be usable by consumers. 

Senator THUNE. Good. 

Dr. Ginsburg, the conversation on reimbursements in the last 

couple of years has focused on the integration of health care and 

coordination of care. This may be providing an incentive in the 

market for consolidation. I am wondering, what role does consolidation play in pricing? As the landscape of health care providers 

changes, what areas of antitrust need to be reevaluated, if this 

trend continues, to help put downward pressure on prices? 

Dr. GINSBURG. Yes. Well, I believe that the reforms in provider 

payment are leading to additional consolidation. I think there are 

a lot of other forces pushing for more consolidation as well. I think 

that the best approach is to take steps that make markets more 

competitive despite their consolidated state. 

I think an antitrust policy is probably a need to revisit the safe 

harbor policy that the Federal Trade Commission has had to actually require demonstrations of benefits for patients from safe harbors. I think that the governments can take steps which can facilitate tiered approaches. 

When Chairman Baucus asked about reference prices before, I 

neglected to say that I believe that most insurers or employers will 

not be capable of adopting a reference price system because of the 

likely push-back they will have from providers, who will basically 

say, if you have that, I will not contract with you. I think that legislation is important to outlaw non-competitive contracting practices between health plans and providers. 

Senator THUNE. I would just ask this as a general question for 

anybody to answer. But, Mr. Brill, you talked about market power. 

One of the things that we are seeing with this consolidation and 

the integration is, as more and more physicians and hospitals are 

coming together, the entities are getting larger. I am just curious, 

sort of as a philosophical question, what can be done to return 

principles of the free market into health care pricing in this country? 

Mr. BRILL. Well, I am not sure we ever started from that place, 

but we certainly have slid very far away from it. 

Senator THUNE. We have evolved. 

Mr. BRILL. Again, one of the things I found in doing the reporting 

is, if there is one countervailing power to even the most concentrated health care provider, it happens to be Medicare, which I 

found does an awfully good job. It is run, by the way, mostly by 

the private sector. It is contracted out. I thought that Medicare 

demonstrates that, if you have one really big buyer in the marketplace, it can serve to address the power, the accumulated power, 

of the providers. 

Let me just add one thing, though, about the chargemaster. I 

know that there is a lot of response that, well, the chargemaster 

is not really relevant because it is only X percent of people who actually end up paying that. It happens to be the poorest people who 

are asked to pay it. 

But the reason I focused on the chargemaster is, it is sort of a 

metaphor, if you think about it, for the whole health care system, 

in three ways. It is irrational. We all would agree with that. It is 

17 

completely unaccountable. Nobody can account for it, and no one 

can explain it. And the prices are just way too high. It serves as 

the basis upon which almost everything else in the health care system has to operate. The insurers negotiate discounts off it; everybody refers to it. 

So, if we are talking about market power, the one entity again 

that is big enough to just literally brush the chargemaster aside 

and say, we will not even talk to you about that, is Medicare, 

which does a very good job as a consumer of health care. 

Senator HATCH. Senator Brown, you are next. 

Senator BROWN. Thank you, Senator Hatch. 

Thank you all. This has been very illuminating, I think, for all 

of us. 

Mr. Brill, thanks for helping to change this debate. You are a terrific journalist, because you tell stories so well. I want to sort of 

tell a story and ask you to comment on it. A couple of years ago, 

for a period of several years, there was a progesterone used by injection, taken by injection, for 20 weeks, once a week, for women 

who were at risk of low birth weight babies, of early births. So it 

was a progesterone called 17–P. The injection cost between $10 and 

$20 an injection. A woman would take, as I said, once a week for 

20 weeks. 

In February of 2011, a St. Louis company, KV Pharmaceutical, 

became the first company to receive FDA approval. This had been 

clinically tested earlier, the progesterone 17–P, by KV Pharmaceutical out of St. Louis. It spent about $200 million, went through 

the clinical trials, then began selling the drug and marketing it 

under the name of Makena and selling it for $1,500 a shot. So the 

cost of treatment went from $200–$300 to $30,000, an increase, if 

our math is right, of some 14,000 percent. 

The CEO of KV said, well, it does not matter that we are charging this much. What matters is the savings that we provide for the 

health care system because there are not these very, very, very expensive dollar costs and human costs: early births. How does this 

happen? I mean, how does this health care system allow this to 

happen, where they can come in like this and disrupt something 

that was working well, there is no argument there, and take this 

much money out of the health care system? 

Mr. BRILL. Because they can. Again, there is not a competing 

drug, I take it, from your story. 

Senator BROWN. Well, there is, but not the competing market 

power, because they both are out there now. 

Mr. BRILL. Let us even say there is sort of a semi-competing 

drug, but it is the physician who prescribes the drug. The physician 

may have consulting contracts with the drug company; there could 

be all kinds of things going on. But I think your story just demonstrates again—and there are a thousand stories out there—that 

this is not a marketplace that functions like other marketplaces. 

Name a product outside of health care where the price can go up 

one day by 1,000 or 10,000 percent just because it can. I guarantee 

you, without even knowing the price of that drug, if it is prescribed 

in every other developed country of the world, it did not go up that 

high and is not that high. 

Senator BROWN. That is correct, yes. 

18 

You call the current drug reimbursement structure a perpetual 

gift to the pharmaceutical industry. A number of us here have suggested that Medicare negotiate drug prices. Give me your thoughts 

on that. 

Mr. BRILL. Well, I am not an expert on that or anything else. It 

just seems logical to me that if you are the biggest buyer of something, you ought to be able to negotiate the price for it. The resulting loss to taxpayers—the math is pretty clear. It is a big loss; it 

is pretty high. So it is a question that almost answers itself, it 

seems to me. 

Senator BROWN. Could the rest of you give us your thoughts on, 

as we do in the Veterans Administration, giving Medicare the ability to directly negotiate drug prices on behalf of X million consumers of those drugs? Dr. Colella, if you would start first. 

Dr. COLELLA. Thank you for the question, Senator. I am not an 

economist, so I do not really have a strong opinion on that. It just 

seems completely logical that if you are the biggest payer and you 

are paying for something, you have the power to negotiate for it, 

and that gives you market power and allows you to reduce the cost. 

Senator BROWN. Dr. Ginsburg? 

Dr. GINSBURG. Yes. Actually, the Veterans Administration is very 

successful because they have the threat that they will not include 

a drug on the formulary. In a sense, they can get therapeutic alternatives to compete for the right to sell to the VA. I think if Medicare is going to take that approach, you are going to have to be 

ready to answer the complaints about, well, but I wanted this drug, 

and you negotiated for this drug instead. Now of course you can go 

to a pure regulatory system and just say that we are going to set 

drug prices for everything, and we are going to include them. 

Senator BROWN. I do not hear those complaints from veterans 

that their drug is not available, not on the formulary that has been 

negotiated or that has not been negotiated, so why would we hear 

them on Medicare? 

Dr. GINSBURG. Well, I think the reason is that, in the Veterans 

Administration and Kaiser Permanente, they involve their physicians in these choices. So, in a sense, if the physicians help make 

the choices and explain to the patients why this drug is good, I 

think it is much less likely that complaints like that would come 

up. 

Senator BROWN. Dr. Delbanco? 

Dr. DELBANCO. I would just say that I am excited that we are 

finally approaching an era where we look at the comparative effectiveness of different therapies, drugs, procedures, and that, as that 

information becomes more available, I certainly hope that the Federal Government will act on it. 

So, as we think about purchasing drugs, there should be some 

kind of system where we are purchasing based on the value that 

they offer. Whether that involves a competitive bidding process or 

other process, I will not comment on, but bringing into account how 

helpful, useful, and valuable the different therapies are will be 

really important. 

Senator BROWN. I wish we were, as you said, moving into an era 

of comparative effectiveness, because it was labeled rationing, socialism, every other negative descriptive term imaginable in that 

19 

debate, and was not really included the way that it should have 

been here. 

The CHAIRMAN. Thank you very much. 

Senator Bennet, you are next. 

Senator BENNET. Thank you, Mr. Chairman. 

I will actually pick up where my friend left off in talking about 

socialism, and who is the biggest Bolshevik, and all this other stuff. 

[Laughter.] 

I want to say that one of the great mysteries to me about this 

place over the last 4 years has been why this health care debate 

has been so partisan in this town, because the people whom I represent, their prices are going up, the quality is not improving. That 

is what they care about. This place has made a mess of all this, 

in the discussion that we had. 

So I want to thank you, Mr. Brill, for your article, first of all, 

which I think reveals very clearly that there is no market, because 

there is no price transparency for anybody. I hate to use the word, 

because it sounds like a 50-cent word, but, when I read your article, my main reaction to it was that opacity should never be a business model. But it is a business model for the folks who are delivering this stuff. 

So the first question I had for you was, I would be curious to 

hear what the reaction has been to your article, what you have 

heard from people in the industry that you wrote about, and what 

they have said to you about the content of your piece. There is 

nothing defensible about the chargemaster. 

Mr. BRILL. And they actually have not tried to defend it, except 

to say that it does not matter, to which one might ask the question, 

well then, why do you have it if it does not matter? I think, rather 

than generalize, I will point out one thing that kind of surprised 

me about the reaction. 

That is, I had written in the piece that the nurses and most of 

the doctors, unless they were gaming the system in some way by 

getting consulting contracts, the people who actually provide the 

care are not on the gravy train that everybody else is on. 

What surprised me in all the mail I have gotten is that, not only 

have they not made out as well, but they really feel like victims 

of the same system. They feel, not only that all these other people 

are getting wealthy while they are doing the scut work—which is 

not scut work, it is saving people’s lives—they feel like they have 

no control and they are demeaned by the whole system, whether 

it is jumping through hoops to fill out insurance forms or everything else. 

As one doctor wrote me, he got an angry memo from his supervisor that he had ordered in the last quarter 3 percent fewer tests 

than he had the quarter before, and he had better get that rate 

back up, as if the patients obviously must have needed more tests 

that he did not order. 

So that, to me, is the most surprising reaction, that the most important players in the system, the people who provide the care for 

all of us, are not only not the beneficiaries of the system that you 

describe as so opaque but are, I think, the victims of it too. 

Senator BENNET. So I would like to ask the doctors, before they 

roll me out of here, what would be your top one or three or whatVerDate Nov 24 2008 21:10 Apr 22, 2014 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 R:\DOCS\87496.000 TIMD
20 

ever the number of things that could be done administratively 

today that do not require us to get our act together in the Congress, but could be done today by CMS or anybody else, to drive 

the transparency that we are talking about. 

Dr. DELBANCO. I would echo something that Dr. Colella said 

about CMS releasing more data and allowing it to be used by more 

qualified entities to analyze for quality and payment patterns. I 

think that is the number-one thing that I would add. 

Dr. COLELLA. Yes. Thank you very much, Suzanne. It is of paramount importance. CMS is sitting on so much data; it is a gold 

mine. Making that data accessible will help everybody understand 

much better the quality of care and the cost of care. 

Last but not least important, is also making sure this is an easy 

thing to do, and it would go a long way toward solving problems, 

making sure that people who pay for health care, which are mostly 

the employers, have access to their claims. A claim is a receipt. 

When you go to a store and you buy something, you have the right 

to have that receipt in your hands. It is just incredible that it is 

only in health care where this does not happen. 

Senator BENNET. But even then, Doctor, the best that people can 

do is maybe figure out what they have been charged—maybe. But 

we never can get to what it actually costs. You mentioned colonoscopies earlier. I mean, the range in communities is—— 

Dr. COLELLA. Thank you, Senator. That is exactly my point. Once 

you have the claims, that claim then can be given to organizations 

like ours or like other public organizations that know how to actually explain to the consumer what they will be charged out of pocket. 

I think Dr. Ginsburg pointed out very, very appropriately that to 

just show a price does not mean we can tell people what you are 

going to pay for your colonoscopy out of pocket, and where you are 

going to get that colonoscopy. And you know what? If you go to the 

hospital next door, you may pay half and have the same doctor. 

That is shocking. 

Senator BENNET. I am out of time, but I think Mr. Brill had a 

comment. 

Mr. BRILL. Yes. I just want to add, on the subject of information, 

this could be a whole other hearing. But, as I started to try to get 

information about Current Procedural Terminology codes and all 

this stuff, I found out that, somewhere along the line, that CMS 

and the Federal Government have given certain information and licenses to codes to the American Medical Association, the American 

Hospital Association, and they started asking, well, are you working for a for-profit company, what are you seeking this information 

for, why do you want it? I know there is a reference in your testimony, Dr. Colella, about them requiring that this data, which is 

our data, the taxpayers’ data, cannot be used by for-profit entities 

but only nonprofit entities, such as nonprofit hospitals, for example. That should be a whole other hearing, because there is a real 

issue there. 

Senator BENNET. Thank you, Mr. Chairman. 

The CHAIRMAN. I just want to ask one question of anybody. What 

is the responsible—if there is one—argument why CMS should not 

release all this data, whether it is doctors’ charges or hospital 

21 

charges? What is the rational, reasonable counter-argument, if 

there is one? Why don’t they? 

Dr. GINSBURG. Yes. I would like to point out the difference between that and information about quality, about practice patterns. 

That, I think, would be very valuable for CMS to release. Medicare 

Compare is probably the single-most important source of quality information for those seeking to—— 

The CHAIRMAN. What is the answer? What would CMS say if we 

said, all right, CMS, release it all? Would they have a counterargument? 

Dr. GINSBURG. I do not know, but I was going to make the distinction between—— 

The CHAIRMAN. Well, I am asking, can anybody indicate what 

maybe CMS might say? 

Dr. GINSBURG. The only thing I could think of is, I do not think 

there is a person in this room who has a computer with the server 

capacity to be able to receive it. 

Dr. COLELLA. Well, no, there is also another argument to be 

made. Very powerful provider organizations do not want this data 

to be released. So, when we, as a known qualified entity because 

we are a for-profit, which the last time I checked was not a crime 

in this country, asked to have this data so we could work on it to 

show quality measurements, we were told, no, you cannot because 

you are a for-profit organization. The reality is, people do not want 

to be held accountable for the quality of care that they deliver. 

The CHAIRMAN. So I would just be honest, I have not heard a 

good, solid answer. 

Dr. GINSBURG. There isn’t one. 

The CHAIRMAN. All right. 

Senator Wyden? 

Senator WYDEN. Thank you, Mr. Chairman. I believe the answer 

to your very good question, Mr. Chairman, is there is no answer. 

Later today, Senator Grassley and I, apropos of what the chairman 

has said, and Senator Bennet, are going to introduce legislation to 

open up the Medicare database. This is long overdue, and I appreciate the thumbs up. Let the recorder note that one of the witnesses gave a thumbs up to that. 

This is a treasure trove of valuable information. It needs to be 

released in a way that is sensitive to protecting the personal issues 

with respect to seniors. But, in answer to the chairman’s question, 

there is no reason for not making this public. 

I want colleagues to know Senator Grassley and I are going to 

do everything we can to add this to the SGR bill, because I think 

it is very appropriate, apropos of what Dr. Ginsburg has talked 

about, that we get this information. 

It is going to give us a lot of clarity with respect to practice patterns across the country. For the first time, people around the 

United States are going to be able to see what Medicare actually 

reimburses for various services. 

People have been debating this since the days when I was codirector of the Gray Panthers, but I think the answer to the chairman’s question is, there is no compelling reason for not doing it. 

With the court’s decision as well, I think we now have the green 

light to get it done, so I thank you all for your answers. 

22 

Let me ask you about one other area, and that is, my hope is, 

in the days ahead, we will be able to also focus on an area of Medicare that has been neglected in the past—and Senator Casey and 

a number of colleagues, Senator Isakson, have been talking about 

this—and that is chronic disease. This is where most of the Medicare money goes. 

Well over 80 percent of the Medicare money in America goes to 

heart, stroke, cancer, and diabetes. I would like to have you all outline how you think access to data and improved transparency in 

the Medicare program in particular can help identify and help treat 

seniors with chronic disease. 

So why don’t we start with you on that, Dr. Ginsburg? 

Dr. GINSBURG. Thank you, Senator Wyden. I believe that the 

best approach to addressing chronic disease is not publishing a lot 

of data, but to reform the provider payment system, such as 

through Accountable Care Organizations or similar things. 

These are organizations that are accountable, they have incentives, and their biggest opportunities are to address chronic disease 

better than in our fragmented fee-for-service system. So I would 

not go the transparency approach, I would go the payment reform 

approach. 

Senator WYDEN. Well, I think, Dr. Ginsburg—you are an authority in this area. My hope is, we could do both. We could do both, 

and certainly the Accountable Care Organizations, in terms of integrating care, move us in the right direction. 

There are some issues, particularly the attribution rule, that I 

hope—and we will have another nod for the recorder, because Dr. 

Ginsburg helped us there as well. I think that the attribution rule 

is also limiting our ability to see practitioners specialize in chronic 

disease. If you would like to follow that up, please. 

Dr. GINSBURG. Yes. Yes, I would. I mean, I think, even though 

there is a lot of potential in Accountable Care Organizations, the 

specifics on which the legislation was written and the regulation 

was written may not have been the best calls. 

I would like to note that the Bipartisan Policy Center, when they 

came out with their strategy, they called for an enrollment model 

of Accountable Care Organizations where beneficiaries would have 

incentives to enroll, and that that would be a big improvement in 

attribution over the way it is done now. 

Senator WYDEN. Well, you are absolutely right that there are a 

number of pieces to this puzzle. There are also some questions 

about which vulnerable seniors are going to get access to a care 

plan, because the language in the text of the rule talks about people at high risk. One of the things that has come to light is what 

happens to people who, say, have three chronic conditions. Are they 

considered high-risk? 

But for any of you, on the point of transparency and chronic disease, what are your thoughts with respect to how various transparency reforms that you have been talking about can help us deal 

with the area that I think Medicare has been transformed into? 

There is more cancer, more stroke, and more diabetes than when 

Medicare began in 1965. Having your thoughts about how transparency can help us tackle chronic disease, Doctor, would be great. 

23 

Dr. COLELLA. Yes. So I have been a practicing physician for 

many years. I think Dr. Ginsburg is right: transparency is not the 

only solution. Transparency is the beginning. The way I like to say 

it is, transparency is like giving you a great seat to a very bad 

movie. We are just starting from there. 

But transparency is not only transparency on prices, transparency is transparency on quality. So Medicare can give us data, 

and, the more data we have, the more we can pick quality. When 

my mother had cancer and I really desperately wanted to find a 

good, quality hospital for her cancer, I could not figure that out. 

That is an area where Medicare really is still lacking, and it is 

not fair to American citizens. As a physician, I find this almost offensive, the fact that we cannot understand who is performing better, what are the better outcomes, where do we get the best surgery, and ultimately, what are we paying for? 

Senator WYDEN. My time is up, Mr. Chairman. But again, I am 

surely glad you asked that question about the database. 

The CHAIRMAN. All right. 

Senator Nelson? 

Senator NELSON. Representing a State like Florida where a high 

percentage of our population is elderly, it is not infrequently that 

I get the panicked call to one of our Florida offices from a senior 

citizen with, for example, what happened last week, a bill from the 

hospital of $40,000. When we got into it on behalf of the senior, 

what was worked out was a bill of about $4,000. So it basically is 

another example of the thesis of your article. 

Now, beyond that, I am concerned, as we implement the Affordable Care Act, and we are seeing, at least in Florida, hospitals buying up doctors’ practices and other health care provider practices 

since we set up Accountable Care Organizations under the bill— 

and we want to encourage physicians to get together in order to get 

efficiencies of scale, sharing of information about patients, therefore elimination of duplication—whether this is a good thing to promote. 

Here is what is happening, and I would like your comments. Hospitals are buying the doctors’ practices, then a patient in a doctor’s 

practice in an ACO not owned by the hospital has an emergency. 

They end up in the hospital. Whatever the problem is, it is taken 

care of, and now they are ready to exit the hospital and they refer 

them to one of their doctors’ practices that the hospital owns, and 

in some cases their original doctor does not even know about it, is 

never informed, and is cut completely out of the loop. 

Now, other than stealing patients, which this system would lend 

itself to, it clearly is a way of consolidating power by whoever owns 

all of the medical services. Now, this is contrary to the competition 

that we were trying to create in Obamacare. Can you all comment, 

please? 

Dr. GINSBURG. Sure. I would be glad to comment. I think the 

pressures on physicians in small practices to change, either to become employed by a hospital or to perhaps join a large physician 

organization, are very intense now. 

I believe that if they could join physician organizations, whether 

they are medical groups, independent practice associations—which 

are looser organizations which have had success in California and 

24 

Massachusetts—that makes the market more competitive than 

when hospitals employ physicians. 

So I think it is an opportunity for insurance companies and for 

governments to take steps to foster and encourage the development 

of physician organizations. I think the medical profession would 

rather that be the result than that their members all work for hospitals. 

Senator NELSON. Well, that is the theory of the ACOs. 

Dr. GINSBURG. That is right. 

Senator NELSON. But what is happening is consolidation of the 

hospitals—exactly the opposite. 

Dr. GINSBURG. That is right. Well, ACOs—— 

Senator NELSON. So what do we do? 

Dr. GINSBURG. The ACOs can be led by hospitals, they can be led 

by physician organizations, or they could be exclusively a physician 

organization. I was actually very pleased with the most recent announcement by CMS at the beginning of this year about its new 

ACO contracts, that a majority of them were for ACOs led by physician organizations, and they have in fact eased some of the requirements for physician organizations to contract with them for 

ACOs. 

So I think, if you can think back to the 1970s, the Federal Government did a lot to foster the development of health maintenance 

organizations. There may be an opportunity for the Federal Government to foster development of physician organizations. 

Dr. COLELLA. I could just give you a personal experience. As a 

physician who practiced, I saw two things in the 1980s when there 

was another wave of consolidation to take capitated contracts. The 

model of physicians employed by hospitals is a business model that 

usually does not work. You usually create low-handicapped golfers 

at that point, because you take away the incentive to work harder. 

While I totally agree with Dr. Ginsburg that this is an opportunity, if we have physician-driven organizations that compete in 

a free market and competition is based on the common denominator of transparency on quality and price, you will have a much 

more efficient market, and costs in every free market come down. 

I would ask anybody to show me a market where it is a free market, where there is competition, and we have not seen prices come 

down. 

Senator NELSON. I do not know how we would do that if, in a 

given urban market, the hospitals are owning most of the practices. 

The CHAIRMAN. Thank you, Senator. 

Senator Burr? 

Senator BURR. Thank you, Mr. Chairman. I am shocked at what 

Senator Nelson has uncovered, that providers would do exactly 

what we designed and take advantage of it. I might say that Blue 

Cross Blue Shield has experimented in Florida with actually owning their own provider networks, doctors, and the insurer, cutting 

the hospitals out. 

So to say that everything emanates good from up here, there are 

experiments going on in every community across the country. I remember when Safeway was that model up on the pedestal that we 

all looked at and said, gee, look at what can happen. But I will get 

to that. 

25 

Mr. Brill, your article was very informative. 

Mr. BRILL. Thank you, sir. 

Senator BURR. It has been diluted to some degree. I have to tell 

you, in full disclosure, I have taken health care money. I do not 

know how much; I cannot tell you from whom. But I think it is a 

cheap shot to come in here and say that has contributed to the 

health care model that we have today. I do not think any members 

have written more reform legislation than Dr. Coburn and I, and 

we have never been influenced by where we took money from. 

Mr. BRILL. It would be a cheap shot, if it is what I said. 

Senator BURR. I think it is a convenient excuse some people use, 

but there are many members who take it seriously up here. 

Dr. Delbanco, will Safeway’s model be able to exist with the Affordable Care Act? 

Dr. DELBANCO. There have been questions about the annual outof-pocket max, how much consumers are going to be spending out 

of their own pocket, and the cap on that, and whether or not you 

can still have a reference pricing model with that cap in effect. 

There are some health insurance companies that are moving full 

steam ahead, saying yes, we think that there is still plenty of financial incentive within that maximum amount we want consumers to spend out of pocket to encourage them to seek care for 

more affordable choices. 

Senator BURR. But if their model does not check all the boxes— 

well, they are grandfathered, right? 

Dr. DELBANCO. Who? 

Senator BURR. Safeway. Are most of the large corporations that 

make up your group grandfathered from the Affordable Care Act? 

Dr. DELBANCO. I have not done a poll of all of them to know exactly which position they are taking. 

Senator BURR. All right. 

We have had a lot of talk about Medicare. Let me just suggest 

that I think we have made great strides when we instituted Medicare Part D. We thought about it from outside the box, I think. We 

created an insurance model. Yes, we did not go as far as to say the 

Federal Government can go out and do what the VA does, but what 

we found was a marketplace that reacted even better, I think. 

In many cases, our projections on what the cost was going to be 

for risk-takers to provide certain structures or formularies actually 

has come down, in large measure because generics were used, in 

other measures because patent lives expired and we had some of 

the blockbuster drugs go off of patent. 

But what we found was that we had a more positive cost experience than what we had designed. The one thing that we learned 

from that that we did not anticipate was that seniors do not like 

choice. When given a choice between something and something 

else, it was hard to make a decision. 

I think, at the end of the day, the person who most served as the 

navigator for a senior was a child, not a health care professional. 

This should be alarming. Even as one who had 19 years in policy, 

it was tough for me to try to determine how to navigate for my parents. 

Let me suggest to you that part of our health care reform has 

to be putting health care providers back in the consultation and deVerDate Nov 24 2008 21:10 Apr 22, 2014 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 R:\DOCS\87496.000 TIMD
26 

cision role, and I think, Dr. Colella, it gets at the heart of what you 

talked about, which is tying cost and quality together, if I remember. 

If we do not judge quality, then cost is an irrelevant thing. It is 

either affordable for somebody or not. Part of the quality is going 

to come from the relationship between the medical professional and 

the patient. 

Let me ask all of you, is there any value to us going back to a 

health care system that really resembles 30 years ago, when we got 

a service delivered, we paid for it out of our pocket, and then we 

were reimbursed when we filed back to our insurance company? 

Have we become so insulated as patients that we have no concerns 

about what the cost is, therefore we do not assess value because 

we do not know what we paid for something? 

Mr. BRILL. I think that what I saw when I did my reporting, Senator, is that that has, in the last couple of years, changed a lot, 

where it is now relevant to everybody, because deductibles are 

higher, co-pays are higher. 

I think where it is definitely the case—and you may recall I 

wrote about this—one of the patients who had $335,000 worth of 

bills, he was on Medicare, and his out-of-pocket expense was 

$1,139. He would just wake up in the morning and go to some doctor. He had a bunion, and it cost him 82 cents, but it cost the taxpayers $60, as I recall. So he had no skin in the game at all. 

I think Medicare really needs to look at that from top to bottom. 

This man is basically upper middle class. He could easily have afforded more than 84 cents on the whim of having a doctor look at 

his bunion. But I think that all of us who go to doctors who are 

not in Medicare, we now have pretty much everyone who has a lot 

of skin in the game, which is why I think the reaction, frankly, to 

the article was much stronger than I expected, because everybody 

has a story now. Everybody has an experience. 

Dr. GINSBURG. I want to point something out, that over the last 

10 years, as Mr. Brill was mentioning, there has been a very substantial increase in the degree to which privately insured patients 

need to pay part of the cost of their care. That is continuing. 

What is striking is the contrast with Medicare, because Medicare’s benefit design has not changed, and supplemental coverage 

is just so common that your typical Medicare beneficiaries pays 

nothing at the point of service for care. I am not sure how long that 

divergence is going to continue. 

Senator BURR. No, I agree with you. With the supplemental care, 

you can buy down any risk exposure, and that is not a good thing. 

If I could, Mr. Chairman, just one last statement. 

The CHAIRMAN. Very, very short, please. 

Senator BURR. Over 10 years ago, I remember having a conversation with Mike Hash, who was then CMS Director. It was over a 

new technology called contrast imaging. The fact is, CMS had no 

code for contrast imaging. We went through months of the need to 

do this, because contrast imaging compared to non-contrast gave 

one greater clarity of the diagnosis. It is common practice today. 

But I remember the day he called me, and he said, ‘‘We have a 

solution to the problem.’’ I said, ‘‘What is that?’’ He said, ‘‘We are 

going to reimburse non-contrast imaging at the same number as 

27 

contrast imaging, and the two will just sort of work themselves 

out.’’ 

I was dumbfounded at the other end of the phone, that all of a 

sudden we had created a reason for every hospital administrator to 

become a crook because, if you eliminate the thing that has the 

best result from a diagnostic standpoint, you will tell them, only do 

non-contrast because, if it does not show it, we can do all these 

other tests and they will pay the bill. 

I think what I have heard from all of you is that our health care 

system needs to be redesigned. It needs to focus on patients playing 

a large role in, not only their choice, but cost playing a big role and 

quality playing a big role in the choice. 

Mr. Chairman, it is going to be a big task for us, but I think 

Medicare is the 800-pound gorilla in the room. When we are willing 

to reform Medicare as we know it today, I think we will have a private system that in fact follows. 

The CHAIRMAN. Senator Casey? 

Senator CASEY. Thank you, Mr. Chairman. We want to thank the 

members of the panel for being here, for your testimony and your 

scholarship. It is important that we get this right. One of the ways 

that we are going to get it right—and when I say ‘‘we,’’ I mean both 

parties here and anyone who is interested in improving our health 

care system—one way we get it right is by trying to find the answers to difficult questions. Mr. Brill, your article reminded us why 

we have a free press, even when it makes us uncomfortable. But 

we are grateful for the work that went into that. 

Mr. BRILL. Thank you. 

Senator CASEY. I have a question that I am going to ask all of 

you, but I start with a line—I know it is not the best way to summarize testimony, but, Dr. Ginsburg, on page 3 of your testimony 

you say, ‘‘I perceive the greatest potential to obtain lower prices 

comes from approaches where purchasers and health plans, rather 

than report prices to their enrollees, analyze extensive data on cost 

and quality and provide their enrollees very simple incentives to 

choose providers determined to be higher value.’’ 

So you talk about analyzing data that would undergird the provision of incentives. Can you tell me why you made that statement 

and why you came to the conclusion that that is the best way to 

lower prices? 

Dr. GINSBURG. Yes. Well, sometimes we look at examples where 

there are opportunities to lower prices. If somebody needs an MRI, 

we tell them that it costs less at a freestanding facility than in the 

hospital outpatient department. But there is so much of care that 

is not scheduled. 

I think we might just use incentives like, we have assessed the 

different hospitals in this community, and we feel that this group 

of hospitals has higher value than the other group of hospitals, so 

we are just going to give you a lower deductible if you go to the 

preferred tier of hospitals. 

I think there is a limit to the complexity that consumers are willing to deal with. You do not just give them a lot of price information when they are worried and sick; it is very complicated. So in 

a sense, I see a role of someone else digesting the information, and 

in a sense it is not a transparent approach, although I think it is 

28 

an effective approach, just to say, we have made a judgment as to 

which providers are higher value and, if you go to them, you will 

pay less. 

Senator CASEY. So we come to that question of incentives. I 

wanted to ask each of you a question. I have 2 minutes, but it is 

a little bit of a lightning round. But Column A and Column B: Column A would be any provision in the Affordable Care Act that you 

think positively impacts this problem that we have discussed here 

today. 

Column B, even if Column A has none—as I think Mr. Brill will 

say based upon your earlier testimony—even if Column A is no provisions, no positive effect, what should we be working on for Column B? What policies, just by way of itemization or listing of 

them? I will start with Mr. Brill and we will go left to right. 

Mr. BRILL. Yes. I would just remind the Senator that I did write 

that there are a lot of very good, positive provisions in the Affordable Care Act, but they do not attack the price issue. 

Senator CASEY. Right. But if you had to make your lists of steps 

we should take—— 

Mr. BRILL. Well, I tested one in the article. The more I think 

about it, and the more I have gotten reaction, and the more I do 

the math, the more I think it works, which is, if you lowered the 

Medicare age, you would actually save money compared to what it 

is going to cost us to fund the subsidies on insurance premiums 

under the Affordable Care Act. 

Senator CASEY. You had that example of the 64-year-old, 11- 

month person. 

Mr. BRILL. Yes. She would have saved money if she had been a 

month older, but actually the government, under the new regime, 

would have saved money. 

Senator CASEY. Thank you. 

Dr. Delbanco? 

Dr. DELBANCO. So I would take it in a different direction and 

talk about how some of the new payment models that are being 

stimulated by the Affordable Care Act will help in this case, because, first of all, consumers do not know enough to know what individual components go into their care. If you look at the individual 

payments made under fee-for-service, it is unintelligible. 

I think, whether it is bundled payment, global payment, or the 

new methods, they should be tied to quality performance, where it 

is not just, you get to earn more as a provider if you do well, but 

actually, you will take on some risk if you not only go over budget, 

but if you do not perform well on the quality measures. I think we 

could go a long way to creating incentives for all parties to not only 

choose higher-value providers, but for providers themselves to be 

higher-value. 

Senator CASEY. We are out of time, so if you could itemize them 

quickly. 

The CHAIRMAN. Go ahead. 

Dr. GINSBURG. Yes. I would say that our premium credits do not 

depend on which plan you enroll in, so people have very strong incentives to get a lower premium. What we are seeing is a lot of innovation in network design and plans in response to that so that 

plans are not including the lowest-value, most-expensive providers 

29 

in their networks and the plans they are offering on exchanges. I 

think that is a positive change. 

Senator CASEY. Dr. Colella, you get the last word. 

Dr. COLELLA. I will try to make a long story short, which is really hard for me. People respond to incentives, and, if we pay doctors 

in a different way, with bundled payments like Suzanne was saying, or we provide data to consumers with incentives, we will actually see changes in behavior. 

Senator CASEY. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

Next is a very good friend of mine, a wonderful Senator, and 

today happens to be his birthday. 

Senator ROCKEFELLER. Oh. That is me. 

The CHAIRMAN. Senator Rockefeller? 

Senator ROCKEFELLER. Thank you, Mr. Chairman. 

I am struck, Dr. Ginsburg, by your present and previous position 

with the Independent Payment Advisory Board. I want to relate 

my question to the fact that the increase in prices is not just a 

problem for the consumers, but it is the underlying cause of the 

sustained growth of the cost of health care, which is growing faster 

than the rate of inflation. We cannot live with that, so we have to 

do some dramatic things. 

I have always felt that fee-for-service built in an inefficient system, because it relied on others who did not have public judgment 

or a concept of fairness, or whatever, to make decisions. I refer you 

to the incredible battle we had with the health insurance industry, 

as much a layering on of lobbying and money if I have ever seen 

one. We had this thing called the public option. Everybody loved 

it. There was just one problem: we could not get any votes in the 

Senate Finance Committee. I tried it and got nine, Senator Schumer tried another one and got 10, so it was dead. 

Everybody screamed and yelled that anything other than a public option was traitorous to the American people. So we came up 

in the Commerce Committee with something called a medical loss 

ratio. Nobody can understand what that means, which is key to 

calling up a bill if you are of good faith and good heart. 

What that simply said was, it worked off the concept of Ingenix, 

which is my parallel to chargemasters. They work differently, but 

they controlled basically the same things, until they were brought 

down by an Andrew Cuomo-initiated court suit in New York and 

then by our legislation, that said they had to pay—it was sort of 

simple and brutal. They had to pay 80 or 85 percent, depending 

upon the size of their business they were insuring, or the number 

of people. 

They had to pay 80 or 85 percent on health care that made people better, and then we were watching them because, if they did 

not do it, then they had to start rebating to the American people, 

and already the thing is only a year and a half old and several billion dollars have been rebated to the American people. People come 

up to me in West Virginia and ask, ‘‘What is this check for?’’ They 

will figure that out. I am trying to make a comparison again about 

fee-for-service not being good. 

30 

My answer to that in part is in fact IPAB, which is not wildly 

popular in either the House or the Senate. But it is in the Affordable Care Act, and I think it is a very good instrument, because 

it takes away from lobbyists, Mr. Brill, and takes away from Congress people, Mr. Brill, the ability to make a decision about how 

we reimburse Medicare, the largest of all spenders in health care, 

and puts in the hands of 15 people like yourself—Gail Wilensky, 

Stuart Altman, and the next generation, the next generation of 

those people—the sole power to make those decisions: how do you 

reimburse physicians, how do you reimburse big hospitals? 

I mean, I have watched big hospitals buying up more little hospitals, and it is repulsive. It is an act of growth and not an act of 

better medicine. I like that IPAB system, because it controls costs, 

it is done by wise people who are not subject as easily to lobbying, 

because you already know it all, and you make wise judgments 

based upon the transparency of information, which I support. 

But I also support the idea that you give consumers a lot of information, and sometimes it is distressing—I say this respectfully— 

to them or to me, how to make a decision from that. 

But deciding how much people are reimbursed under Medicare— 

doctors, hospitals and others—is to me the most powerful instrument for the control of the cost of health care and, therefore, also 

obliterates this ridiculous situation which Mr. Brill reports, that 

the poor pay more than the non-poor in our hospital system. 

Could you respond? 

Dr. GINSBURG. Sure. Senator, the overall idea of delegating some 

authority to a committee or a commission of wise people to make 

detailed decisions where perhaps, in the absence of lobbying, they 

could make wiser decisions, I have always seen that as an attractive idea. I wrote an article about that a number of years back before the Affordable Care Act. 

What I am concerned about is the way IPAB came out. Because 

many members of Congress were so reluctant to delegate their authority, IPAB’s authority is so constrained and so limited that, 

really, pretty much the only tool it has is to squeeze provider payments, which is something that Medicare has been pretty good at. 

I do not think it needs the IPAB to do that. 

Senator ROCKEFELLER. But it takes a two-thirds majority to override it, your decision. 

Dr. GINSBURG. Yes. But I am saying, as far as hospital rates go, 

physician rates, they are on auto-pilot. Congress can always say 

they should be lower. That is what I mean. I think that the opportunities in Medicare to reduce costs long-term come in provider 

payment reform. 

I am very enthusiastic about the vigorous piloting programs that 

the Innovation Center at CMS is running on ACOs, bundled payments, medical homes. I think that is where the future is as far 

as cost containment, as opposed to an IPAB which is limited—I 

think improperly—to just adjusting provider payment rates. 

Senator ROCKEFELLER. I thought I threw you a softball, and you 

hit it all the way to the pitcher’s mound, but I still think you are 

terrific. 

Dr. GINSBURG. Thanks. 

Senator ROCKEFELLER. Thank you, Mr. Chairman. 

31 

The CHAIRMAN. Thank you, Senator. 

It is my understanding that, even though there is a wide variation among hospitals, say, for certain procedures—colonoscopy has 

been referred to several times—that there is much less variation in 

what Medicare pays around the country for that same procedure. 

I saw a chart somewhere. It is pretty flat around the country. It 

is flat-lined. There is not a lot of variation. The variation is much 

more in the private sector; it is not Medicare. If that is accurate, 

I would like to know why we have not yet focused on the variation 

in private pay? 

Dr. GINSBURG. Yes, that is entirely accurate. 

The CHAIRMAN. And then also, what data are Medicare and CMS 

going to release? Is it just with respect to Medicare reimbursement, 

or does Medicare also have the data on private pay charges? 

Dr. GINSBURG. That is right. The Medicare payment rates do not 

vary much. Basically, all hospitals are paid the same for DRG except for the index of local input prices, and, if they are a teaching 

hospital, they get an extra amount for that, or if they are a disproportionate share hospital. But it is generally uniform, whereas 

private payments vary enormously. 

The CHAIRMAN. I know. My question, though, is, what do we do 

about the private side, assuming that Medicare is doing a decent 

job? 

Dr. GINSBURG. Sure. One thing that has not come up in this 

hearing is—we have talked about how to use competition to address some of the variation of prices on the private side—but nobody has mentioned the other alternative, which is to regulate 

those prices the way, say, Maryland has done for hospitals. 

The CHAIRMAN. Could you explain that? What does Maryland do 

with respect to regulation of private payers? 

Dr. GINSBURG. Yes. Well, Maryland, since the late 1970s, has 

been setting the rates that hospitals in the State can charge. It 

also sets—— 

The CHAIRMAN. Mr. Brill, what about that? Does that make 

sense? 

Mr. BRILL. It seems to work. In a world of perfect information, 

I will tell you what the information ought to be. There ought to be 

sort of a 5-column price list for a hospital. One column is, what 

does Medicare pay for that; another would be, what does the 

chargemaster say—that one would be all the way over there—and 

then what do the three largest insurance companies doing business 

with that hospital, what do each of them pay? 

So those would be your five columns. If you publish those five 

columns—and that is really kind of a summary of the work that 

Dr. Colella is trying to do in one respect—if you publish those five 

columns, those columns would start to come together very quickly, 

because it is just too—— 

The CHAIRMAN. What about quality? There is a lot of discussion 

here that just transparency alone is not sufficient. 

Mr. BRILL. Well, I am describing there—— 

The CHAIRMAN. I am asking now about quality. What is the quality input in those columns? 

Dr. DELBANCO. I think part of how you reduce payment variation 

is, you have much more transparency on quality. You start asking 

32 

your provider, justify to me that you are 40 percent better than 

that hospital down the street, and, if you cannot prove it to me 

based on quality, then I know where to go for a better value. 

So I think the quality measures have to be those where there is 

the greatest disparity among providers, not just the quality measures that are the easiest to report and sort of the least offensive 

to providers. I think if we move toward those quality measures that 

really show differentiation, payment variation will reduce along 

with that. 

The CHAIRMAN. How far along are we in measuring quality? 

Dr. DELBANCO. We have many, many, many quality measures. I 

think the problem is, we have probably too many now and not 

enough that focus on exactly those points where there is the greatest opportunity for reducing harm if we improve quality and where 

there is the greatest variation in performance. We tend to measure 

things that are easy to collect data on and that show very little difference among providers. 

The CHAIRMAN. So how would you synthesize or bring together 

these quality measures? What would you do? 

Dr. DELBANCO. I would look to see where the greatest complications are, the greatest risk of mortality is, and where the greatest 

disparity in costs is. I would use those as the criteria for selecting 

a more parsimonious set of quality measures than the huge proliferation we have today of measures that do not help consumers 

very much. 

The CHAIRMAN. All right. Thank you. 

Senator Menendez, you are next. Thank you. 

Senator MENENDEZ. Thank you, Mr. Chairman. On a day of competing hearings, I thought this was an incredibly important one to 

come to, but now that I know it is Senator Rockefeller’s birthday, 

it is an extremely important one to come to. So Jay, happy birthday. Many more. 

Let me thank the panel for their testimony. Mr. Brill, in your article, you make very little mention of health reform and how it 

could help resolve or mitigate many of the issues you discuss. For 

example, when you describe a couple who are faced with high fees 

related to cancer treatment, you say that ‘‘Obamacare does nothing 

to prevent the high costs.’’ 

Yet I would suggest to you, by limiting the low-quality mini-med 

plans which do not provide comprehensive coverage and expanding 

access to insurance that is required to provide standard benefits 

and meet specific quality standards, that couple will not have to 

worry about paying out of pocket for what—— 

Mr. BRILL. Actually, that is what the article says in the paragraph right below the one you just quoted. 

Senator MENENDEZ. Well, first of all, I would appreciate it if you 

would just let me finish my question first. 

Mr. BRILL. Sorry, Senator. 

Senator MENENDEZ. So that couple will not have to worry about 

paying out-of-pocket expenses. In addition to that, there are States 

like New Jersey that have a law capping hospital charges to 115 

percent of the Medicare rates for anyone earning under 500 percent 

of poverty. So, as a result, less than 5 percent of patients could 

even be potentially subjected to a chargemaster rate, and those are 

33 

people who make enough to afford insurance but often choose not 

to purchase it. 

Here is the question. Considering the vast array of insurance 

regulations and consumer protections provided and enacted, by 

both the States and as part of the Affordable Care Act, in addition 

to the expansion of coverage to millions of Americans who are currently unable to find it, do you not agree that a large part of this 

problem has been addressed in some very meaningful ways? 

Mr. BRILL. No. 

Senator MENENDEZ. All right. So, with the facts that I have just 

finished describing to you, how is that not responsive in part to 

this challenge? 

Mr. BRILL. Well, I am sorry, Senator, but those are not the facts. 

In New Jersey, for example, many more people fall through the 

cracks of the regulations limiting the chargemaster charges. 

There was a case I looked at at the Passaic Hospital, which is 

not in the article, of a doctor who was able to bill someone, and 

then ultimately an insurance company, $9,600 for a half hour’s 

worth of care in the emergency room, and the regulations did not 

cover that. So I just do not agree with your characterization of 

what the article says. 

Senator MENENDEZ. Well, do you not agree that limiting the lowquality mini-med plans and providing comprehensive coverage is in 

fact in part dealing with this challenge? 

Mr. BRILL. Exactly, which is why I wrote just exactly that in the 

article. That is what the article says. What I also said is that 

Obamacare does not address the other fundamental problem, which 

is the high prices. The patient who is asked to pay $13,700 for his first transfusion 

of a cancer drug, he has two problems. The first is, he does not 

know that that is the price, but the second is, there is nothing he 

can do about it, because that is the price. Obamacare does zero, 

nothing, to address that. 

As you point out, though, Obamacare would eliminate the kind 

of insurance policy he had that forces him to pay that. That is a 

good thing, and the article says that. It does not eliminate the fact 

that somebody—in this case it is now going to be the taxpayer— 

is going to pay that $13,700 for a drug that cost the drug company 

about $200. 

Senator MENENDEZ. Well, that is a whole different question. Let 

me just ask you this, then. So are you suggesting that part of the 

solution is some form of price control? 

Mr. BRILL. That is also in the article. Price control for patented, 

lifesaving drugs, I think, is necessary, and it is an experiment that 

has been tried by every other country in the world. 

Senator MENENDEZ. Well, let us forget about the drug for the moment. You just described a procedure. Should there be price controls for procedures? 

Mr. BRILL. What I described was $13,700 for a drug, Senator. 

Senator MENENDEZ. All right. Do you have procedures that you 

think there should be price controls for? 

Mr. BRILL. No. I am not advocating anything. 

Senator MENENDEZ. So it is only when you come to medications 

that you think there should be price controls. 

34 

Mr. BRILL. No. I think that, as the article suggests, there should 

be all kinds of interferences in the marketplace, because it is not 

a free marketplace. There should be some interference in the marketplace where supposedly nonprofit hospitals are the most profitable businesses in the community, including many in your State. 

There should be interference with the marketplace where doctors 

are having lab tests done in labs that they have invested in. There 

should be interference in that marketplace, yes. 

Senator MENENDEZ. Dr. Colella, let me turn to you. Your company shares a laudable goal of increasing transparency and access 

to health care information. I think that is incredibly important. I 

agree that empowering people to make better decisions about their 

health care is the first step in really transforming our health care 

system. 

But I think it is important we provide data that is easily understood and properly used. For example, in your testimony you mentioned the wide variation in the cost of a colonoscopy, for example, 

even within the same network and within the same region. You 

correctly say that we have no way of knowing if the higher-cost 

procedure is the highest-quality one. 

However, what we do not know from your testimony are some of 

the outside factors that could account for the differences in cost. 

For example, is the highest-cost procedure provided in an emergency room that factors in all the additional costs associated with 

running a 24-hour/7-day-a-week emergency department, or is the 

lowest-cost procedure offered in a single physician’s practice without those overheads? Which is to say, the total cost of the procedure varies widely, but why is equally as important for us to know 

so that we can make determinations. 

This is the question: with so many different factors going into 

pricing any given procedure, how can we increase access to data in 

a way that provides people with usable information? 

Dr. COLELLA. Senator, thank you for the question. There are two 

parts to this. The first one is, our application, our software, allows 

you to understand where the procedure—in this case the colonoscopy—is done. So you would know if it is done in ambulatory services, in an emergency room, or if it is done in a hospital. Not only 

that, we even give you outcomes and specific quality measurements 

on the physician who is doing it. So we empower the consumer already to do that. 

For the second part of your question—which is more of a policy 

one and is absolutely a very fair question, and I appreciate you 

asking it—how do we account for all the variables in this? Please 

give us data. You are sitting on a lot of Medicare data. The more 

data we can get, the more we can actually provide the right quality 

and cost information to consumers. 

Senator MENENDEZ. All right. 

Mr. Chairman, I heard earlier that Mr. Brill suggested that we 

should be scrolling contributions to members. I think that is an interesting idea. I think we should also be scrolling the advertising 

and/or the contributions to organizations that appear before the 

committee so we know the perspective of those who are testifying 

before the committee. I think it would be an interesting proposition. 

35 

Thank you, Mr. Chairman. 

The CHAIRMAN. I have a couple more questions. Some hospitals 

I see are pretty fancy. They have fountains, Taj Mahals, and so 

forth. I just wonder why. You mentioned executive salaries. I do 

not want to paint all executives with one brush. 

Mr. BRILL. No. 

The CHAIRMAN. But it is a question. So my question is, at least 

with respect to DRGs and Medicare, to what degree do they calculate in, or do they not at all, hospital costs for the fountains and 

all that? 

Mr. BRILL. They actually do. They actually calculate all the average overhead for the average hospital, so they do take account of 

that. I think what we have seen is sort of like what a lot of people 

say they have seen with higher education: higher prices, higher salaries, more building, an over-supply of courses, an over-supply of 

beds in the United States, and everybody just keeps getting bigger, 

and therefore their costs are higher. There really are not the kinds 

of economies of scale that one would expect, at least that is what 

I found in my reporting. My colleagues here would know a lot more 

about that. 

The CHAIRMAN. Does Medicare also pay more for fancier hospitals? 

Mr. BRILL. No, not in theory. That is not how the DRGs are done. 

The CHAIRMAN. Right. So then, is it private payers that make up 

the difference? Is that basically what happens? 

Dr. DELBANCO. Well, I think what is happening is that people do 

not have the most accurate and objective data on which to make 

a choice of hospitals, so they look at what it looks like. They look 

at the ease of parking, they look at patient satisfaction. 

All of this matters, but it does not matter as much, when someone gets sick, as whether or not they are going to get the right care 

that they need. I think if we can balance the more superficial elements with ones that are meaningful to consumers, we will do a 

better job of right-sizing those kinds of expenditures. 

Dr. GINSBURG. Yes. You have some hospitals that have musthave status: insurers need to have them in their networks. Those 

are the ones that can charge the highest prices and, if they want, 

build palatial facilities. There are a lot of hospitals that do not 

have that power, and their facilities are pretty mundane. 

Clearly, Medicaid is not a profitable payer for hospitals. It appears to be generally adequate. Hospitals that do not have the ability to generate large margins on privately insured patients are usually able to get to a positive Medicare margin, get their costs down 

enough so that Medicare is paying its way. 

But it is, overall, an issue of, with a third-party payment for 

health care, with student loans for higher education, they are both 

very important programs, but in a sense they start removing the 

consumer from the cost of these things, and one of the results is 

that costs go up. 

The CHAIRMAN. All right. Oh, I am sorry. Chuck came back. I did 

not see you. 

Senator Schumer, you are next. 

Senator SCHUMER. Thank you, Mr. Chairman. I thank all the 

witnesses. I am sorry I could not be here for most of it. I would 

36 

just like to first pick up what Dr. Ginsburg said. Well, I want to 

start with another question. I am a large defender of our great 

teaching hospitals in New York. Your study, Dr. Ginsburg, said 

what we have been saying all along. 

I go to them, and I say, why are your costs so much higher, and 

they tell me, because they are higher. Even Dartmouth’s study and 

things like that, they factor out rent and the high cost of living in 

New York, which is higher, but not that much. What they basically 

say is, such a large proportion of the people who come there—— 

The CHAIRMAN. Patients. 

Senator SCHUMER. Patients. That is the word I was looking for. 

I am getting old. [Laughter.] Such a large proportion of our patients have very complicated conditions. We are the place of last resort. When the hospital in Paduca, KY cannot really do it, they say, 

you had better go here. We take them, and there is all of this. But 

that is why their costs are much higher. Your studies seem to show 

that that is the reason, overall, of most of the high costs. 

Could you just elaborate on that a little bit? Then I would like 

to hear what my good friend Steve Brill has to say about that. 

Dr. GINSBURG. Yes. Actually, I do not recall having studied 

teaching hospitals—— 

Senator SCHUMER. Per se, I know. 

Dr. GINSBURG [continuing]. Per se. In a sense, the studies I have 

done are just looking at price variation. 

Senator SCHUMER. Yes. 

Dr. GINSBURG. Of course, Medicare, when it created the prospective payment DRG system, actually was so concerned about not 

paying enough to teaching hospitals—not so much for the teaching 

function, they paid directly for that, but for the concern that the 

patients are more complicated and are not going to be picked up 

by the DRG—that they have what we call the indirect teaching adjustments. 

Senator SCHUMER. Yes. 

Dr. GINSBURG. MedPAC, over the years, has said that it is too 

high. The adjustment is too high. 

Senator SCHUMER. I do not agree with MedPAC on that issue, as 

you know. But you are right. Go ahead. 

Dr. GINSBURG. So, in a sense, I think we understand that teaching hospitals will cost more, both because of the teaching and because of the differences in patient mix that our DRG system—— 

Senator SCHUMER. Just does not have. Right. 

Steve? Mr. Brill? 

Mr. BRILL. Senator, I do not think I know nearly as much as Dr. 

Ginsburg or the other panelists about how fair as a general matter 

the DRG is, or how fair it is to teaching hospitals. But I will tell 

you that, just in looking at the hospitals I looked at, with the bills 

that I looked at, I do not think the issue was that Medicare was 

under-paying or cheating these hospitals. 

Again, I am just reminded of one of the quotes in the article from 

Mr. Blum, who, as you know, is a senior CMS official, who said, 

if you think hospitals lose money on Medicare, just drive down any 

highway in Florida and look at all the billboards. What are they 

advertising? It is hospitals advertising for patients. Who are the 

37 

patients they are advertising for? It is not teenagers, it is people 

in Medicare. 

Senator SCHUMER. Yes, but that is a different issue. 

Mr. BRILL. It is a different issue, yes. 

Senator SCHUMER. Hip replacement or something that is standard, you have every leg to stand on—bad metaphor. [Laughter.] 

You have good grounds in terms of your argument. But when you 

are dealing with—take Sloane Kettering, a hospital you criticized 

in your article. So many of their patients have rare, unique, untreatable in other places types of cancers, that the costs are higher, 

the reimbursement rates do not recognize most of that, and it puts 

a lot of pressure on them that may come out in unfortunate ways. 

But the bottom line is, we need these unique institutions, because they treat patients that other places have tried and failed to 

treat, or cannot treat. Do you not agree with that? 

Mr. BRILL. Yes, I do. 

Senator SCHUMER. All right. Good. 

Mr. BRILL. With all respect, I take a little bit of issue with the 

notion that I criticized Sloane Kettering in that piece. I did point 

out that their survival rate is in fact their business plan. It is even 

in the bond offerings that they write. What I did say was that 

whatever their costs are—as you know, cancer reimbursement with 

Medicare is sort of a special case with special formulas. 

But the only thing I did say about Sloane Kettering was that, in 

one way, it was emblematic of the alternate universe that is health 

care, where the top fundraiser for Sloane Kettering, to take one example—you shrug it off because it is not a lot of money—but the 

top fundraiser for Sloane Kettering makes three times as much as 

the top development officer of Harvard. I just use that as a metaphor for the different world of health care economics. It was not a 

criticism of Sloane Kettering, which is a marvelous place. 

To put it in even more perspective, I hope I made clear, and I 

will make clear now, that we are not talking about evil people here. 

We are talking about a marketplace that just does not work, does 

not make anyone really price-accountable. What happens, whether 

it is in higher education or medicine or something else, when marketplaces do not work, people tend to maximize their income. 

Senator SCHUMER. Yes. And the marketplace—that is the fundamental problem here. I tend to have sympathy for the idea that, 

because people are not paying themselves, either it is Medicare, 

Medicaid, or insurance for most people, or they are uninsured and 

it gets picked up by some other big pool—that the market system 

does not work in health care. 

I—and I am sure some of my colleagues have gone over this— 

am dubious of the fact that, if you give consumers information, particularly in a complicated area here, there are some who will look 

at their bill and say, why did I pay $2,000 for somebody I never 

saw, but most people will not, because they are not paying for it. 

That is why, at least in my opinion—I mean, I was for a public 

option. I was more sympathetic than I usually would be to a singlepayer type system, because when you do not—look, who would not 

give all the money they had to save the life of a loved one? Because 

of that, we have insurance. 

38 

That is the main reason we have insurance. We do not have insurance for cars or houses or anything else where this is the cost 

and you have to pay it no matter who you are, what you are, and 

you are willing to put some money aside each year in case, God forbid, something happens to your spouse, your parents, your kids. 

Because when you do that, you lose market control. That is why 

I have always thought free market models do not really work in 

health care very well. In the Affordable Care Act, we struggled 

with an alternative. We tried to use markets to create competition 

among the big insurers, but, at the consumer level, it is very, very 

hard to get the market to work. You are really rolling a stone uphill. 

Any comments on that? 

Dr. GINSBURG. Actually, this also goes back to what Senator 

Rockefeller brought up before. To me, the most important aspect of 

the public option proposal was not so much to disadvantage insurance companies, it was to apply Medicare pricing power more 

broadly than just in the Medicare program. 

I suspect that that is something we are going to have to come 

to grips with. We are talking a lot about ways to use benefit design, et cetera, to make markets more competitive. We do not know 

how successful we will be. In the background, there is always going 

to be this opportunity of, well, let us just tie it to Medicare payments. 

Dr. COLELLA. Yes, Senator Schumer. First of all, I trained in one 

of the highly specialized hospitals in New York, so I appreciate 

your comments on the fact that they are some of the best ones in 

the world. I could not agree more. I think you raise a very valid 

point. When I practiced medicine, for many years people would 

come in and pay with somebody else’s credit card, so they were 

completely desensitized from the cost of what they were doing. 

The world has changed. In the past 10 years, now we are up to 

60 percent of employers in the United States that are offering highdeductible plans. The out-of-pocket payment has grown exponentially in the past 7 years, and the trend is in that direction. So, 

when you are asking a consumer to pay out of pocket up to $4,000 

or $5,000, which for the average American family is real money, it 

is only fair to provide them with the information necessary to do 

that. That is how markets can work. 

Now, otherwise, we are in the worst of both situations, right, 

where we do not have an efficient market and we are covering 

first-dollar coverage. So that is where the big difference is. 

Senator SCHUMER. Good point. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Yes. Let me just somewhat follow up on that. 

The assumption here is more transparency, more information, 

somehow will get a better result. Let us take Sloane Kettering. Let 

us take teaching hospitals. Let us take some hospital, a much 

smaller hospital, not a teaching hospital, say in my State of Montana. What if all of the information, whatever it all is, were available? 

Let us say a teaching hospital, Sloane Kettering. Let us take the 

teaching hospital. How much is the cost to train residents? How 

much is the extra cost actually? Go on down the list here, just item 

39 

by item by item. So you are in effect the CEO of that hospital, and 

you know what all the charges are. And the CFO of the big hospital, or somebody, knows what is being charged for whatever it is: 

the bed, the MRI, the gauze strips, you name it. 

My thought is that somebody like Dr. Colella, some entrepreneur, would take that information and would develop some kind 

of a program, some kind of an app, that would help a little bit, and 

also would take into consideration a lot of the information that Dr. 

Delbanco talked about, namely with respect to quality. There are 

a lot of questions there, obviously. One is, to what degree would 

that work? The second is, what is proprietary here? What should 

be proprietary here, frankly? 

Mr. BRILL. The analogy may be akin to something I worked on 

in a prior life, which is legal decisions rendered by the courts. They 

are not proprietary, they are public. A lot of the CMS data and a 

lot of the data that hospitals file with the Department of Health 

and Human Services is somehow licensed to, I think it is the American Hospital Association, in one instance, and the AMA for Current Procedural Terminology billing code data. 

They have rules that say that, as Dr. Colella said, if you are a 

for-profit entity—which I guess, when I was doing this article for 

Time magazine, they mistakenly thought that I was representing 

a for-profit entity—you are not entitled to it or you have to explain 

how you are going to use it. It just does not make any sense. I am 

sure it is rooted in history somewhere. 

The CHAIRMAN. Right. Well, I know that is right. That tends to 

happen around here. But that begs the deeper question: how much 

of it should be proprietary? 

Mr. BRILL. Why not—— 

The CHAIRMAN. How much of it is, how much of it should be, 

from the public interest point of view? 

Mr. BRILL. As long as it is not patient data, he could tell the 

large corporations that are hiring him to parse out this pricing information in a hospital, he could tell hospitals who has the most 

efficient operation when it comes to food service or who has the 

most efficient operation when it comes to this or that. All that stuff 

is filed with the government. Some entrepreneur ought to be able 

to make a lot of money, adding a lot of value in this world, by providing it to people. Why not? 

The CHAIRMAN. You are an entrepreneur, Dr. Colella. Why don’t 

you take a crack at it? 

Dr. COLELLA. Yes. I could not agree more. I do not know if we 

are going to make a lot of money. That is not what makes us do 

this. We are really driven by providing a good service to our customers. I ask you, Senator, think of a world where you walk into 

a supermarket and you want to buy cereals, and you have a series 

of boxes there, all different cereals, and you have no price and no 

information on what cereals you are buying, and then you leave 

that supermarket and you get a bill 6 months after that, and you 

cannot read what the bill is. That is completely inefficient. There 

is complete asymmetry of information, and it is the most opaque 

industry in the world. 

The CHAIRMAN. Well, it is worse than that, because I may not 

like that brand of cereal, and I don’t have to buy it. 

40 

Dr. COLELLA. You may not even like what you got. 

The CHAIRMAN. When I am in the hospital, I have to take it. 

Dr. COLELLA. So that is health care today. If you think about it, 

this is the most sacred industry that we have. We are not dealing 

here with bond yields or equity, we are dealing here with madness, 

death, and birth. We are dealing with the most sacred things that 

we have. It is really close to immoral, the fact that we cannot even 

understand what we are buying and what we are paying for it. 

The CHAIRMAN. I am going to go back to my question. I am trying to game this out, red flag it. What is the down-side? What is 

the other side of the coin here? That is why I asked the question 

about proprietary information, what should or should not be proprietary. Yes? 

Dr. DELBANCO. So I think maybe the better analogy is, when you 

are in the grocery store, each cereal company does not tell you the 

cost of each of the inputs into making that cereal. Part of what I 

think the other side of the argument is—you have asked for that— 

is that I do not think that CFOs actually really know what the cost 

of each of those inputs is. 

There are some line items there, but really what they are operating on is, what is my overall revenue and what are my overall 

costs, what margin do I want to achieve, and how can I do that by 

sort of shifting things around? So I think the more we can understand what the costs of those components are and somehow push 

that to have to be a reality would go a long way. 

I do not think we want to stymie innovation by making everybody reveal exactly the cost of their secret sauce if they think they 

are better at patient through-put, or they think they are better at 

patient quality, or whatever it is. We do not need to know the 

granular detail, but they do. I do not think that they are in a situation where they do it this way. 

The CHAIRMAN. Well, patents clearly should be protected, trademarks. Certain processes do not have patent protection. I am just 

trying to figure out, when we push this point in hospitals, et cetera, 

what reaction might we get that might have some merit? 

Mr. BRILL. Just one note that I am not sure anyone has mentioned yet. I think it is particularly important, because we tend to 

think, with something as important as health care, that the most 

expensive sort must be the best. I mean, one of the magic aspects 

of the chargemaster is, if you get a bill for $47,000 and you see 

that your insurance company got it discounted down to $4,000 and 

you owe $200, you feel great because you just got $47,000 worth 

of medical care. 

If you were comparing and you saw that the hospital next door would only charge you $8,000, you might say, well, I cannot go to 

that hospital, because they are not doing a good job. If you knew 

the costs at both hospitals, then you could see that the $47,000, hypothetically, is not going toward anything having to do with quality, which it is not. 

The CHAIRMAN. Does U.S. News and World Report, that ranks 

the 10 best, include quality? I mean, 10 best, 100 best, or something? 

Dr. COLELLA. I have been a part of the marketing effort to get 

on that when I was practicing, and it is a beauty contest about who 

41 

does the best belly dance. There really is very little about high 

quality in that. Unfortunately, I did not do a great belly dance, obviously, but there is absolutely very little link to quality, with scientific measurements, in that report. 

The CHAIRMAN. Was it you who said that the most expensive had 

the least—— 

Dr. COLELLA. Yes. In Chicago, we have plenty of examples. We 

have plenty of examples that, because of the asymmetry of information in health care, there is very little correlation between price 

and quality. 

The CHAIRMAN. All right. I have a lot of other questions, but it 

is about time to wrap up. Thank you. This was very, very helpful. 

I think you have exposed a lot here. You got a lot of people thinking about this. There is no monopoly on good thinking in this committee, believe me. 

But people listening to this hearing will, I think, come up with 

some good ideas and help us try to find some solutions here. It is 

an abomination. As you know, we pay about 60 percent more per 

person for health care in this country than the next most expensive 

country. There is something not quite right there. I think you put 

your finger on a lot of it. 

I think Senator Schumer is correct when he said market forces 

have a hard time in this area. Maybe it is all right when you are 

buying a car, but when you are buying health care it is very, very 

difficult. Frankly, the Affordable Care Act was an attempt to come 

up with, in my view, a uniquely American solution. 

We did not have any health care system in this country until 

that act was passed, and even now we really do not. But it is a 

uniquely American solution, because we are American. We are not 

Great Britain, we are not France, we are not Germany, we are not 

Japan, we are not Taiwan; we are who we are. 

This committee had to do the best it could, given that we are 

Americans, we are not French and Swiss and Japanese, et cetera. 

I think it is a very good act, because it is a good start. It has a 

lot of warts, a lot of places where things slip through the cracks, 

but it is a good start, and this hearing is going to help us go forward. Thank you. Thank you very much. 

The hearing is adjourned. 

[Whereupon, at 12:16 p.m., the hearing was concluded.] 

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Thanks to health reform, these stories will soon be a thing of the past. The Affordable Care Act will 

ensure heartbreaking stories like Scott's and Sean's are no longer the norm. 

The law got rid of lifetime limits, and by next year, the law will eliminate annual limits as well. 

Families like Rebecca and Scott's will no longer face crippling debt as a result of illness. Insurance 

companies will be required to cover the medical services people need. And by 2016, the law will also 

provide coverage to 26 million Americans who were previously uninsured. 

The health reform law also prevents hospitals from overbilling uninsured patients using inflated 

chargemaster prices. The Administration needs to act quickly to finalize the regulations related to this 

provision. 

The Affordable Care Act also helped increase the transparency of what hospitals charge Medicare. 

I applaud Medicare for releasing chargemaster data on inpatient and outpatient hospital stays over the 

last two months. We need to build on this and take a comprehensive look at transparency from the 

perspective of the consumer. 

Some innovative firms like Castlight Health and Change Healthcare are doing just this. They are 

pioneering analytical tools that can zero in on meaningful pricing information. 

These tools can help Americans be smarter consumers. They can help employers and plans form better 

partnerships with providers that can help keep costs down. 

While increased transparency has the potential to change behavior, it will also expose the real thrust of 

Mr. Brill's article- health care prices are too high in the United States. 

Today's hearing will explore the causes of these high prices. Specifically, I hope we can examine the 

consolidation of hospitals and physicians. The practice can often help produce more integrated care, 

but consolidation can also lead to higher prices for patients. 

I also hope to look at the medical device sector and how it often reaps record high profits, including 

gross profit margins approaching 75 percent. We need to see if barriers exist that prevent hospitals 

from more aggressively bargaining for lower prices, and if they do, we need to tear them down. 

This hearing is an opportunity to start working through these issues. We know there's a problem. It's 

been portrayed in the cold light of day by Mr. Brill. 

We are here, as President Roosevelt urged, to ask the questions, to analyze the problem. So let us apply 

common sense. Let us continue to make health care more transparent and affordable. Let us not stop 

working until we finish the job we started with health reform. I look forward to our witnesses exposing 

real problems and discussing real solutions. 

### 
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Testimony Of Steven Brill 

The United States Senate 

Committee on Finance 

June IS, 2013 

Chairman Baucus, Senator Hatch, Members of the Committee: 

Thank you for inviting me today to discuss what I found when I 

decoded and examined seven random medical bills, line by line, for a special 

issue of TIME Magazine. In the debate over Obamacare and health care 

reform generally, I had been frustrated that the conversation was mostly 

about who should pay the high cost of health care - rather than why the cost 

is so high. My goal, put simply, was to help start that other conversation. 

So I decided to follow the money, line by line, to see who's getting all 

the extra billions we spend in the health care marketplace for results that 

don't justify the cost. 

I am happy to summarize what I found - which is that by any 

definition this is no one's idea of a functioning marketplace. 

In a functioning marketplace prices are based on something that is 

explainable - whether it's the cost of producing the product, the laws of 

supply and demand, or the quality of the product. 

In this marketplace, no one can explain a hospital's charge of$77 for 

a box of gauze pads, or $IS for a diabetes test strip that can be bought on 

Amazon for about 50 cents. 

No one can explain a supposedly non-profit hospital's $13,702 charge 

to an underinsured small business owner - whose family income is about 

$40,000 - so that he could get his first dose of a cancer drug that cost the 

hospital $3,500 and cost the drug company, whose gross profit margins are 

90%, a few hundred dollars to make. 

No one can explain a $995, four-mile ambulance ride, or an $S7,000 

bill to a retail worker for a few hours of outpatient care. The bill included 

$3.00 for the magic marker that marked the spot where a neuro-stimulator 
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would be inserted into his back. He was then charged $49,000 charge for the 

neuro-stimulator, which cost the hospital about $19,000. That $19,000 was 

in tum paid to a company whose gross profit margin is nearly double 

Apple's, meaning it cost the company about $4,500 to make the product for 

which the retail worker was billed $49,000. 

I should add that this bill, like all the others I examined, was full of 

acronyms and numerical codes and just plain gibberish that took hours to 

figure out, line by line. The magic marker, for example, was a line labeled 

"MARKER SKIN REG TIP RULER," and that was one of the easier items 

to decode. 

In this market, no one can explain why a part time school bus driver 

was charged - and then successfully sued into paying -$9,400 after she 

slipped and fell in her backyard and spent a few hours in the Bridgeport 

Hospital emergency room, where among the charges was $239 for a routine 

blood-test that Medicare - which pays hospitals based on their actual costs -

would pay $13.94 cents for. 

No one can explain why the laws of supply and demand or economies 

of scale don't work - why, if anything, they work inversely. For example, 

the sale and distribution of expensive diagnostic imaging equipment, such as 

CT scans, has more than tripled in recent years, but the prices charged for 

these tests have escalated sharply, with even Medicare - forced to do so by a 

heavily-lobbied Congress - now paying four times as much for these tests as 

the German health care system does. 

No one can explain anything about what I discovered was a massive 

internal price list called the chargemaster, which all hospitals have but which 

vary wildly, hospital by hospital, and have absolutely nothing to do with 

quality. Nor can anyone explain why the chargemaster's sky-high list prices 

are charged mostly to those least able to pay, the uninsured or the 

underinsured. 

And no one can explain why the discounts that insurance companies 

pay to hospitals and other providers off of the chargemaster vary so wildly, 

which, of course, affect that co-payments and deductibles paid by patients 

lucky enough to have insurance. 
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Finally, no one can explain how by far the largest consumer product 

in our economy - healthcare, which is approaching 20% of our GDP - is so 

un-consumer friendly that it has spawned a growing cottage industry of 

patient advocates who read and translate chargemasters for patients and try 

to negotiate for them. 

The reason no one can explain any of this is simple: they don't have 

to. 

They don't have to explain because they have all the information and 

all the power. Indeed, this is no marketplace at all, if we define a 

marketplace as involving buyers and sellers who enter into transactions with 

something approaching a balance of power. For in the healthcare nonmarketplace the buyer has no price information and no leverage to do 

anything it about even ifhe or she did. The buyer has typically entered that 

marketplace unwillingly and under great stress. He or she is sick and needs 

medical care. 

That school bus driver didn't wake up one morning and say to herself, 

"I wonder what they have on sale over at the emergency room today. Maybe 

I'll go have a look." Instead, when she involuntarily became that hospital's 

customer, she not only had no price information, she also had no choice. She 

paid for whatever procedures, lab tests, CT scans and anything else she was 

told she needed, whether she needed it or not, at whatever price she later 

found the unintelligible chargemaster had spit out on her bill. 

The result of this lopsided sellers' market, I found, is that the world of 

healthcare economics has become an economy apart from the economy the 

rest of us live in. While things have been tough for most Americans in the 

last half-decade, those who run hospitals or sell CT scans or prescription 

drugs or medical devices have thrived like never before, as if living in an 

alternate universe. The only exceptions are the nurses and most of the 

doctors who actually provide health care. 

Here's an illustration of that alternate universe. In recent years we've 

become concerned about the high costs and high salaries associated with 

higher education. Let's compare higher education to health care. The 

Bridgeport Hospital, which sued that part time school bus driver, is part of 

the Yale New Haven Hospital system. The head of Yale New Haven makes 

$2.5 million - 60% more than the president of Yale University. That's a 
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phenomenon I found repeatedly across the country where a major university 

is associated with a hospital, be it Duke, Stanford or the University of Texas. 

Here's another telling example: the head of fund raising at New 

York's Memorial Sloan Kettering Cancer Center makes $1,483,000, while 

the head fundraiser at Harvard, which raises lots more money, makes 

$392,000. Lest you think the difference is related to New York's higher 

living costs, the chief fund-raiser at the Metropolitan Museum of Art in New 

York makes $345,000. 

Indeed, as I wrote in TIME, "In hundreds of small and mid-sized 

cities across the country - from Stamford, Connecticut to Marlton, New 

Jersey, to Oklahoma City - the American health care market has 

transformed tax-exempt 'non-profit' hospitals into the towns' most 

profitable businesses and largest employers, often presided over by the 

region's most richly compensated executives." 

Oklahoma City is where the ironically named Sisters of Mercy 

hospital charged that man with the back pain $3 for the magic marker and 

$49,000 for his neuro-stimilator. Sisters of Mercy Oklahoma City is part of a 

highly profitable $4.2 billion chain of hospitals that has seven executives 

earning more than $1 million each and employs a multi-state bill collection 

firm to bring lawsuits against patients across the Midwest. 

The Stamford Connecticut hospital is actually a bigger business than 

the city of Stamford, itself. It takes in more in patient billings than the city 

collects in all of its taxes - and even after paying a slew of high salaries to 

its executives, including $1.86 m to its CEO, it had an operating profit of 

$63 million - a healthy $12.7% margin. Not bad for a non-profit. 

So that's what I saw when I followed the money. 

What can or should we do about it? Some changes are obvious. 

The first, of course, is transparency. None of this will change until we 

can see it all, so that those involved can be asked to answer for these profits, 

these salaries, those $77 gauze pads, those outsized margins on drugs and 

medical devices and the irrational differences in prices not only among 

hospitals but among the prices paid by patients and even by insurance 

companies to the same hospital or diagnostic clinic. 
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But transparency can only go so far. Take the case of the man who 

was asked to pay the MD Anderson Cancer Center in advance - $13,702 

for that transfusion, plus $70,000 more for other charges, including the $77 

for the gauze pads. 

Suppose he knew that the drug cost the hospital only $3,500. Suppose 

he also knew that the drug cost the drug company just a few hundred dollars 

to make, and that the drug company had 90% gross profit margins. Suppose 

he even knew he was about to get soaked for $77 for the gauze pads or 

$15,000 for various lab tests that Medicare would pay a few hundred dollars 

for. 

So what? 

What could he do? 

He could literally feel the tumor growing in his chest, his wife told 

me. He was desperate for his check to clear; in fact, they kept him waiting 

downstairs, unable to receive his first transfusion, until it did. All the 

transparency in the world couldn't help him. 

Nor, I should add, would the marketplace he was in have been 

improved, as some suggest, if only he had 'more skin in the game.' He had 

100% skin in the game; they made him pay for everything himself, upfront. 

Similarly, when I asked the wife of a terminal cancer patient facing 

more than $900,000 in bills what she thought about getting charged $18 

each, or $1,584, for 88 diabetes test strips that could have bought on 

Amazon for about 50 cents each, she responded much as Mrs. Lincoln might 

have had she been asked whether she liked the play. "Are you kidding?" she 

said. "I'm dealing with a husband who had just been told he has Stage IV 

cancer. That's all I can focus on ... " She had, she said, just stuffed all of the 

bills into a box and didn't look at them until after her husband had died. 

So, we need more than transparency. 

In that regard I should remind you of the math I did about a patient in 

Stamford with chest pains that turned out to be indigestion, but whose bill 
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for a few hours in the emergency room was $21,000. She was, it turns out, 

64 years and 11 months old. Had she been allowed to buy coverage from the 

one buyer in the marketplace with real information and market power -

Medicare - she not only would have saved thousands of dollars but the 

taxpayers would have saved, too. Having her in Medicare at age 64 would 

cost the taxpayers a lot less than the Obamacare plan to subsidize what will 

be her much more expensive private insurance premiums. 

But giving everyone the chance to enroll in Medicare, thereby 

establishing it as the single payer, does not seem politically realistic, despite 

the math and despite what I found to be Medicare's highly efficient 

performance compared to that of private insurance companies - performance 

that is mostly operated, I found, by private sector contractors. 

So what else can we do short of that? We have to do something 

because in a marketplace where buying is not voluntary, someone has to step 

in to regulate the sellers. 

We could consider requiring hospitals and everyone else to charge the 

same transparent prices to everyone. We could consider price controls on 

prescription drugs and medical devices, or limits on profits made by nonprofit hospitals. 

We could touch the third rail of Democratic politics by implementing 

sensible malpractice tort reform that will limit the number of unnecessary 

tests done on patients. 

And we could consider anti-trust enforcement against hospital systems 

that are increasingly consolidating with other hospitals and even buying up 

doctors' practices and clinics to secure a lock on medical services, thereby 

forcing insurance companies to pay whatever these providers demand so that 

the insurer can have the hospital chain in its network. 

In short, transparency is important because it starts the conversation 

we have to have and didn't have in the debate over Obamacare - which is 

what can we do about outlandish healthcare prices. I'm proud of the role that 

I played in starting that conversation. But it's only a start. Once we follow 

the money, we have to act to stem the flow. 

Thank you again for inviting me. 
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87496.009

Testimony of Giovanni Colella, MD, CEO and Co-Founder 

of Castlight Health, Inc. 

United States Senate Committee on Finance 

Hearing: "High Prices, Low Transparency: The Bitter Pill of Health Care Costs" 

18 June 2013 

Chairman Baucus, Ranking Member Hatch, and distinguished members of the Committee. It is 

my honor to have this opportunity to testify before you today. 

I came to this country 29 years ago to complete my medical training. What started as a medical 

career became a business career as I found my passion creating start-ups to improve the quality 

and cfficiency of health care delivery in the United States. While I now spend my time as an 

entrepreneur in the business world and not as a doctor in thc cxamination room, my goal remains 

the same: to try to improve the health and well-being of my fellow Americans. 

It is this commitment, combined with the enormous need that brings us here today, that led me to 

co-found with Bryan Roberts and Todd Park-- Castlight Health five years ago. 

Our goal at Castlight is to help millions of Americans make better dccisions about their health 

care. We provide cost and quality information that helps people lower their health care spending 

while improving the quality of their care. From health care claims data, we can determine the 

price paid for a service - by geography and by doctor which we combine with an individual's 

benefit plan information to provide the actual out-of-pocket cost that person will pay for a 

medical service. We then combine this accurate pricing information with quality information 

and patient reviews, and present it to the employees of our clients through easy-to-use web and 

mobile applications. Because patients rarely have been provided with this kind of information, 

we provide rich educational information that explains what the prices mean, how to interpret 

quality information, and how to use the other convenience information to get the most out of 

thcir hcalth care benefits. This enables patients to make better and more informed decisions 

about their health care, and reduce the amount that they and thcir employers spend on health 

care. We havc hclped customers achieve engagement rates of up to 80 percent, which is an 

astounding accomplishment. And this has translated into millions of dollars in savings for our 

customers. 

Today, I want to rcview with you the state of health care price and quality transparency; why it is 

important economically and medically to make these data available; the impact thcse data have 

on consumcrs' health care decisions, financial circumstances, and health outcomes; and what the 

federal government can do to bring more transparency to the health care market. 

THE STATE OF HEALTH CARE PRICE AND QUALITY TRANSPARENCY 

I first becamc aware -- and admittedly obsessed -- with the issue of health care transparency a 

few years ago when my mother, old and very ill, needed care. I wantcd to bring her to the United 

States because we have the best health care in the world. I was fortunate that I could get my 

mother excellent care, and as a doctor and a businessman, I wanted the facts about the highcstquality care for her and what it would cost. Howcver, as hard as I tried, I could not get that 
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information. I could not determine if a name-brand, world-renowned medical center was indeed 

the best, or whether it was worth the price. And if it was not, where I could find that care and 

what would it cost. 

This puzzled me. When you go shopping for a car, you know its price: it's right there on the 

window, and there arc numerous sources for information about key aspects of quality. When you 

are booking a hotel room, likewise, it's easy to know the charges and to instantly access 

evaluations on everything from the cleanliness of the bathroom to the friendliness of the frontdesk staff. Yet, when it comes to our health care system, it has been virtually impossible for a 

consumer to find out what it will cost for any given procedure or course of treatment, and to 

determine whether the quality of care is worth the price. 

This makes no sense from either a markct or medical perspective. Without transparency in health 

care, consumers ultimately end up paying more and getting worse care, and we as a country end 

up spending more on health care than is necessary. 

This is not a new problem, but it's one that is growing in significance as the US works to 

decrease the rate of health care cost growth, and as households find themselves paying more out 

of pocket for their own health care costs-which currently is about 5 percent of total household 

spending, as shown in Figure I. 

Distribution of Average Household Spending by 

Medicare and Non-Medicare Households, 2010 

Medicare Household Spending 

Average Household Spending = 

$30,818 

Non-Medicare Household Spending 

Average Household Spending = 

$49,641 

SOURCE; Kaiser Family Foundation analysis of the Bureau of Labor Statistics Consumer Expenditure Survey Interview and Expense 

Files, 2010. 

Figure 1 

Care 

5% 
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As a result of escalating health care costs, employers have begun to shift costs to employees. For 

instance, 58 percent of all employers now offer high-deductible health plans.! Avcrage 

deductibles for patients on cost-sharing plans continuc to rise and are currently over $1200.2 

Because of this trend, the 60 percent of consumers with employer-sponsored insurance 

increasingly have a real financial incentive to manage health care spending and seek out quality. 

Similarly, American businesses have an imperative to keep their health care costs down and the 

quality of the care their workers receive up. Unfortunately, over the past decade, health care 

premium increases have consumed all real-wage growth in America? If companies can keep 

health care costs down and quality up, they can be more competitive, hire more workers, and 

share their savings with workers through increases in wages and other benefits. Finally, our 

entire country has an interest in seeing a more competitive health care sector in which market 

forces drive value up, reduce the rate of health care cost growth, and lessen the burden of health 

care spending on state and federal budgets. 

To be clear, spending less on health care does not mean receiving lower quality care. As a matter 

of fact, the opposite is sometimes true. We know from years of study that there is huge variation 

in price and quality across our country, across individual states, aeross individual cities, and even 

across doctors practicing in the same hospitals. And unfortunately, prices and quality have 

almost no correlation. Thus, facilities and providers with the highest costs for medical services 

may provide low quality care, and, conversely, high-quality facilities and providers may charge 

the lowest fees for care. 

To illustrate the lack of correlation between price and quality, in Figure 2, we have combined 

Castlight data for the price of pregnancy in Chicago mapped against Leapfrog's pregnancyrelated quality measures. The results are startling. The highest charges come from hospitals with 

the worst quality ratings. And the lowest charges come from hospitals with the best quality. The 

difference in prices is $11,721, or over 300 percent. Similar findings for other episodes of care 

have been reported by those analyzing Medicare elaims data and, most famously, by the work of 

Jack Wennberg and the team that produces the Dartmouth Atlas of Health Care. 

1 "Aon Hewitt Employer Survey," July 17,2012, http://aon.mediaroom.com/index.php?s=25776&item=132919. 

2 "Mercer Employer Survey," November 17,2013, http://www.mercer.com/press-releases/1400235. 

3 Executive Office of the President. The Burden of Health Insurance Premium lncreases on 

American Families. Available at: 

http://www",;ymJehouse.gov/assetsjdocuments/Health Insurance Premi.l1Jl1 Report.p<!f. 
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Figure 2 4 

$10,000 

$16,000 

$14,000 

1 '12,000 

l; a $10,000 

" ~ $8,000 .. 

1 $6,000 

.. $4,000 

$2,000 

$0 

Cost vs Quality for Pregnancy and 

Delivery(Chlcago, Il) 

e 

• , • I • 

• I • I 

Leapfrog o.nvery QAlIlltty Hlltrie 

THE IMPACT OF A LACK OF HEALTH CARE TRANSPARENCY 

At Castlight, we usc a variety of data sources, including actual insurance claims data to 

determine prices. Additionally, to help our users assess relative quality and value, we combine 

Medicare's quality data set with more than 30 of the best available, peer-reviewed, publie and 

private quality measures. Thus far, we have found similar discrepancies between price and 

quality across all conditions and in all of our markets. This means that there is ample opportunity 

for patients to save money and get better care once this data becomes transparent. 

As shown in Figure 3, many routine procedures show an alarmingly large variance in price even 

within an employer's network. Take for example a colonoscopy - a test commonly used to 

screen for colorectal cancer. Castlight found that prices for colonoseopics, for the same health 

plan in the samc geography can vary sevenfold. This equates to a difference of approximately 

$3,500 between the lowest cost and highest cost provider for the same test. Is the colonoscopy 

that is $3,500 more expensive a better colonoscopy? There are no data that suggest that it is. As a 

rcsult, without price and quality transparency, consumers are blindly choosing providers when 

lower-cost providers with commensurate or higher quality very often exist. 

4 Data provided by Castlight Health and Leapfrog (2013). 
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Figure 3 5 

Cost variation by service - single health plan in one geography 

Service Price Range Price Variance 

Colonoscopy $563 

Primary care $85 $270 (first visit, adult) 

X-Ray of spine 

(3 images) $38 1$162 

EKG $27 $143 

A $3,500 difference in the cost of a colonoscopy is significant for any consumer. If a worker is in 

the deductible phase of their health plan, they could pay the entire difference. If they have 

consumed their deductible, most Americans pay between 20 and 40 percent of the price of their 

care up to their out-of-pocket maximums. Therefore, this difference equates to at least $600 and 

as much as $3,500 of unnecessary spending. For a worker making $30,000 a year, that $600 bill 

can be more than just a tough expense to swallow; it could mean the difference between getting 

by or not. 

This lack of transparency in the health care marketplace does not only affect consumers getting 

individual services. It also skews how health care is delivered in the US overall. This is 

particularly true when care is provided out-of-compliance with evidence-based medical 

standards. More than $600 billion is wasted every year in avoidable costs due to unneeded care, 

preventable complications or errors, or the right care not being delivered. 6 

Consider, for example, the overuse of medically unnecessary tests and procedures. The fee-forservice health care reimbursement system in the US provides incentives for health care providers 

to deliver care based on volume, not outcomes. For instance, evidence suggests that most back 

pain is resolved with rest, physical therapy or other conservative treatment and does not require 

MRI's or other advanced testing or treatments.? Yet among low back pain patients in the US, 

5 Data provided by Castlight Health (2013). 

'Diana Farrell, Eric Jensen, Bob Kocher, MD, Nick Lovegrove, Fareed Melhern, Lenny Mendonca, and Beth Parish, 

"Accounting for the cost of US health care: A new look at why Americans spend more," McKinsey Global Institute 

(2008). Available at: 

http://www.mckinseY&91I11W.B£.hts/he'!!th systems/accounting for the cost of us health care. 

? Pham HH, Landon BE, Reschovsky JD, Wu B, and Schrag D, "High-Value, Cost-Conscious Health Care: 
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nearly a third ofMRI's are for patients who had not first tried other potentially effective 

treatments.s Such unnecessary MRI's create significant financial costs. In California alone, 

Castlight found that the median price of an MRI among the privately insured is $746 (and the 

cost in this region varied from $458 to $3,409). 

Health care providers, health plans and lawmakers in the US are making significant efforts to 

address many of these systemic issues. For example, Medicare will no longer pay for certain 

avoidable hospital complications. However, payers without policy-making power, such as 

employers, face continued increases in overall health care spending and bear high costs of poor 

quality and non-evidence-based care. This has a significant impact on the cost of American 

products, and the ability of US companies to compete. Visibility into pricing and quality is 

critical to curbing costs, and by offering these together in an integrated transparency solution, 

true behavior change is possible. 

We have found that consumers actually will utilize transparency; they will "shop" for elective 

medical care and change their choices when exposed to data on price and quality. This is 

consistent with research funded by the Agency for Hcalthcare Research and Quality that 

consistently has found that when you present ,feople with meaningful price and quality data, they 

will make better choices for their health care. In fact, most health care in America is non-urgent, 

enabling patients to comparison shop; therefore, data transparency could substantially improve 

competitiveness for most health care services. 

For instance, a recent survey of employees in companies and organizations that offer Castlight 

found that more than half of respondents use Castlight's data to make health care decisions. 

Ninety one percent of employees want their employers to continue offering Castlight, and of 

those who have used it, 94 percent plan to do so again. And when that same study looked at how 

people use Castlight, it found that 65 percent use it to search for doctors or view their choices for 

care; 60 percent look to see how much they have spent on health care; and 51 percent use it to 

review past claims to see how much they spent. These data show that Castlight is now acting as a 

trusted advisor and guide for people to interact with the health care system. 

And this activity is having a real economic impact. One national grocery retailer who started 

using Castlight saw a 44 percent increase in the number of "high-spender" employees making 

proactive choices about health providers and 66 percent of those employees selected services 

that cost less than the reference price. This led to a 9 percent reduction in projected health care 

spending for that business. Another Castlight customer reported that 61 percent of their 

employees used quality and price data from Castlight to influence their health care decisions over 

a six-month period. This contributed to a staggering 13 percent reduction in health care spending 

as compared to the expected trend by that company, which allowed them to reinvest in other 

benefits programs for their employees. 

Concepts for Clinicians to Evaluate the Benefits, Harms, and Costs of Medical Inter venti OilS," Annals of Internal 

Medicine 154 (2011):181-189, 

8 Pham HH et aL,"Rapidity and modality of imaging for acute low back pain in elderly patients," Archives of 

Internal Medicine 169 (2009):972-8 L 

9 Judith H, Hibbard, Jessica Greene, Shoshanna Sofaer, Kirsten Firminger and Judith Hirsh, 

"An Experiment Shows That A Well-Designed Report On Costs And Quality Can Help Consumers Choose HighValue Health Care," Health Affairs 31 (2012): 560-568, doi: 10, 13771hIthaff.2011.l168, 
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The implications ofthe Castlight experience are clear: when given data on price and quality in an 

accessible format, employees use it to make smarter health care decisions, and both the 

employees and employers save money. 

POLICY PRESCRIPTIONS 

With these benefits in mind, I believe that we need to do more to bring transparency and 

competition to health care so that the health care system can deliver better value to consumers. 

As Drs. Ezekiel Emanuel and Robert Kocher, a member of our board of directors, recently wrote, 

we need to cmbrace a "transparency imperative: All data on price, utilization, and quality of 

health care should be made available to the public unless there is a compelling reason not to do 

SO.,,10 To accomplish this, we believe there are steps that Congress, along with the Executive 

Branch, can take to significantly improve transparency and the health care market. 

First, we should enshrine the "transparency imperative" into law by requiring all payers to make 

claims data publically available, with privacy protections, for utilization and quality 

measurement. Only 12 states currently maintain all payer claims databases, with varying degrees 

of accessibility. 11 Public access to these data will go a long way in advancing consumers' ability 

to select high quality care and providers. For example, robust claims data yields one of the key 

predictors of quality: physician case volume, a measure that is currently extremely difficult for 

consumers to access. 

Second, the Department of Health and Human Services (HHS) should build on the momentum of 

its recent release of data for 130 in-patient and out-patient procedures to make much more of its 

data available to the pUblie. 12 The immediate response to the release of these data reflects the 

thirst for, and power of, transparency. Yet there is pricing data for more than 1,000 additional 

procedures that were not released. Moreover, it is critical that Medicare make physician quality 

data widely accessible. The legislated release of this data has already been delayed six months. 

Third, the federal government should relax data restrictions on access to Medicare data without 

compromising safeguards to protect privacy. Provisions to release Medicare data to "qualified 

entities" already exist. 13 However, the definition of "qualified entity" limits access to this 

exceptionally useful data to non-profit entities that must make all of their analyses available 

publicly for frcc. These stringent requirements effectively block new entrants and for-profits 

from utilizing this powerful dataset to develop innovative and disruptive solutions to improve 

transparency. 

Fourth, purchasers of health care should have unfettered access to their claims data to enable 

price and quality transparency initiatives. These purchasers are often employers, from whom 

IO"Robert P. Kocher and Ezekiel J. Emanuel, "The Transparency Imperative," The Annals ~f Internal Medicine 

(2013), doi: 10.7326/0003-4819-159-4-201308200-00666. 

II "Interactive State Report Map," APCD Council, NAHDO, UNH, lillJ2JLWF.I:Y,!'l2fdcou.ncil.org/state/map. 

12 "Medicare Provider Charge Data," Centers for Medicare & Medicaid Services, last modified June 2, 2013, 

http://w!Y.W.&!IlJUl2ylResearch-Statistics-Data-and-Systems!Statisties-Trends-and-Reports!Medicare-Provid~rCharge-Datal. 

13 "Centers for Medicare & Medicaid Services," Federal Register Volume 76, Number 235, December 7, 2011, 

http://www.gpo.gov/fdsys/pkg/FR-2011-12-07Ihtm1l2011.:31232.htm. 
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87496.016

most non-elderly Americans receive their health insurance. 14 Employer purchasers are eager to 

adopt market driven solutions that help thcir employees stem the rising cost of care and should 

be able to fully access the critical data required to do so. 

Finally, pro-transparency measures, such as those in Massachusetts, should be passed by other 

states, or by the Congress, to prevent providers from restricting access to pricing data. 15 In 

response to significant, unwarranted price variation, Massachusetts passed legislation in 2012 

that promotes price transparency and prohibits health plans and providers from entering into 

contracts that prevent disclosure of the providers' prices from consumers.16 Such contracts 

prevent consumers from making informed decisions and solely benefit the interests of the 

market-dominant providers that are able to negotiate such terms. Some argue that without such 

contracts lower-cost providers will raise their rates, thereby increasing the average cost of care. 

We have, in fact, sccn the opposite where pricing transparency has brought market forces to 

health care and where providers have reduced the cost of care. 17 

The health care system in the US is changing rapidly. The adoption of promising new 

reimbursement and delivery models, such as accountable care organizations (ACQ's), has 

created many exciting opportunities to improve the quality and more effectively managc the 

costs of health care. 

However, a key element that is missing is transparency. Today, it is a challenge for consumers to 

factor price and quality considerations into their decision-making processes about health care, 

which rcsults in higher costs and lower quality for them, higher health care expenses and reduced 

productivity for their employers, and an unsustainable health care cost growth rate for the 

country. By taking these small, but meaningful steps toward more transparency, you will go a 

long way to bringing market discipline and better value to the American people. 

Thank you for the opportunity to speak with you today. 

14 "Employer-Sponsored Coverage," America's Health Insurance Plans, http://www.!!hiJhQ.[gfu~ues/EmployerSponsored~Coverage.aspx. 

IS "Session Laws: Chapter 224 of the Acts of2012," The 188" General Court of the Commonwealth of 

Massachusetts, https:llmalegislature.gg-"&'!FsISe~jonI.,~wsIActsI2012IChapter224. 

16 "AG Coakley Releases Second Report Examining Key Drivers of Rising Health Care Costs," Office of the 

Attorney General of Massachusetts, June 22, 2012, http://www.mass.gov/ago/news-and-updates/pressreleasesnO Il/ag-releases-20 ll-report-on-health-care-eosts.html. 

17 Wall, J.K., "Hospitals proving themselves wrong about prices," The Dose blag, June 6, 2013, 

htillJ.6Y_w~.i~j"'Qmlthe.-dose-2013-06-06-hospitals-proving-their.-own-aW!!1_,,~.!!>-wron~boutprices/PARAMSlpostl41776. 
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87496.017

CATALYST 

PAYMENT 

REFORM 

TESTIMONY 

The Importance of Price Transparency from the Employer and Consumer Perspective 

June 18, 2013 

Statement of: 

Suzanne F. Delbanco, Ph.D. 

Executive Director 

Catalyst for Payment Reform 

Before the Committee on Finance 

U.S. Senate 
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87496.018

Chairman Baucus, Ranking Member Hatch, distinguished Committee members. I am Suzanne Delbanco, 

executive director of Catalyst for Payment Reform (CPR). Thanks for the opportunity to be here with you 

to discuss the importance of transparency in health care pricing as a means to achieving a higher quality 

and more affordable health care system. 

Background 

Catalyst for Payment Reform (CPR) is an independent, non-profit organization working on behalf of large 

employers and public health care purchasers to catalyze improvements in how we pay for health 

services and to promote higher-value care in the U.S. Currently, CPR has 30 members, mostly large 

private employers, such as 3M, Dow Chemical Company and Safeway, as well as eight state agencies 

such CaIPERS-California's Public Employee Retiree System-- and the Medicaid agencies from Arizona, 

Ohio, South Carolina, and Tennessee. 

CPR's long term goal is to spur changes in how we pay for health care so that our members and the rest 

of the nation can get better value for every health care dollar. By value, we mean the best combination 

of quality and costs. But there are other building blocks that must also be in place to drive our health 

care system to produce better and more affordable care. CPR designated price transparency as one of 

its special initiatives because we cannot imagine a high-value health care system without it. 

What Has Led to the Call for Price Transparency Today? 

Employers and other health care purchasers, as well as individual consumers, continue to face rising 

health care expenditures. Employers' health care costs continue to rise -- a March 2013 report 

indicates average employer costs are expected to increase S.1% in 2013.; As a result of these growing 

costs, and in an effort to stem them, employers are asking those for whom they provide health care 
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benefits to take on a greater share of the cost. Whereas consumers have not been a significant force in 

the past, employers are now designing and implementing employee benefits, such as high-deductible, 

consumer-driven health plans, to motivate consumers to seek more efficient, higher-quality care. In 

fact, deductibles more than doubled between 2003 and 2011,;; and 34% of employer-sponsored plans 

now have deductibles of $1,000 or more.;;; Consumer-directed health plans are now the fastest growing 

type of health plan, with 19% of covered workers currently enrolled in them.;' This is expected to grow 

in response to the requirements ofthe Affordable Care Act. 

Total out-of-pocket spending by consumers is now at an estimated $312 billion annually.' But while 

many consumers now have a more vested interest in expending health care resources carefully due to 

new benefit designs, health care costs are also becoming unaffordable for a growing number of 

Americans. The rate of increase of average family premiums has exceeded the consumer price index 

and is chiefly responsible for the stagnation of family incomes.'; Premiums now account for 20% or more 

of the average American family's income.';; 

Purchasers believe that pressure from consumers for higher-quality, more affordable care, is a powerful, 

underused lever. Once consumers are positioned to shop actively for medical services due to increased 

financial responsibility, it is important to make information about those medical services transparent to 

facilitate their decision-making. For a consumer strategy to succeed, it is critical to expose the variation 

in prices for services - the prices for standardized services such as colonoscopy can vary as much as 

1000%.';;; It is also critical to provide consumers with meaningful quality information to help them 

identify high-value providers, especially because price is rarely indicative of quality. 

There is much greater awareness of unwarranted payment variation now than in the past. In 2010, CPR 

commissioned Paul Ginsburg of the Center for Studying Health System Change to examine variation in 

commercial payment amounts across and within eight markets. Three large private health insurers 
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provided data which illustrated, for example, that in San Francisco the average inpatient hospital 

payment rates were 210% of Medicare whereas in Los Angeles, the average inpatient stay at the 25th 

percentile cost 84% of Medicare, at the 75th percentile cost 184% of Medicare, and the highest paid 

hospital received 418% of Medicare. Ginsburg concluded that payment variation seems to be tied to 

provider market power, which is likely to create even greater disparities as consolidation continues and 

put more providers in a position of being able to refuse requests for price transparency. 

What is Price Transparency? 

CPR uses the U.S. Government Accountability Office's (GAO) definition of price transparency, which is 

"the availability of provider-specific information on the price for a specific health care service or set of 

services to consumers and other interested parties." GAO defines price as "an estimate of a consumer's 

complete health care cost on a health care service or set of services that (1) reflects negotiated 

discounts; (2) is inclusive of all costs to the consumer associated with a service or services, including 

hospital, physician and lab fees; and, (3) identifies the consumer's out-of-pocket costs (such as co-pays, 

co-insurance and deductibles).";' 

How Could Price Transparency Help Employers and Consumers? 

Transparency on health care prices increases the likelihood that consumers will choose health care 

providers that deliver effective and cost-efficient care.' Price transparency can also be an important 

tool for health care providers. Recent studies suggest that price transparency can help providers 

evaluate and identify the most appropriate and affordable care for their patients.'; Furthermore, 

employers and health plans cannot implement some of the more promising benefit and network designs 

without it. 
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Reference and value pricing are examples of such approaches. Reference pricing establishes a standard 

price for a drug, procedure, service or bundle of services, and generally requires that health plan 

members pay any allowed charges beyond this amount. Value pricing is when quality is also taken into 

consideration in addition to the standard price. 

Two of CPR's members, CaIPERS, and Safeway, Inc. have led the way in experimenting with using 

reference pricing to signal to providers that their unwarranted price variation is no longer acceptable 

and to engage consumers in making more value-oriented selections of providers. Price transparency is 

at the core of these programs, enabling consumers to minimize their financial exposure. For example, 

CalPERS set a reference price for hip or knee replacement at $30,000. CalPERS enrollees are responsible 

for coinsurance of 10% of the allowed charge, which is capped at $30,000. If a patient receives care from 

a facility that charges more, that patient would pay 10% coinsurance on $30,000 and the full difference 

between the allowed charge and the $30,000 reference price. CaiPERS has said that it saved $16 million 

in the first year of the program. ,;; 

What Efforts Exist to Advance Price Transparency Today? 

The main activity in the private sector comes in the form of transparency tools that have been 

developed by health plans and independent commercial vendors. There is solid competition in this 

space and these tools vary in functionality and availability, though they have been rapidly improving in 

recent years and even months. 

While the health care industry could, on a voluntary basis, provide highly-effective price transparency to 

health care consumers, there may be instances in which government must step in to ensure that citizens 

have access to sufficient price information to support the selection of high-value providers. The federal 

government has made some strides in the area of transparency in health care. On the price front, the 
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Center for Medicare and Medicaid Services (CMS) provides an online tool that provides beneficiaries 

with expected out-of-pocket drug costs, and just recently released hospital charge information. On the 

quality front, CMS also operates Hospital Compare, Physician Compare and Nursing Home Compare 

which all post provider performance on a variety of quality metrics. 

At the state level, 34 states currently require reporting of hospital charges or reimbursement rates. 

Some states operate consumer-facing transparency tools such as "New Hampshire Health Cost" and in 

Massachusetts, "My Health Options." In the Report Card on State Price Transparency Laws, CPR worked 

with the Health Care Incentives Improvement Institute to examine existing states laws on price 

transparency to determine whether states were stepping in to provide consumers with price 

information. Forty-three states have laws that address price transparency in health care in some 

manner. The Report Card graded state laws on four dimensions: 1) on what breadth of services they 

require price information be available; 2) on what breadth of providers they require price information 

be available; 3) whether the law required provider charge information versus the actual negotiated 

payment amount; and, 4) how accessible the price information was to consumers. Just two states, New 

Hampshire and Massachusetts, earned 'A' grades according to criteria in these four dimensions, while 

29 received an F due to the absence of any laws or laws that met few of the criteria. 

What are the Challenges to Achieving Effective Price Transparency? 

In the commercial sector, it is very difficult for health plans, employers or other vendors to produce 

transparency on prices for all health care providers. There are some health care providers, particularly 

those with market power, who put into their contracts with health plans a prohibition on revealing to 

health care purchasers or consumers any information about payment amounts. While health plans are 

working independently and through legislation to phase out such contract provisions, and they are 

relatively rare, in some markets where dominant providers succeed in achieving these terms, there can 
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be gaping holes in the information consumers need to make informed decisions about where to seek 

care. As a result, while price transparency could be an effective element of introducing greater 

competition and innovation in the health care delivery system, market power may allow those providers 

with higher-than competitive prices to keep their high-prices obscured. 

Another barrier to em ployers and consumers having the most effective price transparency is the 

position of some health plans that information contained in health insurance reimbursement claims 

data, particularly the payment amounts, is proprietary. They take this position even in the case of 

customers for whom they provide administrative services only and do not take on the insurance risk 

(e.g. a self-insured employer). As a result, some health plans will not permit self-insured customers to 

give their own claims data to a third-party vendor, such as Cast light Health, to populate a consumer 

price transparency tool. 

Making transparency in health care work for consumers can be challenging. Without both price and 

quality transparency, consumers may get the wrong message - consumers could mistakenly correlate 

higher prices with higher quality, which is often not true in health care.'';; In addition, our current 

reliance on fee-for-service payment, with individual codes for every test, procedure and visit, may make 

it hard for lay consumers to estimate their total costs for an entire episode of care since they make not 

know what the components of their care will be. 

Price transparency alone is unlikely to change consumer behavior. Pairing it with some sort of incentive 

to use it and to act on it is more likely to engage consumers. New benefit designs can make price and 

quality information meaningful, such as the reference pricing example above. 

Furthermore, it is unknown how providers will react to greater price transparency, particularly if 

transparency is implemented in such as way as to enable them to gain access to each other's negotiated 
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payment amounts. It is possible that less expensive providers may try to raise their rates to those of 

their higher-priced competitors. It is also possible that providers with prices higher than the average 

would bring their prices down out offear of losing patient volume. This is an area that needs further 

research. 

How is CPR Working to Meet the Needs of Employers, other Health Care Purchasers, and Consumers? 

In our work to support employers and others who purchase health care for consumers, CPR has created 

a variety of tools to help them advance price transparency in health care. 

Most employers and other health care purchasers rely on health plans to act as their agents in the 

health care marketplace, administering benefits and contracting with health care providers on their 

behalf. As a result, CPR has developed a series of tools as well as venues in which purchasers can push 

health plans to meet their need for price transparency. 

In order to alert health plans about the priority purchasers place on price and quality transparency, we 

have created standard questions that purchasers can pose to them when they are determining which 

health plans with whom they would like to contract. We have also created model health plan contract 

language purchasers can use as a starting point for contract negotiations with the plans. This model 

language outlines the purchaser's expectations of the contracted health plan regarding price and quality 

transparency. We support both of these sourcing and contracting approaches with CPR-moderated user 

groups that occur quarterly between each of the four largest national health plans and their employerpurchaser customers. At each meeting, we ask the health plans to report their progress on their own 

price transparency tools, whether they meet CPR's specifications for these tools (more detail below), 

whether they allow self-insured customers to give their own claims data, including the payment 

component, to a third-party vendorfor analysis or for use in a transparency tool, and what percent of 
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their professional claims and hospital claims run through health care provider contracts that limit 

sharing price and quality information with consumers. 

In response to the various frustrations many employers and other health care purchasers have 

experienced in seeking the cooperation of health plans and health care providers to make health care 

prices transparent, CPR issued its Statement on Price Transparency to request that health plans and 

health care providers remove these barriers by January 1, 2014. This statement was also endorsed by 

many other business groups as well as the AFL-CIO and AARP. 

In its first National Scorecard on Payment Reform, released on March 26, 2013 and designed to track 

the nation's progress on payment and other related reforms, CPR found that 98% of health plans say 

they have cost calculator tools of some kind. However, they also reported that only 2% of patient 

members ever use them. We will track this finding over time as we release subsequent annual 

Scorecards. 

While there is a proliferation of consumer transparency tools, not all of them are easy to use or provide 

meaningful information. After reviewing the leading consumer transparency tools about 18 months 

ago, when CPR found many helpful features spread across the various tools but not all contained in any 

one tool, CPR decided to create Comprehensive Specifications for the Evaluation of Consumer 

Transparency Tools as of way of pointing to the features we think tools must contain to be effective. 

Most tools, whether designed and operated by health plans or independent vendors are getting better 

rapidly. However, one of the biggest shortcomings is the separation of price and quality information, 

which can make it very difficult for the consumer-user to identify which provider or procedure options 

offer the best overall value. 
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How Could the Federal Government Advance Price Transparency? 

The various stakeholders in the health care industry that are privy to price information could work 

together to provide effective price transparency. But since a voluntary effort is unlikely to lead to 

complete transparency, there is a role for government. The federal government could facilitate price 

transparency in a variety of ways. 

First, building on its recent release of hospital charge data, it could share charge, payment, and quality 

information for a much broader range of providers and services. 

Second, in the federal government's efforts to provide transparency tools for consumers, such as 

www.hospitaicompare.gov, it could work to incorporate the features designated as most important in 

CPR's Comprehensive Specifications for the Evaluation of Consumer Transparency Tools. The federal 

government also has a unique role to play in meeting the price transparency needs of those receiving 

health benefits from the federal government as well as the uninsured. 

Third, the federal government could, through the federally-facilitated exchanges, insist on price 

transparency from qualified health plans. CPR's model health plan contract language includes price 

transparency requirements that could be used by exchanges in their contracting with these plans. 

Lastly, in order to help employers and other self-insured customers of health plans meet their fiduciary 

obligations in the delivery of health benefits, the federal government could ensure they have access to 

their own claims data, including the payment component, for use in consumer transparency tools, 

including those operated by third-party vendors. 

There is also a role for state government to play. States can implement laws that require health care 

prices (not just charges) in the commercial sector for a broad range of health care services and providers 
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87496.027

to be easily accessible to COnsumers. The State Report Card on Price Transparency Laws outlines the 

criteria that it takes to be an 'A' state in this regard. States can also create All Payer Claims Databases 

designed to produce robust quality and price information for use by consumers. 

Conclusion 

Large employers and other health care purchasers cannot envision a high-value health care system in 

which there is not meaningful and usable price and quality transparency. Catalyst for Payment Reform 

commends the Senate Finance Committee for delving into this issue. CPR will continue to work to 

ensure that employers and consumers can be armed with the information they need to help evolve our 

health care system to one in which we understand and feel confident about the value we are getting for 

each health care dollar we spend. 

, National Business Group on Health and Towers Watson. "Reshaping Health Care. Best Performers Leading the 

Way. March 2013." Available at: http://www.towerswatson.com/en/lnsights/IC-Types/Survey-ResearchResu Its/20 13/03/T owers-Watson-N BG H-E m pi oyer -5 u rvey-o n-Val ue-i n-Pu rch asi ng-Health-Ca reo 

HSchoen C, Lippa J, Collins 5, and Radley D. State Trends in Premiums and Deductibles, 2003-2011: Eroding 

Protection and Rising Costs Underscore Need for Action. The Commonwealth Fund, 2012. 

;;; The Henry J. Kaiser Family Foundation. "Employer Health Benefits 2012: Summary of Findings." Kaiser Family 

Foundation & Health Research & Education Trust, 2012. 

IV Ibid, 

"CMS OACT, "National Health Expenditure Projections 2010-2020". July 26,2011, p: 1-22. 

"' Kaiser Family Foundation, "Employer Health Benefits." 

VII Schoen C et ai, IIState Trends. 1I 

"';; Robinson JC and MacPherson K. Payers Test Reference Pricing And Centers Of Excellence To Steer Patients To 

Low-Price And High-Quality Providers. HEALTH AFFAIRS 31,NO. 9 (2012): 2028-2036. 

"Government Accountability Office (GAO). "Meaningful Price Information Is Difficult for Consumers to Obtain Prior 

to Receiving Care" September 2011. Available at: http://www.gao.gov/products/GAO-11-791. 

, Hibbard JH, Greene J, Sofeaer 5, and Firminger K. An Experiment Shows That A Well-Designed Report On Costs 

And Quality Can Help Consumers Choose High-Value Health Care. Health Affairs. March 2012. 
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87496.028

"Feldman LS, Shihab HM, Thiemann D, Shihab M, Yeh HC, Ardolino M, Mandell 5, and Brotman DJ. Impact of 

Providing Fee Data on Laboratory Test Ordering: A Controlled Clinical Trial. JAMA Intern Med. 2013;173(10):903-

908. 

," Edlin, Mari. 'Value' in Health Insurance Acquires New Meaning. California Healthline, January 09, 2012. 

Av aila ble at: http://www.californ I ah ea Ithli n e .org/fea tures/20 12/val u e-i n-hea Ith-i nsura n ce-acgui res-n ewmeaning.aspx%23IxZl1j7M4ocSC#lxzz2W8auzUNn. 

,'" Sommers R, Dorr Goold 5, McGlynn E, Pearson 5, and Danis M. Focus Groups Highlight That Many Patients 

Object To Clinicians' Focusing On Costs. Health Affairs. February 2013. 
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CATALYST 

P FOR AYMENT 

REFORM 

l I 

(]J 

• 

~ 

~1r:i.l[m nSAc.n~en. -i!lil'~~~""~~~~~~ 

=",,~=- --Z-=~~- ~- --~~- --

INTRODUCTION 

As health care costs continue to rise, purchasers remain focused on strategies that 

can help to bring costs under control. These pressures have facilitated a movement 

by many purchasers to engage consumers - their employees and their dependents 

- more fully in their health care decisions, including taking on a greater share of their health 

care costs, In their efforts to manage costs, health care purchasers, including large employers 

and states, recognize consumers need information on both health care price (particularly a 

consumer's expected out-of-pocket contribution) and quality (especially outcomes measures 

and other measures of safety, effectiveness, timeliness, efficiency, and equity),} along with 

the right incentives to seek higher-value care. In recent years, information about quality has 

become more transparent; however, meaningful price information is still difficult to obtain.2 

Purchasers, plans, and providers need to do more to advance price transparency and to 

marry price and quality data together to help consumers assess their treatment options, 

What is price transparency? Why should purchasers push to make price and quality 

information public? What are some of the existing tools and strategies in the current 

marketplace and their limitations? This Action Brief examines these questions and 

provides purchasers with concrete ways they can foster transparency, which in turn 

can help catalyze much needed reform in our health care system, 

WHAT IS PRICE TRANSPARENCY? 

Depending on who you talk to in health 

care, "price transparency" can have many 

different definitions, For the purposes of 

this Action Brief, Catalyst for Payment 

Reform (CPR) defines price transparency 

as "the availability of provider-specific 

information on the price for a specific 

health care service or set of services to 

consumers and other interested parties."3 

Price is defined as "an estimate of a 

consumer's complete health care cost on 

a health care service or set of services 

that 1) reflects any negotiated discounts; 

2) is inclusive of all costs to the consumer 

associated with a service or services, 

including hospital, physician and !ab fees; 

and, 3} identifies the consumer's out-ofpocket costs (such as co-pays, co-insurance 

and deductibles),"4 

The price a consumer pays for a particular 

service depends on a number of variables 

PRICE EXAMPLE: An insurer has negotiated 

a rate of $1,000 with a particular in-network 

provider for a chest MRI, and therefore, 

the cost is $1,000. A consumer has $200 

remaining to meet his/her deductible and 

the coinsurance is $160; the individual is 

responsible for $360 and the insurer pays 

$640. In this case the consumer's "price" 

for the MRI is $360. Price transparency 

eKists when, for e)(amp!e, prlor to seeking 

cate, OJ consumer knows his price wi!! be 

$360 for that particular prOVider and can 

compare the price for chest MRls with 

other providers, 

It IS also lmportant for consumers to 

understand the total payment for the service, 

including what the plan (or purchaser) pays 

and the remaining price they owe for that 

service, This broader context is important as 

we inform consumers about the total cost 

Clnd price of specific health care services as 

they make decisions and seek care in the 

health care system. 

Price Transparency 
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Some of the most 

promising payment 

reform approaches 

such as reference and 

value pricing cannot 

be implemented 

effectively without 

price transparency. 

2. CATALYST FOR PAYMENT REFORM 

induding whether that consumer is insured or uninsured and whether the provider who 

performs the service is "in~network" or "out~of-network." For uninsured consumers, the 

price for a service is always the same as the total payment a prolJider receives. For 

insured consumers who have not yet met their deductible or are visiting an out-ofnetwork provider when their health plan has no out~of~network benefit, the price of care 

is also the same as the total payment to the provider. However, for insured consumers 

visiting an in~network provider, the price of care will often represent only part of the 

paymentforthat care; the insurance plan wi!! pay the rest. Regardless of the arrangement, 

the "price" as understood herein is the amount of payment for which the consumer is 

responsible. Despite one's insurance status, however, it is important to note that 

maximizing the consumer benefits of price transparency wi!! require attention to medical 

literacy issues, including the fact that it can be very challenging for most health care 

consumers to understand medical terms as weI! as how health care payment works, 

including their own insurance benefits and billing. 

WHY SHOULD PURCHASERS SUPPORT TRANSPARENCY? 

Purchasers and consumers need transparency for three primary reasons: (l) to help 

purchasers contain health care costs; (2) to inform consumers' health care decisions as 

they assume greater financial responsibility; and, (3) to reduce unknown and 

unwarranted price Variation in the system. 

PURCHASER COST SAVINGS Based on a 2012 report, health care costs rose only 5.4% 

in 2011 because of benefit plan redesign and increases in employee contributions. 

Without changes to plan design and increases in employee contributions, "average cost 

trends would have been 8% in 2011 and anticipated to be only slightly lower (7.4%) 

next year."s Another recent report indicates that large employers expect health care 

costs to rise by 7% in 2013. 6 While this stabilization in trend may be a testament to the 

impact of current efforts, health care costs are still growing at about twice the rate of 

the general Consumer Price Index; in fact, health care cost trends have outpaced wage 

growth for more than a decade. 7 

To address these trends further, many purchasers are implementing a variety of cost 

containment strategies, including care management of high~cost patients, reference 

pricing, centers of excellence for high-cost, complex services, and other strategies 

including wellness incentives and more extensive coverage of preventive care. 

Purchasers aiming to manage health care costs by implementing these payment 

reforms and benefit design changes will find price transparency essential to their 

strategies. Some of the most promising approaches such as reference and value pricing 

cannot be implemented effectively without price transparency.s 
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SUPPORTING CONSUMERS AS THEY ASSUME GREATER FINANCIAL 

RESPONS!B!L1TY As health care costs continue to rise, most purchasers are asking 

their consumers to take on a greater share of their costs, including both health 

insurance premiums and out·of·pocket expenses. According to the Kaiser Family 

Foundation, consumers pay 47% more for coverage than in 2005 while wages have only 

increased by 18%.~ Furthermore, 34% of employer-sponsored plans have a deductible 

of $1,000 or more for single coverage, more than three times the average in 2006. 

Enrollment in consumer-driven health plans (CDHP), such as health savings accounts 

(HSAs), has risen to 19% of all employer-sponsored plans, making them the second 

most popular plan type after traditional PPOS.l0 According to an American Association 

of Preferred Provider Organizations (AAPPOl~commjs5ioned analysis of the Mercer 

National Survey of Emp!oyer~Sponsored Health Plans, 61% of large employers and 48% 

of all employers expect to offer CDHPs five years from now. These trends, coupled with 

overall increases in health care expenditures, mean consumers now spend $312 billion 

out-of-pocket annuaJly.ll Even with the Patient Protection and Affordable Care Act's 

(PPACA) pending guidelines on the maximum deductible and out-of·pocket expenditures 

for family coverage at $4,000 and $11,900 respectively, these trends will still con'tinueY 

Despite taking on a greater share of their health care costs, consumers cannot be prudent 

health care shoppers without information on quality and price. Consumers research 

quality and prices regularly for a variety of goods and services, from cars and washing 

machines to mechanics and restaurants. Research13 - and common sense - indicates 

they need and want easy-to-understand, quality and price information about their care. 

Consumers seeking non-urgent care would benefit the most from access to price and 

quality information because they have time to examine data and make decisions about 

predictable services, unlike in emergency situations. 14 And consumers have proven that 

when they have price and quality information, they in fact make strong decisions based 

on value. Research shows that when they have access to well-designed reports on price 

and quality, 80% of consumers will select the hjghest~va!ue health care provider.Is 

REDUCING UNWARRANTED VARIATION Several heaith care researchers have 

examined the topic of price variation and found that significant price variation exists 

for hospitals and physician services across markets and even within markets. Without 

transparency, those who use and pay for care may be unaware of the range in potential 

costs and what little relationship price has to quality. In extreme cases, some hospitals 

command almost 500% of what Medicare pays for hospital inpatient services, and more 

than 700% of what Medicare pays for hospital outpatient care.1(; Variation in payment 

to providers can be as much as ten-to-one for services like colonoscopy and arthroscopy 

Some hospitals 

command almost 

500% of what 

Medicare pays for 

hospital inpatient 

services, and more 

than 700% of what 

Medicare pays for 

hospital outpatient 

care. 

The implementation of a transparency tool with consumer adoption and behavior change can 

provide cost reductions for purchasers. For example, a purchaser with a median health care 

cost trend and 20,000 consumers could expect to save $6.7 million of health care spending over 

three years. This projection is based on consumer adoption rates of 10% in the first year to 50% 

by the third yearY Coupling transparency with related benefit strategies has proven even more 

effective. CalPERS instituted limited price transparency and reference pricing with high-quality 

medical centers for hip and knee replacements and estimated $16 million in savings in 2010.'8 

Price Transparency 
74 


87496.032

Without price 

transparency, it is 

difficult for anyone to 

understand the extent 

of price variation, its 

causes, or the ability 

of purchasers to 

address the problem. 

in a single geographjc area.1S Studies on price variation suggest that it 15 largely due to 

provider market power resulting from "must have" status in a network, unique service 

offerings, and/or size. 20 The recent trend in provider consolidation has given some 

provider systems even greater market power relative to their peers,n Recent reports 

from the Health Care Cost Institute show a 4.6 percent increase in private spending 

over 2010~2011, due almost wholly to higher prices, not utilization or the intensity of 

services.19 Without price transparency, it is difficult for anyone to understand the extent 

of price variation, its causes, or the ability of purchasers to address the problem> 

WHAT ARE SOME OF THE EXISTING EFFORTS ON PRICE 

TRANSPARENCY? 

Health plans, with their extensive data on claims, contractual reimbursement, 

credentiating and quality information, may be best positioned to disclose price and 

quality information today. Some health plans are trying to offer members access to 

shopping and transparency tools; however, many of these tools are currently limited in 

their scope and in the specificity of provider prices. This is partly due to pressure from 

the providers with whom they negotiate, operational challenges with respect to the data, 

and limitations of existing consumer portals, The additional presence in the market of 

other independent vendors developing similar tools is also likely spurring the creation 

of better tools at a faster rate. States and the federal government may also take steps to 

move price transparency forward in a comprehensive and meaningful way, 

KEY ELEMENTS OF COMPREHENSIVE TRANSPARENCY TOOLS FOR CONSUMERS 

CPR has developed a comprehensive set of 'petit/cations to help purchasers evaluate existing health care transparency tools. Such tools must provide access to broad information about providers and the services they offer. 

The best tools will present information intuitively so consumers can easily use it to decide where to go for care. 

Ideally, information would be on a single integrated platform of web and mobile applications and paired with 

trained support personnel such as nurses, coaches, or other customer representatives. 

CPR developed these specifications after reviewing the capabilities of existing tools and with consideration of 

criteria developed by other organizations. The specifications fall into five categories: 

1. Scope - the comprehensiveness 01 provider, including in-network and out-ol·network providers, 

and service information, including price, quality, and consumer ratings. 

2. Utility - the capability of the tool to facilitate consumer decision making through features that 

permit comparisons of health care providers' prices, quality, and care settings. 

3. Accuracy - the extent to which consumers can rely on the provider, service, and benefit information. 

4. Consumer Experience - the user-friendly nature of the tool, including the availability of mobile 

applications and easy·to-find, easy-to-understand information. 

5. Data Exchange, Reporting and Evaluation - the extent to which claims data are exchanged with 

purchasers according to all privacy laws, the ability 01 purchasers to USe the data with third·party 

vendors, regular reporting to the purchaser, ongoing improvement of the tool, and the ability of 

users to rate the tool. 

4 CATALYST FOR PAYMENT REFORM 
75 


87496.033

HEALTH PLAN TOOLS AND PURCHASER DATA National health plans are heeding 

the call from purchasers to share price and quality information with consumers and 

are developing transparency tools for their patient members to help them access and 

understand these data. Some plans have had tools for several years, while others Just 

months. Even in the most sophisticated tools, precise price transparency is still relatively 

rare. CPR's review of the current cost calculators or estimators offered by some of 

the largest health plans 23 found they provide varying levels of price transparency for 

select services. The Pacific Business Group on Health also recently performed a "secret 

shopper" study of the tools developed by major health plans. 24 The r{'suils demonstrate 

wide variation in their functionality and cost comparison capabilities. Examples of 

differences include variation in the number of services for which price information 

is available and the ability to compare prices across care settings. In response, some 

purchasers are turning to third*party vendors - separate from their health plans - to create 

tools for their consumers. However, this requires health plans to release purchasers' 

data to a third·party vendor, which many health plans have not yet agreed to do. 

OTHER VENDORS' ACT1V~T!ES like health plans' tools, other vendors' tools vary in 

functionality and in the scope of information they offer, Many tools focus solely on 

price, or estimates of price, Others exclusively present quality and patient·submitled 

reviews, Some tools even alert consumers about opportunities to lower their outof*pocket costs and can be customized to individual benefit designs. Only a few 

comprehensively provide information on Quality, price, patient experience, network 

providers, and benefit design, 

These transparency tools also have their limitations, Other vendors typically do not 

have access to real-time data for their tools as health plans do. They may also have to 

obtain medical, pharmaceutical, behavioral and other clinical claims data from multiple 

sources to populate the tool. Despite these limitations, other vendors' tools playa 

valuable role, particularly when health plan tools do not meet the needs of purchasers 

and consumers, Their presence in the market enhances competition and spurs 

innovation to make more robust, user-friendly too!s available, 

STATE ACTIVITY Currently, 34 states require reporting of hospital charges or 

reimbursement rates 25 and more than 30 states are pursuing legislation to enhance 

price transparency in health care,·6 The structure and requirements of the laws and 

pending legislation vary widely by state and some only include pilot programs and pre~ 

implementation steps. While most states have some disclosure requirements in place, 

these statutes generally do not cover the actual prices specific providers charge for 

performing specific treatmentsY 

Currently, 34 states 

require reporting of 

hospital charges or 

reimbursement rates 

and more than 30 

states are pursuing 

legislation to enhance 

price transparency in 

health care. 

Price Transparency 
76 


87496.034

When well-designed 

databases collect 

the right information, 

they can transform 

data into valuable 

price and quality 

information. 

In recent years, severa! states, such as Massachusetts, Maryland, and Utah, have 

also established databases that collect health insurance claims from health care payers 

into statewide repositories, Known as "all-payer claims databases" (APeD) or "all-payer, 

alklaims databases," they are designed to inform policymakers and other stakeholders 

about various state-based cost containment and quality improvement efforts, According 

to the APeD Council, nine states operate mandatory APCDs,28 three states are currently 

implementing mandatory APCDs,29 and two states have voluntary APCDs. 311• 31 State laws 

can direct an APeD on what information it collects and reports. When weU-designed 

databases collect the right information, they can transform data into valuable price and 

quality information. 

California has a new voluntary, mUlti-payer claims database managed by the Pacific 

Business Group on Health, The new platform, a nonprofit entity called the California 

Healthcare Performance Information System (CHPI), will pool claims and other data 

from California health plans and CMS. CHPJ is applying to be deemed a Medicare 

Qualified Entity so that it can include Medicare claims data (on California's Medicare 

beneficiaries). CHPI wHl produce physician, group and hospital performance ratings 

using quality, efficiency, and appropriateness measures, 

States have taken additional steps to ensure that claims information is not restricted under 

contractual stipulations such as "gag clauses." California recently signed into law S81196 

which states, "No health insurance contract in existence or issued, amended, or renewed 

on or after January 1, 2013, between a health insurer and a provider or a supplier shall 

prohibit, condition, or in any way restrict the disclosure of claims data related to health 

care services provided to a policyholder or insured of the insurer or beneficiaries of any 

self-insured health coverage arrangement administered by the insurer,"32In practice, the 

law wi!! allow plans to share data with Medicare Qualified Entities, 

Some states have developed their own price transparency tools for consumers. 80th 

New Hampshire and Maine have posted health care costs on state-sponsored websites 

called Ne\v HatnpsfHc He,lIth Cost and ivldi',L' H('81V1CoSt respectively. Using these 

A 2010 Commonwealth Fund report states that "APCOs are proving to be powerful tools for all 

stakeholders in states where they are being used, filling in long-standing gaps in health care 

information. They include data on diagnoses, procedures, care locations, providers, and provider 

payments, and offer both baseline and trend data that will guide policymakers and others 

through the transitions that health care reform will bring in years to come. As with all data sets, 

there are limitations to APCO data, but capturing information from most if not all of the insured 

encounters in a state can still create a powerful information source." The report also indicates the 

challenges APCOs face, despite some positive results. "While APCOs have undeniably proven to 

be valuable where they are in use, their development and implementation require states to 

resolve the numerous political and technical challenges associated with large-scale information 

systems. Such challenges include engaging and educating all major stakeholders, determining 

governance and funding, identifying data sources, and determining how the data will be 

managed, stored, and accessed." 

6 CATALYST FOR PAYMENT REFORM 
77 


87496.035

sites, both insured and uninsured individuals can compare the prices of various medica! 

services for different providers. Similarly, Minnesota state officials unveiled a new too! for 

insured consumers to gain access to average negotiated rate information on the website, 

M 

FEDERAL ACT!VITY The federal government can also playa role in transparency. One 

of the best examples of price transparency in a federal program is the disclosure of drug 

prices in the Medicare Part D program, signed into law in 2003. For most individuals, the 

Part 0 benefit is structured so that an individual pays 100% of the cost of a drug when he 

or she IS in the "donut hole" (after exceeding the initial prescription coverage and before 

reaching an annual maximum for out-of-pocket costs). Medicare provides an online 

tool where an individual beneficiary can enter the name and dosage of the drug and a 

database wi!1 provide the beneficiaries with their expected out-of-pocket costs. 

Medicare also offers a HO$;:Jlt2d Con~pare wGb:-.lte, which allows Medicare beneficiaries 

to compare the quality of hospitals in their area. The website provides a "snapshot" 

of hospital quality and includes six aspects of care: timely and effective care; 

readmissions, complications and death; use of medical Imaging; survey of patients' 

experiences; number of Medicare patients; and Medicare payment. By making this 

information available on the federally-managed Hospital Compare platform, the federal 

government has taken a step in the right direction. However, to make the site truly 

valuable for patients, Medicare needs also to share price data. Finally, the Patient 

Protection and Affordable Care Act (PPACA) of 2010 includes a provision that requires 

hospitals to provide charge information to the public annually.33 

WHAT ARE THE CHALLENGES TO ACHIEVING PRICE TRANSPARENCY? 

While our health care system has made significant strides in publicly reporting data on 

provider performance and quality, purchasers, plans, providers, other vendors, and policy 

makers need to do more to help price information flow freely, both overall and for specific 

services. A number of obstacles to achieving this goal exist, including the complexity of 

the health care marketplace itself. Our health care system has enormous variation in care 

delivery, different approaches for measuring outcomes, and wide-ranging products and 

services. The diversity of payers in a market that contract with providers at different rates 

and serve different populations (e.g. Medicare, Medicaid, individual, group) compounds 

the comple~ity. As purchasers, providers and policymakers pursue change, lack of 

provider competition, health plan restrictions on data use, and policymakers' concern 

about the "unintended consequences" of price transparency also pose challenges. 

LACK OF PROVIDER COMPETITION Lack of provider competition in a market, 

particularly among hospitals and specialists, makes it easy for some providers to refuse 

to reveal prices to consumers. The major health plans have attempted to address this by 

removing so~caned "gag clauses" from their contracts or by working with facilities outside 

of the normal contracting cycle to seek permission to share their price information in 

transparency tools. Much effort has been made to remove such contractual barriers 

to transparency, but there are still gaps in the information accessible to consumers, 

particularly in markets like California. legislation, such as the California example above, 

can address this issue - essentially preventing providers from entering into contracts that 

don't allow plans to share data with plan members or a Medicare Qualified Entity. 

HEALTH PL4N RESTRICTIONS ON DATA USE Due to restrictions from health plans, 

many self-funded purchasers face challenges with using their own claims data to build 

transparency tools for their consumers. These purchasers receive information and data 

Lack of provider 

competition in the 

market, particularly 

among hospitals and 

specialists, makes 

it easy for some 

providers to refuse 

to reveal prices to 

consumers. 

Price Transparency I 7 
78 


87496.036

Purchasers believe 

that more competition 

between those 

developing and offering 

transparency tools will 

promote innovation 

and better serve the 

needs of consumers in 

the long nin. 

8 CATALYST FOR PAYMENT REFORM 

from contracted health plans and their data vendors, but still may wish to contract with 

other parties to build price transparency tools fortheir consumers. However, some 

health plans do not allow purchasers to give information to other vendors about the 

prices the plan paid to providers for the purpose of price transparency, arguing that 

price information is proprietary and confidential, even though it was the purchaser's 

funds that paid these claims. With third~party vendors increasing the options in the 

market, more purchasers are raising the issue of "who owns the data'" in private and 

public dialogues. 

This controversy may be less about the Jaw, and more about health plans' interests. 

Sejf~funded purchasers, insurers, and third~party data vendors must all adhere to 

applicable privacy laws and regulations, including H1PAA, ERISA and HfTECH. The 

transfer of data between such parties is protected under these laws and regulations, 

Health plans, in their effort to be responsive to market demands for greater 

transparency, are developing more sophisticated and proprietary transparency 

tools using the claims data. Their investment in these tools is significant and they 

have concerns that providing claims data to other vendors will introduce or support 

competing products. 

Unfortunately, with this restriction on the data, purchasers and consumers may be 

losing out. Purchasers who conclude that a plan's tool is not robust or consumer~ 

friendly or meeting their needs in some other way, may want to pursue other options. 

Purchasers largely believe data about their funds paid to providers belongs to them 

and that they have the right to provide it to whoever can perform the services they 

need. Furthermore, purchasers believe that, in the long run, more competition among 

those developing and offering transparency tools will promote innovation and better 

serve the needs of consumers. 

UNINTENDED CONSEQUENCES Of PRICE TRANSPARENCY While price transparency 

can help purchasers design value~based benefits and address unwarranted price 

variation, there are we!l~founded concerns about the potentia! unintended, negative 

consequences of price transparency. For instance} price transparency without quality 

information could perpetuate consumers' misconception that prices correlate with 

quality, with some consumers thinking higher-priced care is better. Furthermore, while 

standard economic theory suggests that price transparency leads to lower and less 

varied prices, price transparency also has the potential to generate higher prices and 

anti-competitive provider behavior, 

For example, Hospital A could analyze Hospital 8's prices across town and decide to 

negotiate for increases if Hospital 8 seems able to charge more without sacrificing 
79 


87496.037

volume. Similarly, physicians and hospitals could use price information coHectivety to 

set the level of discounts to negotiate with health plans. Further, jf all prices are public, 

it could dilute a health plan's ability to negotiate favorable volume discounts. This 

could result in higher health care costs for purchasers and consumers, at least in the 

short term. And finally, price transparency could cause confusion among the general 

public, at least initially, as individuals' out~of~pocket costs vary with their insurance 

status, source of coverage (private, public, uninsured), and benefit design. One marketbased solution to mitigate this potential unintended consequence is to make sure that 

consumers have access only to their own relevant pricing information based on their 

health plan and specific benefit design. 

Policymakers can also take steps to remedy these problems, Policymakers can and 

should use existing laws to monitor marketplace behavior, as they do in other industries, 

to ensure that providers do not use price data in an anti-competitive manner. 

When plans limit access to the claims, price, or reimbursement data necessary to 

populate robust consumer shopping tools, they disadvantage purchasers and 

consumers, To minimize or avoid unintended consequences, sharing data to develop 

transparency tools must be done carefully and constructively, The more health plans 

and other vendors there are offering tools to meet the demand from large employers 

and purchasers, the more competition there will be to produce better tools. When plans 

control the data for competitive or proprietary reasons, they restrict the strategies and 

tools purchasers can use to control health care costs and enable consumers to maximize 

their benefits and engage in informed decision-making, As providers, health plans and 

purchasers make more information on price and quality accessible, consumers wll! 

become more educated about value, learning that more expensive care isn't always best. 

ACTIONS PURCHASERS CAN TAKE TO DRIVE TRANSPARENCY 

Purchasers can and should playa central role in ensuring consumers and their 

families have access to comprehensive, easy-to-use tools that provide understandable 

information about health care quality and price. Purchasers can: 

't, Require their contracted health plans to: 

11 Provide easy-to·understand price and quality comparison tools to consumers, 

(CPR's InformatiOn, tv10dct 

and can support and guide this conversation); 

~ Help educate consumers about the benefits of using such too!s and their 

functionality; and, 

'/> Allow purchasers to share their claims data with third-party vendors for building 

a transparency tool for consumers or for he!p with claims data analysis and 

interpretation. 

2. Educilte their COf15Umer5 about hew price transparency tools CilO help them make 

important decisions about their health care and how to use them: 

" Use the PBGH ''Tip ShL'C'ij

, to identify tactics to encourage 

consumers to register for and use their plan's cost calculator tools; 

.. Build on price transparency tools with innovative benefit designs and payment 

reform programs, such as reference pricing and packaged·pridng for specific services 

like maternity care that will make the price information highly relevant; andl 

" Encourage consumers to ask their physicians and other providers for an estimate of 

what they will charge before receiving care, 

Policymakers can 

and should use 

eXisting laws to 

monitor marketplace 

behavior, as they do 

in other industries, 

to ensure that 

providers do not use 

price data in an anticompetitive manner. 

Price Transparency 9 
80 


87496.038

ABOUT US 

Catalyst fOI' Payment Reform 

is dn indep-endenC non -profit 

corporation working on behalf 

of large employers to catalyze 

irnprovements in how we 

pay for tWillth services and to 

promote bet1Pr and higher 

va!ue care In the U.S. 

3. Be vocal about the need for effective price transparency: 

.. Endorse CPR's "StJtt'lnNlt on Tramp<lfrncy" and stand behind it in the sourcing, 

contracting and management of health plans and other vendors (sign on h€re); 

.., Support health plans and other vendors who are developing these tools by 

sending the message to providers that transparency is important to you and your 

consumers - their patients; and, 

• Use CPR's Specifications for transparency tools in the development of a new tool or 

in the evaluation and comparison of existing tools. 

4. Take part in statewide datil collBction efforts: 

.. Statewide data collection efforts can improve access to credible quality and cost 

information. A fart \he(~t prepared by the AI!~Payer Claims Database Council provides 

background information. Their webs'lte also lists state efforts: http:! A~pcdcouncd.org/; 

• California purchasers can visit w·ww.pbgh,org!CHP! to learn more about the 

California Healthcare Performance Information System, the new mu!ti~payer 

claims database in California; and, 

,. If gag clauses or other contractual provisions between health plans and providers 

create barriers to the release of quality and price information in your area, 

support efforts -voluntary or legislative - to make that information transparent. 

Write a letter to the involved parties (e.g. hospital CEOs) indicating that you and 

your consumers want them to make this information available, 

CONCLUSION 

Purchasers believe making quality and price information transparent to consumers is 

a powerful building block for supporting them in making more value-oriented choices, 

which can improve quality and reduce costs for everyone. Yet barriers to price transparency 

remain, including pushback from providers and limitations on data~sharing by the 

health plans. Purchasers will continue to encourage health plans to develop robust, 

consumer-friendly transparency tools and to share data with other vendors so they 

can do the same, CPR's health plan RFI questions and model contract language can 

help purchasers to push plans on transparency and related payment reform strategies. 

Purchasers can also engage in advocacy and regional efforts to collect data, such as 

all-payer claims databases. Finally, purchasers can use CPR's specifications to compare 

existing transparency tools and select one that meets their needs. Using these tools, 

purchasers can foster transparency, driving the health care marketplace doser to 

meeting the needs of those who use and pay for care. 

1 M","surem"rltentenaoutlinedln(hePatlerltCh>irt"rlcrPhy.le,arlp"rrcrmance MarketPower" Cente, for Studying Health Sy.tem Change, 2010. 

17,He~lthC~reCo.tln'l1tute, "Heallh Care Cost and UtllllatlonRepon: 2011." Sept'lmber2012 

18,Co!uni,BobbL"WhltePaper:$ave$36SllilonlnU.S.Healthr:areSpend<ngThroughf'rIC'" 

Tran,p~rerlcy."Thom<onReuters:l-16. 

Measur'lment, R~portirlB arid Tlen"tg PrOBram. (the "Partent Charter"). Ava,lable at http:// 

h'lalthcaN!d:sdosur~orgjdo<:~/fi~s/PatientCharter.pdf 

2 Go .... rnment A~courltirlg: Offic" (GAO). "M"anmgful Pntelnformation Is Difficult for Consumers 

to Obtain Prior to Recelv,ng Care" September 2011. Ava,lable at. http://www.gao.gov/products! 

GAO·ll·191 

3. ibid,GAO 

4. Ibid,GAO 

5. Towers Watson and NatlonalBusiness Group on H~alth. "performance ,n "rI Era of Uncertainty.w 

17th Annual TowersWatson!Natlorlal 6usiness Group On Health €mp Icyl!r Survey on Pun:hasing 

ValuemH'lalthca~,2012 

6 Nabonal8us'ness Group On Health. "large U.S. Employer. E~pect to Hold Health car'l Sendlt 

Costll"!crea.est07%irl2013.Natiorl,,18usirlessGrouponHealthSurveyFirld."PreHRelease, 

August 6. 2012. AvaIlable al: http://www.bllSinessgroupheallh.org!prenrelease.c/m?ID''201 

7 Ibld,Towers Watlon and Natlonal Business Group Ol"! H'lalth. 

8. Catalyst for Pavment Reform. uFrom Reference to ValuePriclngff. 2011 ,Availableat'http:// 

www.cataJVlepaym .. ntreform.org!uploads!CP.CA<:tiOll_8rief_Ref.lr.lnce_Prlclng.pdf. 

9 Employer HealthSenefits 2011 Annual Survey, Washington: The Henryl. Kaise,Family 

Fo~nd3toorl,september2011.Allai!ableat:http://ehbskffo,g 

10. The Henry J. Kaiser family foundation. "Employer Health 8enefns 2012: Summary of Findings", 

KaIser hmlly foundation & Health ReS'lllreh & Education Trust, 2012 

11.CMS OACT, ~Nanol"!al Heafth hpendlture Projections 2010·2020", July 26, 2011, p: 1-22. 

12 The Henrv 1. Klmer Famdy foundation "Summary of New Health Reform law". ApnllS, 2011. 

AvaiLllb!e at: hnp:Jfwww.kff.oll!/heatthre[mmfupload/8061.pdf 

13.Glnsbul"g, PS. "Shopping fur P'"e m MedIcal Care." Hea!thAfta!(s 200 7; 26(2)'1I<208-w216, 

14,lbid,Girlspu'Il,2007 

15 HIbbard, JH., el at. "AI"! E~periment Shows That a Well·Designed Rel'Ort on Co.l, and Quahly 

Can Help Consu,,:efl Choose H'Bh-Value Heallh C"m." Health Affa"" 201 2; 31{3} 560--568. 

16.Glnsberg, PB. "W,de Vlmabon in Hosp;tal and phYSician hyment Rate. Ellidence of PrOVider 

10 CATALYST FOR PAYMENT REFORM 

19.Johnson, li. Becker. RL "An Alt'lmatiw Health·car'! Reimburseml!ntSymm - Appncatiorlof Arthros· 

copvand f",anc,aIWarranty· Re,ultsofa 2'Year Pilot Study," Arthrosc opylO,4(1994):462·470 

20. Massa~husetts Attorney Gel"!eral. "Examination of Heatth care Co.t Trend$ and Colt Orillers." 

June 22, 2011. AI/allable at· http://wwwmassgov/agojdocs/healthure/2011·hoctd,pdf, 

21.Beren<on, RA., et al. "The Cirowl11B Power of Some Prov,ders 10 Win Steep Payment Incr'la~e$ 

from Ins..,r'l", suUem Pohey RemedIes May Be Needed," Health Affans 2012; 31(5l: 973-981 

n.Robm50rl,lC,MacPherson,K. "PaY'lrsT'lst Refererlce Pricing an d Centers of Excellence to $te'lr 

PatienlstoLow·Pnceand Hlgh,QualityProviders." Health Affai's 20 12; 31{9j; 2028-2036 

23.Aetna,CiBna,UMedHealthcareandW'lIlPomt 

24.Aetna, Anthem, CigM, HeallhNer, Kaf~er Permanente, and: UnitedHealthcare 

2S.SinaikoA,RosenthaiM."lncrea.edpncetransparencyml\ealrhcare-chatleneesandpotential 

effects." New Engial'ld lo"rnai of Med,eine 2011,364·S91-894. 

261bid,Sm3iko 

27. NatiOl'lal Conference of State legislature. "State ActioM Re!atin gtcTr3r1SparencyandD;sdosure 

ofHeallh and Hosp,tal Charges" Updated ApnI2012. Ava!labl'l at: http://www.ncsl.<lrg/iuuesresearch/heallh/tranlpa~ncy·and·d,s<;losufe·heallh·costi.~SPl( 

28 KS, MA, MD, ME, MN, NH, TN, UT, VT 

29.CO,OR,WV 

30.WA,WI 

31.APC{) Council, a coll~boraticn between the Unlvefl;tv of New Hampshire and 1M National 

As~oC!ation of Health Data OrgaO!~ations, http"/lwww.apcdcouncll.org. 

32 Cahforma LegIslative Information S81196. Availabie at: h"p.J/leglnfc.i'lglslatur'lCaBOv!fao,,~! 

blilH,storyChent)(html 

33.Sectlon2718,Thef'~tientProtectional"idAffordableCar'lActof201O. Provision ert..ctlve m 2010 
81 


87496.039

ABOUT US 

CATALYST 

PAYMENT 

REFORM 

(iltillyst for Payment Reform 

is an independent non-profit 

corporation working on behalf 

of large employers to catalyze 

improvements in how \ve 

pay for health services and to 

promote betler and hlEhervalue care in the u.s. 

Comprehensive Specifications for the 

Evaluation of Transparency Tools 

INTRODUCTION 

As health care costs continue to rise, consumers, including employees, their families 

and dependents, are taking on a growing share of their health care costs. Seeking to 

implement strategies to help them manage those costs, health care purchasers, including 

large employers and states, recognize they need to provide consumers with information 

on both prices and quality along with incentives to seek high-value care. While the health 

care system has made information about quality more transparent in recent years, 

much more work needs to be done to advance price transparency and to connect price 

{particularly consumers' expected out-of-pocket contribution} and quality (especially 

outcomes measures and other measures of safety, effectiveness, timeliness, efficiency, 

equity and patient centered ness) data to capture overall value. Health plans and other 

vendors are developing transparency tools to meet some or all of these needs. 

To help purchasers evaluate and compare available tools, CPR developed specifications 

for optimal transparency tools. These specifications include price, quality, provider 

information, consumer engagement, treatment-decision support and other features. 

CPR understands that these tools wi!! evolve over time based on consumer needs and 

demands and that current tools are unlikely to include all specifications. However, the 

specifications will support purchasers working with health plans and other vendors to 

develop tools that meet their needs and those of consumers. We hope they will also 

spur developers of transparency tools to broaden the scope of providers, services, 

and markets these tools address. 

CPR developed these specifications after reviewing the capabilities of existing tools 

and with consideration of criteria developed by other organizations (see last page for 

acknowledgements). The specifications fall into five categories: 

.. Scope - the comprehensiveness of providers, including in-network and outof-network providers, and service information, including price, quality, and 

consumer ratings . 

.. Utility - the capability of the tool to facilitate consumer decision making through 

features that permit comparisons of health care providers' prices, quality, and 

care settings. 

.. Accuracy - the extent to which consumers can rely on the provider, service, and 

benefit information. 

" Consumer Experience - the user-friendly nature of the tool, including the availability 

of mobile applications and easy-to-find, easy-to-understand information. 

'" DatI) Exchange, Reporting and Evaluation-the extent to which claims data are 

exchanged with purchasers according to all privacy laws, the ability of purchasers 

to use the data with third-party vendors, regular reporting to the purchaser, 

ongoing improvement of the tool, and the ability of users to rate the tooL 

Comprehensive Specifications for the Evaluation of Transparency Tools 
82 


87496.040

INSTRUCTIONS 

As purchasers address consumers' need for transparent price and quallty data, they will be faced with comparing tools with 

various options and features; some of these are more important than others. At a minimum, CPR recommends purchasers use its 

"Core Transparency Too! Specifications" to compare and evaluate tools. For a more comprehensive, thorough evaluation 

of a transparency tool's full ccpabilities, CPR recommends using the "Expanded Transparency Too! Specifications:' 

TRANSPARENCV TOOL SPECIFICATIONS 

YES NO 

o 

CORE SPECIFICATIONS 

Comprehensive provider cQverage 

At a minimum, the tool should include information 

on aU network physicians and hospitals. Ideally, 

the too! wou!d also include lnformation on outof-network physicians and hospitals. 

Comprehensive servin:: coverage 

Indudes al! medications, services, and 

procedures (inpatient, outpatient, diagnostic, 

office visits, etc.). 

Meaninglu! provider information 

Includes provider performance (e.g. physician 

recognition awards, quality indicators for 

the individual physician or his/her affiliated 

medical group, patient experience), contact 

information (e.g. phone, address, email, access 

hours), whether or not accepting new patients, 

credentials (e.g. board certifications, education, 

relevant specialty information), Maintenance 

of Certification, languages spoken, and network 

status (in-network, out-of-network). 

Meaninefu! service lnforrrrJ;llcm 

Includes, at a minimum, relevant information on 

quality (including outcomes measures and other 

measures of safety, effectiveness, timeHness, 

efficiency, and equity), price (including out-ofpocket contribution and total price), and patient 

experience to support consumers seeking valueoriented care. 

2. CATALYST FOR PAYMENT REFORM 

or comparing the- capal1ilities ot va,io!,!" tran~pBrency :001<; by 

SCOPE 

If YES, the (ore 

specifications are 

met, consider 

evaluating 

the expanded 

specifications. 

If NO, the core 

specifications are 

not met, talk to 

your vendor or 

conSider other 

tool options. 

YES NO 

EXPANDED SPECIFICATIONS 

Consumer finandalliability 

Displays consumer financial liability based on 

remaining deductible, capay, and Dut-of~pocket 

maximum to show likely price of care at the 

moment of query. 

Integrated savings and account balances 

Savings and account balances are integrated 

across health savings accounts (HSA, HRA, FSA) 

so patients know amount of funds available to 

pay for services. 

Consumer engagement tools 

Additional features available to engage 

consumers, such as real-time messaging, email 

exchange between provider/plan and consumer, 

savings calculators, highlighting of high quality 

providers, etc. 

Addressf':s health literacy 

Includes lay terms when describing services, as 

well as detailed medica! explanations. 
83 


87496.041

YES NO 

CORE SPECiFiCATIONS 

(nterfa-ce 

Users can obtain price, quality, provider, and 

personalized information (e.g. account balances, 

benefit design, etc.) through an intuitive, easy-to" 

navigate interlace. 

UTILITY 

If YES, the core 

specifications are 

met, consider 

evaluating 

the expanded 

specifications. 

If NO, the core 

specifications ar€!: 

not met, talk to 

your vendor or 

consider other 

tool options. 

YES NO 

o 

[J 

o 

EXPANDED SPECIFICATIONS 

FleKible search capability 

Allows various search capabilities {e.g, by 

procedure category, specialty, centers of 

excellence, accountable care organization, 

PCMH, location, price, quality, provider name, 

and in-network vs. out-ot-network}, 

Compares alternative health care settings 

Allows for comparison of alternative care settings 

(e.g. ER vs. urgent care vs. retail clinic). 

Emphasis on high-value providers 

Clearly identifies higher~value providers using 

easy-to-understand and easy-to-identify words 

or symbols. The methodology behind the value 

distinction should be made available to the 

Consumers can see how well they shop 

Provides consumers with real-time, annual, 

personalized scorecards about their own health 

activities, including use of high-Quality/efficient 

providers, price of servkes, in- and out-of·network 

use, use of services, and overall financial impact of 

choices compared to benchmarks where possible. 

Consumers have access to clinical support 

Users have access to live telephonic and online 

patient education and decision support (e.g. 

diabetes information, treatment options, 

etc.), financial guidance (e.g, how to use the 

benefit efficiently), reference pricing, and other 

programs (e.g. centers of excellence, tiered 

networks) from people trained to explain health 

and benefits. 

Appointment scheduling 

Provides assistance with online appointment 

scheduling and personalized calendars that 

display and alert user of upcoming appointments 

and the need for preventive screenings. 

GPS capability 

Provides users with maps and directions to 

provider offices. 

D Information security 

Fully compliant with aU data and information 

security methods (HIPAA compliant at a 

minimum). 

Comprehensive SpeCifications for the Evaluation of Transparency Tools 3 
84 


87496.042

YES NO 

CORE SPECIFICATIONS 

Presentation of information 

Presents information in a format that facilitates 

informed decision4 maklng by consumers, including 

the ability to compare providers' prices, quality, 

and care settings. 

4 CATALYST FOR PAYMENT REFORM 

UTILITY 

If YES, the core 

specifications are 

met, consider 

evaluating 

the expanded 

specifications, 

If NO, the core 

specifications ore 

not met, talk to 

your vendor or 

consider other 

tool options. 

[J 

EXPANDED SPECIFICATIONS 

Provider rating 

Allows users to rate and review providers and 

publishes their ratings and reviews to make them 

easily accessible to aU users of the too!. 

Mail"order medications 

Allows users to fil! or refill prescriptions online to 

be delivered by mail. 

o Procedure labels 

in 

Procedures are displayed simuttaneously by both 

common name and procedure code, including 

ICD-9 & ICD·lO when available. 

Customized user profiles 

Allows consumers to save user-specific 

information, such as demographic information, 

benefit design, status of deductibles, coinsurance, 

account balances (HRA, HSA), copayments, 

location, provider preferences (e.g. name, 

gender, experience), treatment preferences, 

EHR, historical usage, benefit design, status of 

deductibles, and user-generated notes. 

Includes physician-hospital relations 

Displays physician and hospital relationships 

where physicians have privileges for applicable 

specialties and diagnoses/procedures. 

Integration with Patient Medical Record (PMR) 

Allows for and automates the transfer of provider 

cost and quality information to the PMR. 
85 


87496.043

YES NO 

CORL SPECIFICATIONS 

Timely and up"to~dJte 

Servlce (e.g. prlce and quality) and provider {e.g. 

location and contact} information is accurate and 

updated regularly to ensure accuracy. 

Pri(.:e information 

Price information reflects the total out~of-pocket 

expense (induding remaining deductible. capay, 

and out-of-pocket maximum reached) for a 

specific service at the moment of query, based 

on the individual consumer's benefit plan and 

provider-specific contracts (both negotiated 

in-network and expected out-of-network). The 

price should reflect the actual price and not the 

average price for a region. 

Quality information 

Quality information is based on direct outcome 

measures when avallable. and otherwise is 

based on nationally-endorsed, consensus-based 

process or structural measures. Performance 

measurement should follow the criteria outlined 

in the Patient Charter for Physician Performance 

Measurement, Reporting and Tiering Programs 

(the Patient Charter) found at htttJ'//hedl~!'(d'(> 

ACCURACY 

If YES, the core 

'Specifications are 

met, consider 

evaluating 

the expanded 

speclfications. 

If NO, the core 

specifications are 

not met, talk to 

your vendor or 

consider other 

tool options. 

YES NO 

[J 

EXPANDED SPECIFICATIONS 

Price sources 

If contracted rates are not used, price information 

should be based on the following: 

1. Historical prices: Physicians For physicians 

(groups and individuals), price information based 

on actual unit price derived from historical claims. 

2. HistoriG.ll prices: Hospitals For hospitals (systems 

and individual), price information based on 

actual unit price derived from historical claims. 

3, Historical prices: Pharmacy For pharmacy 

services price information based on actual unit price. 

Bundled services 

For complex services (e.g. knee replacement), 

price, displayed as a single price estimate, 

reflects all services expected to be included. 

Consumer-specific estimates 

Price estimates reflect users' health status and the 

complexity of the level of services when possible. 

Quality information is actionable/reliable 

Quality data is provider-specific and is only 

displayed when a sample size yields a confidence 

level of 90% or greater. 

Process measures of quality 

When no outcomes data are available, quality 

information is based on nationally-endorsed, 

consensus-based process measures, or measures 

proven to lead to improved clinical outcomes (e.g. 

eMS quality metrics, leapfrog quality indicators 

and other measures developed in alignment with 

the Patient Charter for Physician Performance 

Measurement, Reporting and Tiering Programs). 

Accurate and timely consumer information 

All consumeHpecific personalized information 

induded in too! (e.g. demographic information, 

benefit design, status of deductibles, coinsurance, 

account balances [HRA, HSAj, copayments, provider 

preferences [e.g. name, gender, experience], 

treatment preferences, EHR, historical usage, and 

user-generated notes) is accurate and real time. 

Rationale for missing information 

When accurate information is not available, the 

tool provides an easy-to-understand explanation. 

Comprehensive Specifications for the Evaluation of Transparency Tools 
86 


87496.044

CONSUMER EXPERIENCE 

YES NO 

conE SPECifiCATIONS 

Understimdab!e to tht' consumer 

Tool is comprehensive, simple, and uses commonly 

understood language and symbols that make 

relevant information obvious and coherent to If YES, the' core 

the user. 

Tethno!oglCill platforms 

Information is accessible through web-based and 

mobile applications as weU as through telephone 

customer service. 

6 CATALYST FOR PAVMENT REFORM 

speCifications are 

met, consider 

evalu?:ting 

the expa:nded 

speclficatl-ons. 

If NO, the core 

specifications are 

nat met, talk to 

your vendor or 

consider other 

tool options, 

YES NO 

[J 

[J 

EXPANDED SPECIFICATIONS 

Access to tool 

Tool is easy to identify by users from website 

home-page and access is secure. 

Easily accessibh~ clinical information 

Treatment options and potential alternatives, 

including care setting options, are easy to 

identify and access. Also provides online 

treatment decision support and access to other 

live support. 

Resources to obtain medical records 

Provides consumers with resources to obtain 

their personal medical information and the 

ability to keep It current to help consumers 

personally manage their care and assist in 

decision-making, 

Printability 

DlspJays and information are available in a 

printable (e.g. PDF) format 

Integrates decision support with financial and 

benefit options 

Connects information to other relevant resources 

when members are considering care options, 

including but not limited to, open enrollment, 

benefit coverage materials, health-risk 

assessments, customer support, etc. 

[J Accommodates all consumers 

Accommodates individuals with special needs 

and/or limited technological access, 
87 


87496.045

DATA EXCHANGE, REPORTING AND EVALUATION 

YES NO 

CORE SPECIFICATIONS 

Cldim;dattlaccess 

Contracts between health plans and purchasers 

have no restrictions on a purchaser's access to 

their claims data {within the scope of all relevant 

privacy laws} and book of business rates for any 

given service or bundle of services paid to any 

provider or network of providers, 

O('lt;) sharing with other vendors 

Contracts between purchasers and plans should 

permit the purchaser to receive claims data from 

the plan and share that data with any third-party 

vendor to develop consumer transparency tools 

or to assist with data interpretation. 

ACKNOWLEDGEMENTS 

YES NO 

If YES, the core ' [J 

specifications are 

met, consider 

evaluating 

the expanded 

specifications, LJ 

If NO, the core 

specifications are 

not met, talk to 

your vendor or 

consider other 

tool options. 

o 

EXPANDED SPECIFICATIONS 

Data Format 

Data are maintained by the health plan or 

third"party vendor for future purposes, incfuding 

audits and regular tool improvement. 

Utilization Reporting (Quallty and Savings) 

Vendors should prepare reports to the purchaser 

during agreed upon intervals on the utilization 

of Quality and savings information. Quality 

reports should include data on consumers' use 

of Quality-related resources available in the tool. 

Savings reports should include information on 

the accuracy of the price data, and measure/ 

evaluate a purchaser's specific savings attributable 

to consumers' use of the tool. Such reports 

should also identify opportunities to overcome 

barriers to utilization and efficacy. 

Tool evolution 

Vendors routinely monitor the use of the 

transparency too! and make improvements 

based on usage data and feedback from users. 

Vendors should also update the too! based on 

online consumer trends. 

These specifications were developed after reviewing multiple sources of information and tools related to price transparency. 

Sources include information from: government agencies; quality organizations; other business coalitions; health plans; vendors; 

employer contracts; and the Catalyst for Payment Reform health plan RFI and contract language. 

Comprehensive Specifications for the Evaluation of Transparency Tools 7 
88 


87496.046

CATALYST n FOR 

rAYMENT 

REFORM 

HEALTH CARE 

INCENTNES 

IMPROVEMENT INSTTTUTE~ 

Report Card on State 

P Transparency Laws 

March 18, 2013 
89 


87496.047

o • HEALTH CARE 

-; ~~NT~~ 

DearColleagues., 

As health care costs continue to rise, consumers are increasingly being required to take on a growing 

share. To underscore that point, the most recent survey by Mercer shows that dose to two-thirds of al! 

large employers offer a high deductible/high co-insurance health plan and that close to 20 percent of aU 

commerclally insured health plan members afe enrolled in such plans. In this environment, it is only fair 

and logical to ensure that consumers have the necessary quality and price information to make informed 

decisions about where to seek health care. We have made progress sharing information about the quality of 

care, with organizations like Bridges to Excellence and The Leapfrog Group leading the way and federal and 

state governments getting in on the act. But with recent studies showing us that the price for an identical 

procedure within a market can vary seven-fold with no demonstrable difference in quality, price transparency 

is more important than ever. 

While the private sector has made progress recently in making prices more available to consumers, there 

are still large gaps. States can play an important role in ensuring that consumers have access to both quaOty 

and price information by setting policies and lmplementing laws that advance transparency. The most 

comprehensive, consumer-friendly laws ensure ready access to information and data about a broad range 

of providers and services. 

This Report Card on State Price Transparency laws represents a joint effort between Catalyst for Payment 

Reform and the Health Care Incentives Improvement Institute to examine existing transparency laws in all 

SO states and grade them, using well-defined criteria, on how we!! they support the information needs of 

consumers. The Methodology section of this report contains detail about these criteria. 

We hope the Report Card will inform advocates, lawmakers and policy experts about today's best practices 

or what constitutes a top grade and, over time, generate improvements in public policies across the nation. 

American consumers deserve to have as much information about the quality and price of their health care 

as they do about restaurants, cars, and household appliances. 

Sincerely, 

~ Francois de Brantes, MS, MBA 

Executive Director 

Health Care Incentfves Improvement Institute 

~"Cf~WSuz.anne Delbanco, Ph.D. 

Executive Director 

Catalyst for Payment Reform 
90 


87496.048

I. METHODOLOGY 

Catalyst for Payment Reform (CPR) and the Health Care Incentives Improvement Institute (HCl3) teamed up to 

review state-specific laws focused on price transparency for health care. The review generated two products: (1) 

a Report Card on State Price Transparency Laws and (2) a reference table that provides the details of the price 

transparency laws for each state, 

CPR and HCP examined statutes and enacted bills using WestLawNext database, the National Conference on 

State Legislature's website, and web sites from various state legislatures, among other sources. 

This research revealed a wide variety of state laws, with two common and critical elements: (l) varying levels 

of price information and (2) varying levels of public access to that information. Using that continuum, the 

research team established levels of price transparency and scoring criteria. 

Levels of PriCC' Transparency: 

.. Pricing information reported to the State only 

" Pricing information available upon request by an individual consumer 

.. Pricing information available in a public report 

" Pricing information available via a public website 

Scoring Criterl8: 

" Scope of price: including charges, average charge, amount paid by the insurer and amount paid by the 

consumer (allowed amount) 

.. Scope of services covered under the law including: all medical services, inpatient services only, outpatient 

services only or the most common inpatient and outpatient services 

.. Scope of providers affected by the law including: hospitals, physicians, and surgical centers 

Next, the team developed a scoring matrix (shown on following page), which allocates points based on level of 

price transparency and scope of price, services, and providers. 

We evaluated each level of price transparency laws for scope of price, services, and providers. For example, 

if laws required pricing information (both paid amounts and charges) to be posted on a public website for all 

inpatient and outpatient services across all hospitals and providers, the state received full credit (50 out of 

50 possible points) for that level of transparency. However, if the laws required only charges to be posted for 

TABLE OF CONTENTS 

the most common hospital discharges across 

a subset of hospitals, the state received 

substantially fewer points (15 out of 50 possible 

points). We calculated a score for each level 

separately and then summed for a total score 

out of 100 possible points. Every state received 

a cumulative additive score, taking into account 

all relevant laws passed in that state. Thus, 

10 grades do not reflect individual statutes or bills 

but rather each state's overall legislative effort 

ACKNOWLEDGMENTS 

Sa h~y, MPH, prO(~ram 

Implementation Lt~2de>', He!3, and Emilio Galan, 

SpeG'lllniv,lt'\,i("<: '\r:a!yst, Catalyst for Paymrn: RdOITil, 

to thiS pm)€Ct 

toward price transparency for health care. 

The objective of this research was to 

determine how much pricing information each 

state makes accessible to the consumer. As a 

result, we allocated more points to states with 

laws requiring that information be posted on 

a public website than to those with provisions 

for releasing a public report, making the 

information available upon request, and only 

Report Card on State Price Transparency laws 
91 


87496.049

specific to both what was paid for a service and what was charged for that service is more meaningful than only 

releasing what was charged. Charges often are of little value to consumers; the amount that IS actually paid for 

the service, particularly the amount that the consumer is responsible for paying, provides the most actionable 

information. Similarly, releasing pricing information for all inpatient and outpatient services and for all hospitals 

and providers, rather than just the most common services or a subset of providers, is more meaningful to the 

consumer, As a result, we allotted a higher point value to the broader scope of services/providers, 

ii;aUlHWHf.j_&.i,i.,-

Scope of Price legislated Paid Amounts and Charges 

(three leve!s, can only have 1 score out Paid Amounts 4 o(3) 

Charges 

Scope ofServlces legislated AHIPandOP 

(threeleveis, can only have 1 score out 10 AHIP orOP oB) 

Most common IP or OP 

Scope of Health Care Providers : All hospitals and providers 

legislated (three levels, can only have AU hospitals or providers 1 score out of3) 

Scope of Price legislated Paid Amounts and Charges 

(three levels, can only have 1 score out 

of3) Paid Amounts 

Charges 1 

Scope of Services Legislated AlllPandOP 

(three levels, can only have 1 score out 20 AlllPorOP 6 of3) 

MostcommonlPorOP 

Scope of Health Care Providers All hospitais and prOViders 

Legislated (three levels, can only have All hospitals or providers 6 1 score out of 3) 

A 100 Scope of Price Legislated Paid Amoun!s and Charges 

(three levels, can only have 1 score aLIt Paid Amounts 8 of3) 

Charges 

Scope of Services legislated (three AIlIP andOP 3 

levels, can only have 1 score out of 3) 20 AlIlP orOP 

Most common IP or OP 

Scope of Health Care Providers All hospitals and providers 

Legls!ated {three levels, can only have All hospitals or providers 6 1 score out of3) 

Scope of Price Legislated Paid Amounts and Charges 

(three levels,can only have 1 score out 

of3) Paid Amounts 20 

Charges 

Scope of Services Legislated AI!!Pand OP 3 

(three levels, can only have 1 score out 50 AlllPorOP 15 of3) 

Most common IP or OP 

Scope of Health Care Providers All hospitals and providers 

legis!ated {three levels, can oniy have AI! hospitals or providers 2, 15 1 score outof3) 

subset of hospitals!providers 

Report Card on State Price Transparency law 
92 


87496.050

While no state has implemented laws that meet all of our criteria, we graded on a curve to acknowledge the 

states with the most advanced laws to date. We anticipate that this curve will shift as transparency becomes 

more of a priority nationally. We based the letter grades on the following scores: 

GRADE FROM TO 

-~ ~ ~-:;;~~--~ ~~~ ~::::~-~~ =- ~- ~--~~~~~-=~~~ ~ ~ ~ ~:; 

~ (f;$ ~ 

Limitations of this research include (l) variation in definitions among states and (2} accounting forthe 

difference between laws and execution. Numerous permutations exist in the ways states define terms, such 

as the term "health care provider" or what is included in a "public report." Many times these public reports, 

even when developed for the explicit purpose of enabling consumers to make informed decisions, do not 

contain the resolution of information needed to understand a specific provider's price. instead, public reports 

may contain aggregate or average charges for al! providers for a specific service. Interested readers should 

refer to the statute text and example reports, which are hyperHnked in the "Reference Table." The second 

limitation is accounting for the difference between laws and execution, A website intended for consumer 

use may be legislated but not easily identifiable or actionable, while in other cases, such a webSite was 

not legislated but nonetheless developed by the state or an independent party, often the state's hospital 

association. These considerations were addressed on a state by state basis with all relevant details present or 

hyperlinked in the Reference Table. 

Resources permitting, CPR and HCI3 will partner again next year to update this state report card, We 

anticipate that we will raise the scoring thresholds for each letter grade at that time, 

Report Card on State Price Transparency Laws 3 
93 


87496.051

II. 50 STATE REPORT CARD ON PRICE TRANSPARENCY LAWS 

Hgl.lre 1: Mi3p Overlay 

4 Report Card on State Price Transparency law 
94 


87496.052

III. SIMPLIFIED SCORING AND GRADES BY STATE 

Report 

WebSite 

AL 

AR StatE'~n!y 

AZ 

CA 

.I 

< CO 

CT 

Upon Request .I .I 

DE 

Fe State Only 

Upon Request .I .I 

Report 

Website 

GA State Only 

Rep~~ 

WebSite 

HI State Only 

Upon Request 

Report 

Website 

Report Card on State Price Transparency Laws 5 
95 


87496.053

IA State Only <' 

Upon Request 

Report 

Website 

ID 

Report 

; Website 

Il -' 

Upon Request 

Report <' 

Website " IN 

Upon R-:quest" : 

KS State Only 

Upon Request 

Report 

KY 

LA 

Report 

Website 

MA State Only 

Report 

I Website 

MD State Only 

Upon Request 

Report 

Website 

ME 

Report 

Website 

MI 

Upon Request 

Report 

Website 

6 Report Card on State Price Transparency Law 
96 


87496.054

Upon Request 

Report '" Website '" '" MO 

MS 

Upon Request 

Report 

MT 

NC StateOn!y 

Upon Request 

Report 

NO 

NE 

Report 

NH 

R"C?ort 

NJ 

Upon Requcst 

Report '" 

NM 

NV 

Report ,I 

Website ,I 

Report Card on State Price Transparency Laws 7 
97 


87496.055

Upon Request 

Report 

Website 

OH ! State Only, 

[ u~on Re,q~~~ 

I ~aport 

, Website 

OK StateOn!y 

Upon Request 

Report 

Website 

OR I State Only 

.i 'upon R~.~~~~L ~ Report 

l Website 

PA StateOn!y 

Upo~_ Request 

Report 

Website 

RI ' State Only 

~ Upon Re9uest 

" Report 

Website 

SC stateOn!y 

Upon Request 

Report 

SD 

TN State Only 

Upon Request 

Report 

TX 

Report 

UT Stateon!y 

Upon Request 

Report 

Website 

8 Report Card on State Price Transparency law 
98 


87496.056

Upon Request 

Report ./ .c 

VT 

WA State Only 

Upon Request .c 

Report 

WI 

WV 

, WY 

Report Card on State Price Transparency laws 9 

87496.057

<5 

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0 

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a. 

a 

i;l' 

Ii' 

f Arizona 

.Q 

STATUTE(S): 

Arizona RevIsed Statutes 

§36·125.0S 

ENACTED B!LL{S): 

Added: 1983; 

Amended: S.B. 1201 

(198B), S.B. 1486 (1988), 

5.8.1086(1990),5.8. 

1352 (1994), H.B. 2048 

(1996), S.B.1142 (ZOOS), 

H.B. 2150 (2010) 

STATUTE(S): 

Arizona Revised Statutes 

§36-125.D5 ENACTED B1LL(S): 

Added: 1983; Amended;S.B.1201 

(1988),S.B. 11186 (1988), 

S.B. 1086 (1990), S.B. 

1352 (1994), H.B. 2048 

(1996). S.B. 1142 (200S), 

H.B. 2150 {2010j 

STATUTE(S): 

Arizona Revised Statutes 

§36-125,06 

ENACTED BitLIS): 

Added: 1983; Amended: 

5.8.1086(1990), H.B. 

2048 (1996), S.B. 1230 

(lOOO), S.B. 1142 (200S) 

Added: 1983 

Amended: 

1988,1990, 1994,2005, 

2010 

Added: 1983 

Amended: 

1988,1990, 

1996,2005, 

2010 

Added: 1983 

Amended: 

1990,1996, 

2000,2005 

"hospitals 

{except1 state 

hospitals" 

"Emergency 

departments" 

"hospita!sand 

emergency 

departments" 

insurerS. or 

carriers to 

report to the 

state 

estimates, 

actual charges 

"The average 

charge per day 

[and] The 

average charge 

pee 

confinement" 

"Charges for 

ser.oices" 

"average 

charges per 

confinement" 

payers 

common 

procedures, 

only outpatient 

services,orall 

billableserv!ces 

"all inpatient "{report to] the 

services" department" 

are open to 

public 

, inspection" 

"outpatient "[report to1 the "AU reports 

services" department" filed pursuant 

to this section 

are open to 

pubHc 

inspection" 

"the most "shall make "The director 

common available in its shall publish a 

, djagnosesand reception area 

procedures for a sufficient 

inpatient and number of 

emergency these 

department" brochures for 

freedistribu· 

tionofone 

copy to each 

individual 

requesting a 

copy" 

87496.058

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@ 

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: 

Ariwna 

Arkansas 

STATUTE(S): 

Arizona RevisedStatlJtes 

§36-436 

ENACTED BILqS): 

Added: 1971; Amended: 

S.B.1355 (1989), S.8. 

1352 (1994) 

STATUTE(S): 

Arizona Revised Statutes 

§ 36-436.03 

ENACTED BILL(5): 

Added: S.B. 1352 (1994) 

STATUTE(S): 

Arkansas Code 

§§20-7-303,4,5 

ENACTED BILL(5); 

Added: S.8. 596(1995) Amended: H.B. 1470 

(2005), H.B. lS13 (2007) 

enactment 

Added: 1971 Amended: 

1989,1994 

Added: 1994 Added: 1995 Amended: 

2005,2007 

physicians 

"hospital or 

nursmgcare 

Instltution" 

"A home 

health agency, 

supervisory 

care home and 

, a hospice" 

"All hospitals 

andcutpatientsurgery 

<:ente-rs" 

"'schedule of Its 

rates and 

charges" 

"a copy of the 

institution's 

rates and 

charges" 

"health data" 

AND "price [ ... J 

informatlOr'l'" 

Demonstrates ), May legislate 

accepted ; only most i different ; only outpatiertt 

payers : services,orall 

i biliableselVices : 

"al!services "file { ... Jwith 

performed and the director" 

commodities 

furnished" 

"'collected by 

the Division of 

Healthofthe 

Department of 

Hea!thand Human Services" 

"postedina 

conspicuous 

ptace in the 

reception area 

of each land) 

Another copy 

also shaU be 

k.eptlnthe 

reception area 

and be a ..... ailablefor 

inspection by 

the publk at all 

times upon 

request" 

"plJblish 

information" 

"to the public 

on request" 

"disseminate" 

87496.059

N 

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california STATUTE{S): 

California Health and 

Safety Code 

§1339.S1, §1339.S5 

ENACTED B!lL(S): 

Added: A.B. 1627 §6 

(2003) STATUTE{51: 

California Health and 

Safety Code §133956 

ENACTED B1LL{S): 

Added: A.B. 1627 §6 

(2003); Amended: bV 

A.B. 1045 §1 (2aOS) 

Added: 203 

physicians 

"hospital{sj" except "sma!1 

and rural hospital!s)" 

Added: 2003 "each hospita!" 

"charge 

description 

master" 

"average 

charges" 

common 

procedures, 

only outpatient 

services/orall 

billable services 

"25 (ammon 

outpCltient 

procedures" 

I and "2S mo!it 

commonly 

performed 

inpatient 

cedures" 

: Price 

: information 

is reported to r is available to isavatiabJe 

the state I an individual in a publicly 

upon request available 

report 

"shall make 

a written [ ... J copy available 

at the hospital 

location." 

AND post 

a clear and conspicuous 

notice in its 

emergency department, 

if any, in its 

admiSSions office, and in 

itsbiUingoffice 

that informs 

patients that 

the hospital's 

charge description 

master is 

available" 

"submit "shall provide a 

annually to the copy [ ... J to any 

office" person upon 

request" 

87496.060

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Colorado 

physicians 

STATUTE{S): Added: 200S "hospital" 

California Health and 

Safety Code §1339.585 

ENACTED B!ll(S): 

Added: A.B.1D45 §l 

(2005) 

STA1UTE(S): 

CaHfornlaHealth and 

safety Code §128735 

ENACTED Blll(S): 

Added: S.B. 1360 §5 

(199S);Amended: 

S.B.1659 §2 (1996), 5.B. 

1973 §B (199B), S.B. 680 

§2 (2001), 5.B.1498 §163 

(2008) 

Added: 1995 

Amended: 

1996,1998, 

2001,2008 

STATUTE(S): Added: 2008 

Colorado Revised 

Statutes §1Q-16·133 

ENACTED Blll(5): Added: H.B. 08-1385 §1 (2008) 

"Every 

orgamzation 

,thatoperates, 

conducts,or 

maintamsa health facility" 

insurers, or 

carrierst(} 

reporttqthe 

state 

"written estimate of 

the amount 

the hospital 

will require 

the person to 

pay [.,,} based 

on ana\lerage 

lengthofst<JY 

<Jndserllices 

provided for 

the person's 

di<Jgnosis" 

"Total charges" 

"each carrier" "information 

[«oj useful to 

consumers and 

purchasers of 

health care 

insurance" 

procedures, 

only outpatient services,orall 

billable serviCes 

"for health 

careSer\lICeS, 

procedures, 

and supplies 

{ ... J does not 

applytoemergencyser\lices" 

"submit 

annuaUytothe office" 

"Upon the 

request of 

a person 

without health 

coverage" 

"a!ternative methods of 

making the 

consumer 

guide 

accessib!eto 

consumers 

who do not 

h,lIIeinternet 

access" 

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Colorado STATUTE'S): 

Colorado Revised 

Statutes §1O·16-111 §1 

ENACTED BILL(S): 

Added: S.B. 92-104 §1 

(1992.); Amended: S,B. 92-90 §113 (1992) 

Added: 1992 

Amended: 

1992 

insurers, or 

carriers to 

report to the 

state 

"Nonprofit "a!1insurance 

hospital, companies" 

medicalsurgical, and tlealthservice 

STATUTE{S): Add€d: 2008 "a!1carri€fS" 

Colorado Revised 

St3tutes §10-16-111 §4 

ENACTED BlLL(S): Added: 

H.B. 08-1389 §9 (2008) 

STATUTE(S}: Colorado Revised 

Statutes $255-6·202 

ENACTED Blll{S}: 

Added: S.B. 06-219 

(2.006); Amended: H.B. 

08-111.1 (20m1), S.B. 

09-263 (2009), H.B. 

10-1324 (2010), H.lt 1G1379 {L01O}, S.B. 11-215 

(2011), H.B.12-1340 

(2012) STATUTE(5): 

Colorado Revised 

Statutes§6-20-101 

ENACTED B!lL(S}: 

Added: 5.B. 03-015 

(loo3); Amended: S.B. 

D4-239 (1CXJ<1) 

Added: 2006 Amended: 

2009,2010, 2011,2012 

"each nursing 

facility 

prOVider" 

Added: 2003 "eachhospitaI N 

Amended: 

2011 

<:ommon 

procedures, 

different only outpatient 

payers i services, or all 

billable services 

"amounts "for hospital, "file annually 

actually paid" medical- with the com-

"medical "The cost of 

provider price providing or 

increasesN AN.D arranging 

"pharmaceu- health care 

ticalpr1ce services" 

increases'" 

"cost reports" 

"Average 

facility charge 

1 ... Jtheaverage 

charge 

matian" 

surgical,and missioner" 

other health 

services" 

"Frequently 

performed 

inpatient procedure" 

(explicitly 

exdudesemergencycare) 

"fi!eannuaHy 

with the commissioner" 

"nledwith 

the state 

department" 

"disclose 

toa person 

seeking care or 

treatment" 

87496.062

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Colorado STATUTE(S): 

Colorado Revised StatuteS§25-3-70S 

ENACTED Blll{S): 

Added: H.B. 08·1393 

{200a);Amended; 

H.8, 1303 (2011) 

STATUTE(S): Colorado Revised Statutes §10-16-134 

ENACTED DIll{S): 

Added: H.B. 08·1393 

{2008} 

enQctrnt;!irt 

Added:zooa Amended: 

2011 

Added; 1008 

phySicians 

"each hospital" 

insurers, or 

carriers to 

report to the 

state 

, "each carner" 

"Mean charge" 

procedures, 

only outpatient 

services,orall 

bi!lableservices 

"the top 

twenty·five 

diagnosticrelated groups 

with more 

ihanten 

occurrences" 

"shall report 

annua!lvtothe associatlOn of 

hospitals" 

"average "for the aver- "submit to the 

reimbursement age inpatient dl"ision" rates" dav{."jthe 

twenty-five 

most common 

inpatient procedures" 

'e

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Connecticut STATUTE(5): 

Statutes§20-7a 

ENACTED BILl(S): 

Added: 1973 

Amended: S.H.B. 721<1 

(1991), S.H.B. 5139 (1992),S.H.B.6713 

(2005), S.H.B. 5820 

(2006), H.B. 6678 (2009), 

H.B. 5292 (2010) 

Statutes§20-7b 

ENACTED BILL/5): 

Added: 1973 

Amended: S.H.B. 7214 

(1991), S.H.B. 5139 (1992), S.H.B. 6713 

(2005), S.H.B. 5820 

{2006}, H.B. 6678 (2009), 

H.B. 5292 (2010) 

Statutes§19a·613 

ENACTED BILl(5): 

Added: H.e. 6002 (1994); 

Amended: H.B. 6002 

(1994), 5.8.1164 (1995). 

S.B. 572 (1998), S.B. 547 

(1998), S.B. 1373 (1999). 

H.B 6802 (2.009) 

enactment 

Added: 1973 Amended: 

1991,1992, 

2005,2006, 

Z009,201O Added: 1973 

Amended: 

1991,1992, 

2005,2006, 

2009,2010 

Added: 1994 

Amended: 

1994,1995, 1998,1999, 

2009 

"Any 

practitioner 

of the healing 

: arts who agrees 

I with a clinical 

labor<ltory, 

either private orhosprtal,to 

make payments 

to such a 

laboratory 

for (patil'!nts') tests"," 

"Eachpractitionerofthe 

healing art," 

"health care 

facHioesor 

institutions" 

insurers,or carriers to 

report to the 

state 

"amounts 

charged by 

such laboratory 

for indivIdual tests or test 

series and the 

amount of his 

procurement 

or processing 

charga" 

"approXimate 

rangeofcoS1S" 

"Patient-level 

outpatient data" 

"te51:[sjto aldinthe 

diagnosis" 

"outpatient 

data" 

CoUected by "The Office of 

Health Care 

Access" 

on the bllls 

to patients 

or third party 

payors" 

"inform the 

patient" 

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Connectlcut 

Statutes§19a-646 

ENACTED BllL(S): 

Added: 1984; Amended: H.B. 6002 

{1994}, S.B. 1164 (1995), 

S.H.B. 5154 (2002). 

H.B.5321 (2012) 

STATUTE(S): 

Statutes 

ENACTED BlLl(S): 

Added: 1958, S.tI.B.7290 

(1989); 

Amended: S.H.B. 7214 

(1991), S.H.B. 6949 

(1993),S.H.B.7079 

(1993), H.B. 6678 (2009), 

H.B. 5321 (2012) 

Statutes §§19a-644, 

19a-654 

ENACTED Blll{S): 

Added: 1958, S.H.B.n90 

(1989); 

Amended: S.H.B. 7214 

(1991), S.H.B. 6949 

(1993), S.H.B. 7079 (1993), H.B. 6678 (2009), 

H.B. 5321 (2012) 

Added: 1984 

Amended: 

1994,1995, 

2012 

Added: 1958, 

1989 

Amended: 

1991,1993, 

1993,2009, 

2.012 

Added: 1958, 

1989 

Amended: 

1991,1993, 

2009,2012 

physicians 

Uthellospltat 

"Each hospital" 

"'short·term 

acute care 

general or 

children's 

hospitals" 

insurersTor carriers to 

report to the 

state 

"thetota! 

and average 

charges and costs" 

"discharge 

data [ ... } from 

medical record 

abstracts and 

hospital bills" 

Demonstrates : Mavlegislate 

accepted : onl'f most 

relmbursement 1 common 

rates from ! procedures, 

different ' onlyoutpQtient 

payers i services, or all 

billableservk:es 

"reported as 

required by the 

office" ' 

"of charity care "report(tothe 

and reduced office)" 

cost services 

provided" 

"submit [to 

theloffice" 

Unlegislated 

report 

Unlegis!ated 

report 

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Delaware 

STATUTE(S}: 

Statutes §19a·681 

ENACTED BIlL(S): 

Added: H,B. 7030 (1995); 

Amended: S,B. 1145 

(2005), S.B. 622 (2008), 

S.B. 494 (lOlD) 

STATUTE(Sj: 

Delaware Code §2003 

ENACTED BILl(S): 

Added: 1989; 

Amended: H.B. S07 

(1994), S.B. 47 (2009) 

STATUTE{S): 

Delaware Code Ann. 

§§2004,2oo6 

ENACTED BILL(S): 

Added: 1989; 

Amended: H,B. 507 

(1994), S.B. 235 (ZOOS) 

Added: 1995 

Last Amended: 

2005,2D08, 2010 

Added: 1989 

Amended: 

1994,2009 

Added: 1989 Amended: 

1994,2009 

"Eachhospita!" 

"Hospita!s 

<Indnurslng 

homes" 

"aU ilospitals 

[and] an nursing 

home" ' 

"Chargeleve!s 

[andjtrends 

lnne<Ilthcare 

charges" 

Demonstrates i May legislate 

accepted : only most 

reimbursement t common 

rates from procecttlfes, 

: different only outpatient 

payers services, or all 

biltableservlces 

"current price- "'shaUfile with 

master which ,the office" 

shal1mclude ' 

eacncharge 

in itsdetai!ed schedule of 

charges" 

"subminedby 

,all[, .. jtothl! 

, state agency" 

"all hospital "submitted by 

[andjoursing aH [ .. ,j to the 

home inpatient, slate agency" 

discharges" 

"slate agency 

shall prepare 

and distribute ormakeavaHab!ereports 

to health care 

purchasers, 

hea!thcare 

insurers,health: 

care providers ' 

andthegenera! public" 

HAil 

prepared and 

authorized 

by the state 

agency for 

mleaseand 

dissemination 

shaUbepublic 

records" ' 

87496.066

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Florida STATUTE(S): Added; 1991, 

Florida Statutes §381.026 1992,1995 

ENACTED BllL(S): Amended: 

Added: S.B. 292 199B,1999, 

(1991), H,B. 367-H 2001,2004, 

(1992), 5.B. 598 (1995); 2006,200B, 

Amended: C5.H.B. 475 2009,2011, 

12001), S.B. 1324 {2001}, 2012 

H,B.1629 (2004), H,B. 

7073 (2006), 5.8.1488 (2008), H.B. 155 (2011), 

H.B. 935 (20ll), H,B. 

7007 (2012) 

STATUTE(S): Added; 1991, 

Florida Statutes §38L026 1992,1995 

ENAC1ED BILl(S): Amended: 

Added:S.B.292 1998,1999, 

(1991), H.B. 367-+-1 2001,2004, 

(1992),S.B. 598 (199S); 2006,2008, 

Amended: CS.H.B. 475 2009,2011, 

(2001), S.B. 1324 (200l), 2012 

H.B. 1629 (2004), H.B. 

7073 (2006), S.B. 1488 

(2008), H.B. 155 (2011), 

H.B. 935 (2011), H.B . 

7007 (2012) 

physicians 

"primary care 

provider" 

"hea!thcare 

providf'.rora 

health care 

faci!ilyshaU" 

"schedu\eof 

charges ! ... } the 

schedulf'.must 

inc!udethe 

prices charged 

toan uninsured person" 

aa reasonable 

estimate of 

charges 

procedures, 

i only outpatient 

payers ; services, or all 

j bHlabieservices 

"must 

include, but is not limited 

to,theSO 

serv!cesmost 

frequently 

provided" 

"postedina 

conspicuous 

place inthe 

reception 

area" 

"furmsha 

person { ... J 

before the provision of 

a planned 

nonemergency 

medica! 

service" 

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: Florida STATUT£(S): Added: 1982, 

Florida Statutes §395301 1991,1992, ENACTED BlllIS): 

Added: H.B. 357-H 

(1992), S.B. 598 (1995) 

Amended: 5.6. 2128 

(1998), H.Il. 1629 (2004), 

H.B. 7073 (lOO6), 5.6. 

1488(2008) 

1995 

Amended: 

1998,2004, 

2006,2008 

5TATUTE(S): Added: 2011 

Florida Statutes §395.107 Amended: ENACTED B!lL(S}: 20ll 

Added: H.B. 935 (lOll); 

Amended:H.B.787 

POI2} 

STATUTE(S): 

Florida Statutes 9408.05 ENACTED Blll{S): 

Added: H.B.1673 (19B8); Amended: CS.S,B. 314 

(1998), H.B. 1053 (1999), 

S.B. 1766 (2000), S.B. 

2568 (ZOO3), H.B.i629 

(2004), H.B. 763 (ZOOS), 

H.B. 7073 (2006), S.B. 

1488 (2008), S.B. 1784 

(2010) 

Added: 1988, 

1990,1991, 

1992,1995, 

1997 

Amended: 

1998,1999, 

2000,2003, 

2004, ZOOS, 

2006,2007, 

2008,2010 

facHltynot 

operated by the 

state" 

"urgent care 

centerlandl affiliated 

facility" 

"health care 

facilities" 

"good faith 

estimate of 

reasonably 

anticipated chargesi ... jThe 

estimate may 

betheaverage 

charges for 

that diagnosIs 

related group 

ortheaverage chargesforthat 

procedure" 

"schedule of 

charges" 

"undiscounted 

charges" 

rates from 

different 

payers 

1 procedures, 

, only outpatient 

services,orall 

billable services 

"any nonemergency 

services" 

"no fewer 

than 150 of 

the most 

commonly 

performed 

adult and 

pediatric procedures, 

induding 

outpatient, 

inpatient. 

diagnostic, and 

preventative 

, procedures" 

: "no fewer 

than 150 of the most 

commonly 

performed 

aduttand 

pediatric procedures" 

patient" 

"publish [andj 

posted in a 

conspicuous 

place in the 

reception 

area" 

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FlDrida 

Georgia 

: enactment 

available hyperrinks 

STATUTE(S): Added: 1992 

Florida Statutes §40B.061 Amended: 

ENACTED BILL{S): 20061993, 

Added: S.B. 2390 (1992); 1996,1997, 

Amended: S.B.1914, 1998,1999, 

2006,1784 & S,B 406 2000,2003, 

(1993),5.B.226 (1995), 2004,2005, 

S.B. 226(1996),S.B. 430 2006 

(1997),S.B. 314 (1998j, 

H,B, lOS3 (1999), 5.B. 

1766 (2000), s.B. 2558 

(2003), H.B. 1629 (2004), 

H.B. 763 (ZOOS), H.B. 

7073(2006) 

STATUrE{Sj: Added: 1992 

Florida Statutes §40aD61 Amended: 

ENACTED BllL(S): 2006 

Added: S.B. 2390 (1992); 

Amended; H.B. 7073 

120(6) 

STATUTE(Sj: Added: 1988 

Georgia Code §31-7·280 Amended: 

ENACTED Btll(5): 2008 

Added: 19B8; 

Amended: $,6. 433 

(2008) 

oralfproviders carriers to , estimates. rates from procedures, the state 

i including reporttothe i actual charges different only outpatient 

individual state payers servtces, or all 

, physicians biUab!eservk:es 

"health care "actual charge "{totheJ 

facilities" data bydfag- agency" 

nosticgroups" 

"health "dalms[ ... J "{tothej 

insurers" However agency" 

{ ... lshall 

not Include 

specific provider contract 

reimbursement 

information"" 

"each health "total charges "submitted 

care provider" and summary to the 

ofthargesby department" 

revenue code" 

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" ilable hyperlinks , procedures, the state an individual ! in a publiclv 

2" only outpatient 

services,orall 

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STATUTE(S}: 20 Hlinois Added: 1984 "hospitals" 

COmpiled Statutes Amended: §221S/4-1 (4) 2012 

ENACTED BILL{S): 

Added: 1984; 

Amended: H,B. 2343 

(200S), H.B. 156212011), 

S.B. 1282 (2011), 

S.B. 379B (lO12) 

"claims and "inpatient and "compiled "PubHcly 

encounter outpatient by the disclosed 

data" claims and department" information 

encounter must be 

data related provided in 

to surgical language that 

and invasive is easy to 

procedures" understand 

and accessible 

to consumers 

using an 

interactive 

query system" 

STATUTE(S): Illinois Added: 1984 "each "outpatient "coHect!edJ Upublicly 

Compiled Statutes Amended: ambulatory §221S/4-2{S) 2012 surgical treatment ENACTED BILl{S): center" Added: 1984; 

Amended: H.B. 2343 

(2005); H.B. 1S62 (2011); 

S.B. 1282 (lOll); 

S.B.3798(2012) 

daimsand compile[d] disclosed 

encounter by the information 

data collected department" must be 

[ ... ] for each provldedln 

patient" languag.ethat 

IS easy to 

understand 

and accessible 

to consumers 

using an 

interactive 

query system" 

STATUTE{Sj: Illinois Added: 1984 "Ambulatory "average "at least 30 "compiled 

Compiled Statutes Amended: surgIcal §2215/4-2 (6) 2002,2011, treatment 

ENACTED BILl{S): 2012 centers and 

Added: 1984; hospitals" 

Amended: H.B. 2343 

(2005), H.B. 1562 (2.011), 

S.B. 12B2 (2011), S.B.3798(2012) 

charges" inpatient land] by the 

30 outpatient department" 

, condmons and i procedures 

i { .•. Jdemon-

, strate!ing}the 

highest degree 

of variation in 

patient charges 

and quality of care" 

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Illinois STATUTE(5): 

ll!inois Compiled 

Statutes§2215/4-4(a) 

ENACTED BILL(S): 

Added: 1984; Amended: H.B.4580 

{lOO2) 

Added: 1984 "Hospitals" 

Amended: 

2002 

STATUTE(S): Added: 1984 "hospItals'"' 

Statutes 

ENACTED BILl(S): 

Added: 1984; Amended; H.B. 4580 

(1002) 

"the normal 

charge 

incurred" 

"the 

established 

charges" 

payers 

rommon 

procedures, 

only outpatient 

services, or aU 

blilabteservk:es 

"any procedure 

or operation 

the prospective 

pattentis 

considering" 

"including but 

not limited to 

thehospi. 

tal's private 

room charge, 

semi-private 

room charge, 

charge fora 

roorn with 3 

I or more beds, 

intensive care 

room charges, 

emergency 

room charge, 

operating 

room charge, 

electrocardiogram charge, 

anesthesia charge, chest 

x-ray charge, 

blood sugar 

charge,blood chemIstry charge, tissue 

exam charge, 

: blood typing 

charge and Rh 

factor charge" 

"to prospective 

"to post in 

leners" 

in a publicly : 

available 

report 

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Indiana Iowa 

Kansas 

STATUTE{S): 

Indiana Code §16"11-6 

ENACTED BILl(S): 

Added: S.E.A. 24 (1993); 

Amended: H.E.A. 1200 

(2002), S.E.A. 366 (2011) 

STATUTE(S): 

Iowa Code §135.165; 

§13S.166 

ENACTED BILL{S): 

Added: H.B. 2539 (2008); Amended: 

S.F. 389(2009) 

STATUTE{S): 

Kansas Statutes 

§65·6801; §65-6805 

ENACTED BILl(S): 

Added: 5,6. 118 (1993); Amended: 5.8. 577 

(1991\),5.6.272 (2005), 

S.B.397(2012) 

enactment 

Added: 1993 

Amended: 

za02,2011 

Added: 2008 

Amended: 

10()9 

Effective 1993 

Amended 

1994,2005, 

2012 

"each hospital" 

"hosp!tals" 

"all providers 

of health care 

ser .... Kesand 

third-party 

"Tota!charge 

for patlent's 

stay" 

"'quahtyand 

cost measures" 

"costs" 

Demonstrates Mav legislate 

accepted (lnly most 

reimbursement 

rates from procedures, 

different only outpatient 

payers services .. or all ' 

b!llableserviCes 

"inpatient, 

outpatient, and 

ambulatory 

information" 

"file with 

the state 

department" 

"department of 

public health 

shall f".J utilize 

the Iowa hospltaiassociation to act asthe 

department's 

intermediary 

incoHectlOg, 

maintaining, 

anddisseminating" 

"shall file 

{ ... ) with the 

department of health and environment" 

"shaUprovide 

copies of the 

reports I ... ] 

to the public 

upon request" 

"made available in a form 

[ ... 1 to improve 

thededsian-making 

processes" 

lsavailabte 

in a publldy 

available 

report 

"Annually 

pub1isha 

consumer 

guide to 

Indiana 

hospitals" 

87496.072

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'" 

Kentucky STATUTE{S): Added: 1994 

Statute 

ENACTED BILL(S): 2.005,2008, 

Added: H.B. 250 (1994); 2012 

Amended: S.B. 343 

(1996), H.B.132. (1998), 

S.B. 47 (200S), H.B. 44 

(200B), H.B. 265 (2012) 

STATUTE(S): 

Kentucky Revised 

§216.2929 

ENACTED BILL(5): 

Added: H.B. 250 (1994); 

Amended: 5.B. 343 

(1996), H.B. 132 (1998L 5.8.47 (2005), H.B. 44 

(2008), H.B. 265 (2012) 

Added: 1994 Amended: 

1996,1998, 

2005,2008, 

2012 

physio?,ns 

"elleryhosplta! 

and ambulatory 

fadlity,differentiated by 

If relevant, 

fat other provldergroups" 

"charges 

( ... ]include 

the median 

charge" 

"information 

that relates to 

thehea!thcare financing 

and delivery 

system, 

information 

on charges for 

'health-care 

services" 

payers 

commQn 

procedures, 

only¢utpatient 

services,orall 

billable services 

"compUedand 

reported by 

the cabinet" 

"thesecretaryshaUI ... J 

collect" 

"reported by 

the cabinet" 

87496.073

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Louisiana 

Maine 

STATUTE{S): 

Louisiana Revised 

Statutes §§40:1300.111, 

Il2, 113, 114 

ENACTED 8IlL(S): 

Added: H.B.1462 (1997); 

Amended: 5.B" 287 

(2008) 

STATUTE(S): 

Maine RevisedStatvtes 

§§87Q4,6 

ENACTED B1LL(S): 

Added: H.P.BOl (1996); 

Amended: S.P. 560 

(1997),S.P.18(1999), 

H.P. 1003 (1999), S.P, 395 

(2001), H.P. 1187 (2003), 

H.P. 91ll (2005), S.P. 677 

(2006), S.P. 290 (2007), 

H,P.5 (1007), S.P. 578 

(lOll) 

Amended: 

Za08 

Added: 1996 

Amended: 

1997,1999, 

2001,2003, 

200S, 2006, 2007,2012 

care providers 

licensed by the 

state,including 

but not limited 

to hospitals, 

outpat1ent 

surgical 

facilities, and outpatient 

clinical facilities" 

"health care 

facilities, 

providers or 

insur.ers, or 

carriers to 

report to the 

state 

"health care 

cost, quality, and performanct!data" 

"clinical, 

financial, 

quality and 

restructuring 

data" 

"clinical, 

financial, 

quality and 

restructuring 

data" 

"reported 

to the 

Department 

of Health and 

Hospitals" 

"board shall 

develop and 

implement 

policies and 

procedures for 

thecoHection, 

processing, 

storage and 

analysis" 

87496.074

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M;;Iine STATUTE(S): Maine 

Revised Statutes §8712 

ENACTED BILl(S): 

Added: H.P.1lS7 (2003); Amended:H.P.975 

(2005), H.P. 85 (2009), 

S.P. 529 (2009), H.P. 1088 

(2010), H.P. 602 (ZOll) 

STATUTE{S): Mame 

Revised Statutes §B712 

ENACTED BILL(5): 

Added: H.P. 1187 (2003)i 

Amended: H.P. 975 

(2005), H.P. 85 (2009). 

S.P. 529 (2009), H.P.I08B 

(2010), H.P. 602 (2012) 

Added: 2003 

Amended: 

2005,2009, 

2009,2010, 

2012 

Added: 2003 Amended: 

2005,2009, 2009,2010, 2012 

"'healthc.are 

facilities and 

I practitioners" 

insurers,or carriers to 

report to the 

state 

"commercial 

health 

Insurance 

companies, 

3rd-partv 

administrators and,unless 

prohibited by 

federal!aw, 

governmental 

payors" 

Qemonstrates 

average annual accepted 

charges, charge 

estimates, rates from 

actual charges different 

payers 

"payments 

for services 

rendered" 

common 

procedures, 

only outpatient 

serv!ces, or aU 

billable services 

"services 

presented 

mustinc!ude, 

but not be 

hmitedto, 

Imagmg, 

preventative 

health, radiology 

I and surgical 

services and 

other services 

that are 

predominantly 

elective 

and maybe 

providedtoa 

. large number 

, efpatients 

who do not 

have health 

insurance" 

"ptices paid by , "15 most 

individualcom-: common 

mercia I health diagnosisinsurance related groups 

companies, and the 15 

3rd-party most common 

administrators outpatlent 

and,unless procedures for 

prohibited by all hospitals 

federal law, inthe5tate 

governmental and the 15 

payers" most common 

procedures for 

nonhospital 

health care 

facilities" 

"5tateshal1 

collect 

synthesile 

and publish information" 

"sllaUmake 

reportS 

available to 

members of 

the public 

upon request" 

"State shall col- "shall make relect, synthesize 

and publish information" 

portsavaHable 

to members 

oftheplJbfic 

upon request" 

information 

is available 

Ina publicly 

available 

",port 

, 

87496.075

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Maine 

Maryland 

STATUTE(S): Maine 

Revised Statutes §8712 

ENACTED BILLIS): 

Added: H.P, 1187 (2003); 

Amended: H.P. 975 

(2005), H,P. 85 (2009), 

S.P. 529 (2009), H.P. 1088 

(2010), H.P. 602 (201"j 

STATUTE(S): Maryland 

Code, Health - General 

§19·133 

ENACTED BILL(S): 

Added: 1993; Amended: 

S.B. 221 (1999), H.B. 995 

(1999), 5.B. 189 (2000), 

S.B. 196 (2001), S.B. 786 

(lOOn H.B. BOO {200?) 

STATUTE{S): Maryland 

Code, Health - Genera! 

§§ 19-202, 7 ENACTED BILL(Sj: 

Added: 1982; 

Amended: 1984, 1997, 

1999, S.B. 479 (2003), 

S.B. 380 (2006), H,B. 844 

(2007) 

Added: 2003 Amended: 

2005,2009, 

2009,2010, 2012 

Added: 1993 

Amended: 

1994,1995, 1997,1999, 

2000,2001, 2007 

Added: 1982 

Amended: 

1984,1997, 

1999,2003, 

2006,2007 

"osteopathic 

and allopathic 

physkianSIn 

thepnvate 

office setting" 

"health care 

practitionefor 

facility" 

"payorsalld 

governmental 

agencies" 

"thecllarge 

for tile 

procedure," 

[.,,]"health 

care costs, 

utilization,or 

resources" 

"Health care 

costs" 

"the 10 

services and 

procedures 

most often 

proVided" 

"State shall 

coHeet, 

synthesize 

and publish 

information" 

"the 

Commission 

shal!{collectj" 

Creates tile 

"Health Services 

Cost Review Commission lthatjshall 

PeriodiC3lly 

participate in 

or do analyses and studies of" 

"shaUmake reports 

availab!eto 

memb.ersof 

the public 

upon request" 

"shall publish 

an annual 

report [.,,] 

Describ[ing] 

the variation 

in fees charged by health care practitioners 

and facilities" 

"Eacll report 

filed and each 

summary, 

compilation, and report 

required under 

this subtitle 

available 

for public 

inspection" 

87496.076

Massachusetts STATUTEjS): Added: 2011 "institutional 

providers and 

their parent 

ENACTED BILL(S): organizations 

Added: S.8. 2400 (2012) and any other affi!i<li:ed 

entities,non· 

institutional 

providers 

and provider organizations" 

STATUTE(S}: Added: 2012 "any acute 

ornon·acute 

f Laws 12C§8(b} hospital" ENACTED BILUS): ;:, Added: S.8. 2400 (1012) Q 

a. 

a 

." @. 

STATUTE(S): Added: 2012 

il Laws 12C §8 (d) 

->! ENACTED 81LL{S): Added: S.8. 2400 (2012) 

.... 

'" 

"revenues, 

charges, costs, 

prices, and 

utilization 

[ ... Jfilingofa 

charge book., 

the filing of 

cost data and audited 

financial 

statements and 

the submission 

of merged 

billing and 

discharge data" 

"a charge 

book,thefiling 

of cost data and audited 

financial 

statements and 

the submission 

of merged 

billing and 

{lischargedata" 

"relative 

prices" 

"medical,surgi- "Thecenter 

cal, diagnostic shall also andancil!ary collect and 

services" analyze" 

"inpatient and 

"at least 

annually, 

publiSh a report 

analyzing the 

comparatIVe 

information 

to assist third· 

party payer.; 

and other 

purchasers of 

health services 

in making 

informed 

decisions" 

87496.077

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f Massachusetts STATUTE(S}: 

Laws llC §1O 

ENACTED BllL(S): 

Added: 5.B. 2400 (2012) 

STATUTE(S}: 

Laws 12C§16 

ENACTED BllL{S): 

Added: S.B. 2400 (2012) 

Added: 2012 

Added: 2012 care 

provider, 

provider 

organil..ation" 

"from private 

and publiC 

hea!thcare 

payers, 

including 

third-party 

admin"lstrators" 

"private and 

publiC health 

care payer" 

Demonstrates 1 May legislate 

accepted j only most 

reimbursement' common 

rates from i procedures, 

different ; only oUl:pattent 

"reliltive 

pncesfor 

the payer's 

participating 

health care 

provldersby provider type 

which shows 

the average 

relative price, 

the elrtentof variation in 

prke, stated 

asapercentage, <lndiden· 

tifiespwviders 

who are paid 

more than 10 

percent,lS percent and 

20 percent 

above and 

more than 10 

percent,lS per cent and 

20 percent 

belowtheav· 

erage relative 

price" 

"submitclairns 

data l ... ] and 

relahveprices 

paid to every 

hospital, 

registered 

provider 

orgallization, 

phySician 

group, 

ambulatory 

surgical center, 

freestaflding 

imaging 

center,mental 

health facility, 

rehabilitation 

facility,sk.ilIed 

nursing 

facility and 

home health 

providerm 

the payer's 

network, by type of provider, 

withhos.pital 

inpatient and 

outpatient 

prices listed Separately by 

{insurance} 

product type" 

"costs and "costs. and cost 

cost trends trends { ... l and 

[ ... }prke (and] price variation 

price variation between health 

between health care providers, 

c<lrepfDIJiders, by payer ami 

by p<lyer and provider type" 

provider type" 

services,oral! 

billable services 

"Thecentef 

sh<lHrequire 

sion of data 

and other 

informalion" 

"The center 

collects" 

aExceptas 

speCifically 

provided 

otherwise by 

the center 

or under 

this chapter, 

insurer data 

cotlectedby 

the center 

under this 

section shall 

notbea public 

record" 

"The center 

shall publish an' 

annual report" 

87496.078

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fNACTEO BILL(S); 

Added: H.B. 4479 (2006) Amended: H.D. 5240 

(2006), 5.B. 2863 (200B), 

5.B. 2585 (2010), 5.B. 

2400 (2012) 

Lawsll1C § 228 

ENACTED BILL(s}: 

Added: s.B. 2400 {ZOll} 

Added:ZOO6 

Amended: 

Z006,2008, 

2010,2012 

Added: 2012 "a health care 

provider" 

"health care 

quaHtyand 

cost data" 

"Cost 

information 

shal!mdude, 

at a minimum, 

the average 

payment [ ... ] 

on beha!f 

of insured 

patients" 

"disclose the "disclose 

[ ... Jcharge" the! ... lthe 

contractuaHy agreed upon amount paid 

by a carrier 

to a health 

care provider 

for health 

care services 

providedtoan 

insured" AND 

costs" 

"for obstetrical "shall be 

services, collected" 

physician 

office visits, 

high-volurne 

elective 

surgICal 

procedures, 

high-volume 

diagnostic 

tests and 

high-volume 

therapeutic 

procedures" 

"ofthe admisSian, procedure or service, 

indudingthe 

amount for 

anv facility fees 

required" 

Uuponrequest 

by a pat\ent 

orprospectille 

patient" 

87496.079

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Minnesota STATUTE1S): Minnesota 

Statutes§61J.B2 

ENACTED BILL{S): 

Added; H.F. 139 (2005) 

Amended: H.F.I078 

(lOO7) 

STATUTE(S); Minnesota 

Statutes§62J,O$2 

ENACTED BILL(S): 

Added: S.F. 1204 (looS) 

Amended: S.E 3480 

(2006) STATUTE(S): 

Minnesota Statutes 

§62U.04 (Subd. 1) 

ENACTED 8ILL(S): 

Added: S.F. 3780 (2008) 

Amended: S.F. 2082 

(2009), H.F. 3056 (2010), 

H.F. 25 (2011), S.F. 1809 

(2012) 

STATUTE(S): 

Minnesota Statutes 

; §62U.04 (Subd. 3c) 

ENACTED BllL(S): 

Added: S.F. 3780 (2008) 

Amended: 5.F. 1082 

j2009), H.E 3056 (20lD), 

H.F. 25 (2011), S.F. 1809 

(20l2) 

Amended: 

2007 

Added: 2005 Amended: 

2005 

Added: 2008 Amended; 

2009,2010, 

2011,201 

Added: 2008 

Amended: 

2009,2010, 

2011,2012 

"Each 

pharmacy" 

"providers" "provider.-;" 

insurers,or carr(ersto 

report to the 

state 

average charge per day and median 

charge" 

and 

customary 

price for a prescription 

drug" 

"comparative 

information to 

variation" 

"total 

cost" AND 

"conditionspedficcost" 

the SO most 

inpatient 

diagnoslSrelated groups and the 25 

most common 

outpatient 

surgICal 

proceduresN 

"readily 

able at no (ost 

to the patient" 

report" 

, 

87496.080

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Minnesota STATUTE{S): 

MJrloesotaStatutes 

§61U.04 (Subd. 5) 

ENACTED BJll(S): 

Added: S.F. 3780 (2008) 

Amended: S.F. 2082 (2009). 

KF. 3056 (2010), H.F. 25 

(2011), S.E 1809 (2012) 

STATUTE(S): Minnesota 

StatuteS§621.82 

ENACTED Blll(S}: 

Added: H.E 139 {2005j 

Amended: H.F. 1078 

(2007) 

STATUTE(S): 

Minnesota Statutes 

§1114.698 

ENACTED Blll(S): 

Added: S,F. 60 (1976) 

Amended:S.F.109 

(1977), H.f'.1%6 (1984), 

H.F.1759(1989j.S,F.910 

(1991). S.F. 2080 (2004), 

H.F.I078(2007) 

STATUTE(S): 

Minnesota Statutes 

§ 144.699 

ENACTED BIlL(S): 

Added: 5.F. 60 (1976) 

Amended: 5,F.109 (1977), 

H.F. 1966 (1984), S.F. 51 

(1987), H.E 1078 (2007) 

Amended: 

2009,2010, 

2011,2012 

Added: 2005 Amended: 

2007 

Added: 1976 

Amended: 

1977,1984, 1989,1991, 

2004,2007 

Added: 1976 

Amended: 

1977,1984, 1987,2007 

"hospital" "Eachhosplta! 

and each outpatient surgical 

center" 

"hospitals, 

outpatient 

surgical 

centers, 

home care 

providers, and 

professionals" 

"Charge 

information, 

{mcludingl 

alleragecharge, average charge 

per day and 

median charge" 

"cost 

information" 

payers 

"submit data 

ontheircontracted prices 

withhea!th 

care providers" 

"for each of the 

SOmoncommoninpatient 

diagnosis-relatedgroupsand 

the 25 most 

common outpatient surgical 

procedures" 

"for procedures , 

and services 

that are 

representative 

of the 

diagnoses and conditions 

for which 

cltizensofthis 

treatment" 

"toa private 

entity 

designated 

by the 

commissioner ofhea!th" 

file annuaHy with the 

commissioner of health" 

"AHreports 

{ ... )shaUbe 

open to public 

inspection" 

"The 

Commissioner of Hea!th shaH 

"dissemmate 

available price 

information" 

AND 

"encourage 

{providersjto 

publish prices" 

87496.081

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Minnesota Missouri 

STATUTE(S): 

Minnesota Statutes 

§144.701 

ENACTED BILl(S): 

Added: S.F. 60 (1976) 

Amended;S.F.I09 

(1977), H.F. 2175 (1982), 

H.F.1966 (1984), H.F. 

1759 (1989),S.F. 3346 

(199B), H.F. 2446 (2004), 

SJ. 2082 (2009) 

Added: 1976 

Amended: 

1977,1982, 

1984,1989, 

2998,4004, 2009 

"each hospital 

and outpatient 

surgical 

center" 

STATUTE(S): Added: 2006 "health care 

Minnesota Statutes 

§144.0506 

ENAClED BllL(S}: 

S.E 367 (2006) 

STATUTf(5): Added: 1992 

Missouri Revised Statutes Amended: 

§192.665, §192.667 1992,2004 

ENACTf:D B1Ll(5): 

Added: H.B.lS74 (1992j 

Amended: S.B. 721 

(1992), S.B. 796 (1992), 

5.8,1279 (20(4) 

provider" 

"An heafth 

care providers 

[includes hospita!sand 

ambulatory 

surgical 

centers)" 

"a current rate 

schedule" 

'''charges'' 

data" 

is reported to 

procedures. the state 

only outpatient 

services,orall 

billable services 

"for common 

procedures" 

"shaUbe 

filed with the 

commisSioner of health" 

"provide to the 

department" 

"The report 

shaUbe made 

available to 

the pub!lefor 

a reasonable charge" AND 

"The Hospital 

Industry Data 

Institute 

shall publish 

a report" 

AND "publish 

information 

includIng at 

least an annual 

consumer 

guide" 

87496.082

Montana UNLEGISLATED "facilityspedfic "charges" "inpatient and 

information" outpatient" 

Nebraska STATUTE(5): Nebraska Added: 1985 "each hospital "average "Upon the 

Statutes §71··;!07S Amended: ( ... j and ambu- charges" written 

ENACTED BllL{S): 1994 latorysurgical requestofa centers" prospective Added: 1985; patient" AND 

! Amended: LB. 1210 "shall proVide (1994) notice to the 

0 pubHcthat " r;;> such hospital 

<l or center WIl! 

0 provide an 

estimate of charges" 

Nevada 5TATUTE(S): Added; 2007 "each hospital'" "average "reported by "The Depart. .... uponrequest, "shall make 

:1. " Nevada Revised Statutes Amended: AND "each biJIedcharges" diagnosis- mentshaU make the a summary 

@ §§ 439A.220, 439A.240, 2009,2011 surgical center AND "charges related groups establish and information of the 

I 439A.260,439A.270 for ambulatory imposed" , fOfinpatients maintain a pro- thatis information 

ENACTED BILL{Sj: patients" andforthe gram that ( ... j contained on available to SO medical must Include thetnternet Consumers of Added: A.B. 14£ (2007); treatments for the collection website hea!thcare Amended: S.B. 319 outpatients" available in {andjthe 

.!2 (2009), A.B-. 160 (2011), AND "for [.,,} printed form" general public" 5.B. 264 (2011), S.B. 338 potentiallv (2011),5.B. 340 (20U) preventable 

readmissions" 

W 

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Nevada STATUTE{S): 

Nevada Revised Statutes 

§449.490 

ENACTED BILl{S): 

Added.: 1975; Amended: 1985, 1987, 

A.B, 342 (200S), A.B. 146 

(2007), A.B. 160 {lOll} 

New Hampshire STATUTE(S): 

New Hampshire Revised 

BILL(S): 

Added: H.B. 670 (2003) Amended: S.B. 74 (IOOS) 

STATUTE(S); 

New Hampshire Revised 

Statutes§126:25 

ENACTED BILl(S): 

Added: 1985 Amended.: s.B. 197 

(2009), H.B. 544 (WOO), 

H.B. 629 (2011) 

Added: 1975 

Amended: 

1985,1987, 

2005,2007, 

2011 

Added: 2003 

Amended: 

WOS 

Effective: 1985 

Amended: 

2009,2011 

physicians 

"eachhosplta!" 

"Acute care 

hospitals, 

specialty 

hospitals, 

nurSing homes" 

"All health 

carriers" 

"chargemaner" 

"encrypted 

claims data 

[and) Health 

Employer 

Data and 

Information 

Set (HEDIS) 

data 

by 

discharge data 

!,.,javefage 

patient day 

charge data" 

"encrypted 

daimsdata 

[and} Health 

Employer Data 

and!nformationSet 

(HEDfSjdata 

common 

procedures, 

only outpatient 

servkes,oraU 

billable services 

information 

is reported to 

the state 

"made "information 

available to the that may relate 

Department" to individual 

citilensmaybe 

released" 

"to the 

department" 

"shaUfile 

health care 

data as 

required by the 

commissioner" 

87496.084

enactment 

or all providers , carriers to 

induding report to the 

indlvidual state 

physicians 

New Jersey STATUTE{S): Added: 1971, "hospital" "costs" AND 

New Jersey Statutes 1992 "charges for 

§Z6:2H-s, §Z6:ZH-18.55 Amended: health care 

ENACTED BILL(S): 1995,1996, services" 

Added: 1971 and 1998,2008 Assembly 2100 (1992); Amended: Assembly 

2616 (1995),Assembty 

1532 (1996), Senate 1181 (1998), Senate 539 

(2006), Senate 1796 

{2008} 

New Me)(ico STATUTE(S): Added: 1989 "all data 

New Me)(ico Statutes §§ Amended: sources" 24·14A-3,24-14A-34, 

24-14A-37 1994, ZOOS, 2012 

'" ENACTED BILL(5): ro " Added: 1989; Amended: 0 S.B. 556 j1994j, H.B. " hi 1008(2005), S.B. 786 iL (2005), H.B. 293 (2009), 

0 H.B.18(Z012) 

" 

." 

i : New York STATUTE(S): Added: 2001 "hospitals 

New York. Public Health Amended: [andjaH Law §2816 ambulatory .Q 2005, ZOl1 facilities" AND ENACTED 81LL(S): "emergency Added; A. 1644 (2001), departments" Amended: A. 412Z--c 

(2005), S. 2809-D (2011), AND "outpaS.2812-C{2011} rientdinic[sj" 

... 

..... 

estir 

i actu 

"schedules 

of rates, payments,reimbursement" 

"collect health 

data sufficient 

for consumers 

to be ahteto 

evaluate health care services, 

plans,providers 

and payers and to make 

informed decisionsregarding 

quallty, cost and Outcome of 

care across the 

spectrum of 

health care services, pro\liders 

and payers" 

"patient and "Top SO 

other data diag.nostic element" categories" 

AND '"Top 

SOsurgica! 

procedures" 

"Reported 

to the 

department" 

AND "use of 

centralized data 

storage and 

transmission 

technology" 

"serve as 

ahealtn 

information 

clearinghouse, 

including 

facilitating 

private 

a[ldpublic collaborll"twe, 

coordinated 

data collection" 

"Arr>J person 

may obtain 

any aggregate 

data" 

"reports 

to provide 

assistance to 

consumers of 

health care 

in this State 

in making 

prudent health 

care choices" 

"a report in 

printed format 

that provides 

information 

of use to 

thegenerat 

puhlicshali be produced 

I annually" 

"the 

and release of data reported" 

(SPARCS) 

87496.085

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North Carolina STATUTE(S): North Added: 1995 

Statutes 

ENACTED BILL(S): 

Added: 5.B. 345 (1995); 

Amended: 5.B. 352 

(1997) 

North Dakota STATUTE(S): Added: 1991 

North DakotClCentury 

Code §§2.3-O1.1--O2.1 

ENACTED BILL(5): 

Added: 5,B. 2589 (1991) 

insurers,or 

: carriers to 

report t9 the 

state 

"charges" 

"each licensed "Insurers, "average fees: 

physician nonprofit charged" 

practicing healthservlte 

medicine" corporations, 

health 

maintenance 

organizations, and state agencies" 

common 

procedures, 

only outpatient 

services,orall 

billableservlces "35 most 

frequently 

reported 

charges" 

"The center "makesmedsha!!require Ica! care data 

the submission available to 

of data and interested perotherinforma- sons, including, 

non" medicalcilre : 

providers, third' 

partypayors, 

medical care 

consumers, and health 

care planners 

!".) compile 

reports from 

the patient 

data and make 

the reports 

av-<lilableupon 

request to 

intererted 

personsata 

reasonable 

charge" 

"health care 

data committeeshall create a data collection" 

"shaUprepare 

areportwhkh 

must I ... J for 

tousein 

comparing" 

87496.086

North Dakota 

Ohio 

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STATUTE(S): 

North Dakota Century 

Code §§13-O1.1-02 

ENACTED Blll(S): 

Added: S.B. 2S89 (1991); Amended: H.B. 1058 

(1995), H.B. 1065 {2003) 

STATUTE(S): 

Ohio Revised Code 

§3727.42 

ENACTED BILL(S): 

Added: H,B. 197 (2006); 

Amended: H.B. 487 

(2012) 

Added: 1991 Amended: 

1995,2003 

Added: 2006 

Amended: 

2011 

"each 

nonfederal 

acute care 

hospital in this 

state"" 

"Every 

hospital" 

"average 

aggregate charges by 

diagnosIs [ ... j and the average charges 

by source of 

payment" 

"a price 

information!!st 

[ ... J including 

(l)Theusual 

and customary 

room and 

board charges; 

(2) Rates 

charged for 

nursing care, 

'Ifthehospital 

charges 

separately 

for nursing 

care ( ... ) (3) 

The u5ual and 

cu5tomary charges, stated 

separately for 

inpatjentsand 

outpatients 

if different 

: charges are 

imposed" 

"twenty-five 

most common 

diagnoses" 

"Room and 

board { ... ) 

selected 

number 

of;<-ray, laboratory, 

emergency 

room, 

operating 

room,delivery 

room, phYSICal 

therapy, 

occupational 

therapy and 

respiratory 

therapy 

services'" 

"the health 

care data committee 

maycoHect, 

store, analyze, 

and provide" 

"available 

for 

non by the 

public" AND 

"Atthetime 

of admission, 

practica!there. 

after,inform 

each parientof 

the availability 

of the list and 

on request 

provide the 

patient with 

a free copy of 

the list" AND 

"On request, 

provide a 

paper copy of 

the list to any 

person" 

"Prepare an 

annua!report 

companng 

the cost of 

hospitaliZation 

by diagnoSIS 

1·"J£stablish 

procedures 

that assure 

pubJicavai!-

abilityofthe 

information 

required to 

make informed 

health care 

purchasing 

deCisions" 

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Oklahoma 

Oregon 

STATUTE(S): 

Ohio Revised Code 

§3727.34, §3717.39 

ENACTED BllL(S}: 

Added: H.B. 197 (2006) 

STATUTE{S); 

Oklahoma Statutes 

§1-119; §1-121 

ENACTED BILL(S): 

Added: 2006 Added; 1992 

Amended 

1993,1994, 

1996,1998, 

Added: H.B. 2319 (1992); 2000 Amended: H.B.1573 

(1993), H.B. 2570 (1994), 

H.8. 2501 (1996), H.B. 

2868 (1998), S.B. 1585 

(2000) 

ENACTED BILL(S); Added: 2007 

Added; S.B. 329 (20tJ7) 

physicians 

"eachho5pital" 

"mformation 

proVIders" 

"medical 

and dental 

providers" 

insurers, or 

carriers to 

reporttothe 

state 

"health plans" 

"The mean, 

medlan,and 

range of 

totalhospita! 

charges" 

"reimburse· 

ment, costs of 

operation, I ... } 

rates,chargesN 

AND "informationaboutthe 

cost" 

"pertaining 

tompatient 

services [ ... ] 

of the sixty 

diagnosis 

related groups 

[ ... Jmost 

frequently 

treated" AND 

"pertaining 

to outpatient 

serv!ces{ ... J 

ofthesiJdy 

categories 

/ ... Jmost 

frequently 

provided" 

"submit to 

the of 

health" 

"To the 

Divlsionof 

Health Care 

Information 

within 

the State 

Department of 

Health" 

"to the 

department" 

"On request, 

the hospital 

shall make 

copies 

avadable" 

"provides 

enrollees" 

87496.088

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Oregon 

Pennsyiliania 

enactment 

liable hyperlinks 

STATUTE(S): Added: 1985 

Oregon Rellised5tatutes Amended §442AOS; §442A30; 1995,1997, §442.460 1999 

ENACTED BllL(S): 

Added: 1985, Amended' 

S.B. 1079 (1995), H.B. 

2894 (1997), H.B. 2146 

(1999) 

STATUTE(Sj: Pennsylvania Added: 1986 

Unconsolidated Statutes Amended: 

§449.6 1993,2003, ENACTED BILl(S): 2009 

Added: 1986; 

Amended: S.B. 1052 

(1993), S.B. 387 (2003), 

S.B. 89 (2009) 

STATUTE(S): Pennsyiliania Added: 1986 

Unconsolidated Statutes Amel'lded: 

§449.7 1993,2003, 

ENACTED Blll(S): Mded' 2009 

1986; Amended: S.B. 

1052(1993),5:6.387 

(2003),5.6.89(2009) 

in< 

im 

, ph 

care 

facilities" 

"Hospitals, 

ambulatory 

serllICes 

facilities,and 

phySicians," 

"for every 

provider of both inpatient 

andoutpat'ient 

services" 

insurers, or 

carriers to 

reporttothe 

state 

"insurers 

or other 

third-party 

payerso( 

employers or otherpurchasers of health 

care" 

"costs of health 

care" AND 

"advance dlsdosureofthe 

estimated outof-pocket costs 

ofa service or 

procedure" 

Demonstrate$ May legislate 

accepted only most 

reimbursement common 

: rates from procedures, 

, different only outpatient 

payers services, or aU 

billable services 

"Requires 

the office to 

conductor 

cause to have conducted 

such analyses 

and studies" 

"Total charges" "'actual payAND "charges" ments to each 

physician or 

professional 

rendering 

service" 

"including, but "thecoun-

"cost" "payment" 

not limIted ctl shall be 

to, room and required to 

board, radiolo- collect" 

gy, laboratory, 

operating 

room, drugs, 

medical suppJiesandother 

goodsandservices" AND "of each phYSICian or professional 

renderingservice relating to 

an incident of 

hospitalization 

or treatment in an ambulatory 

servicefaciHty" 

"Weforpubtk 

disclosure 

reports that 

wlilenabJe 

bothpr!vate 

and public purchasers of 

, vices from such , faciHtiesto 

make informed 

decisions" 

"Make 

availab!e 

andpro"ide comparisons" 

"prepare and 

issue reports" 

87496.089

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Rhode Island STATUTE(S): 

Rhode Island Genera! 

Laws §§23-17.17-1O 

ENACTED B1LL(S): 

Added: 1956; Amended: 

524819 (2008), H 7465A 

(2D08) 

South Carolina STATUTE(5): 

South Dakota 

South Carolina Code 

§44-6-170 

ENACTED BILL(S): 

Added: 1985; Amended: 

1989, S.B. 474 (1991), 

S.S. 507 (1993), H.B. 

3546 {1993}, S.B. 691 

(1995) 

Laws §34-lZE-8 

ENACTED BILL{S}: 

Added: H.B. 1384 (1994) 

Laws §§34-12E-ll, 11.1 

ENACTED BILL(S): 

Added: S.B. 169 (200S), 

S9 182 (ZOOS) 

Added; 1956 

Amended: 

2008 

Added: 1985 Amended: 

1993,1995 

physicians 

"health care 

prOl{iders, 

healtllcare 

facilities" 

acute care 

h05pitaisand 

specialized 

llo5pita!s 

including,but not limited 

to, psychiatric 

hospitals, 

alcohol and 

substance 

abuse 

hospitals, and 

rehabilitation 

hospitals" 

Added: 1994 "health care 

Added: 2005, 

2008 

provider or 

facility" 

"Anyhospita!" 

insurers,or carriers to 

report to the 

: state 

H!nsurersand 

governmental 

agenciEs" 

"or insurer" 

"heatthtare 

costs, prices" 

"financialinformation" AND 

"charges" 

"AU fees and 

charges" 

"the charge 

information" 

"health insurancedaims" "health care facility 

services" 

"The director 

shatlertablish 

and maintain a 

unified health 

carequahty andvatue database" 

"of inpatient "reported to 

and outpatient the office" 

information" 

"shall report 

annually to the 

Diagnosis- South Dakota 

Related Groups Association of 

"AU Patient 

Relined 

for which that Health Care 

hospital had at Organizations" 

teasttencases" ; 

"Upon request 

Clfpatient" 

"Provide 

I'lfof'ndtl!)nto , 

consumers and 

purchasers of 

heatth care" 

"appropriate 

dissemination of health 

care-re!ated 

data reports" 

87496.090

Tennessee STATUTE(S): Added: 1985, 

Tennessee Code '00' 1-119 

Amended' 

ENACTED Blll(S): Added: 1994,2004, 

1985, S.B. 2407 (2002); 2006,2011, 

Amended: S.B. 63 (1994), 2012 

H.B. 3449 (2004), H.B. 

, 2827 (2006), KB. 596 

(2011), S.B. 3011 (2011), 

5.8.2416(2012) 

Texas STATUTE(S): Added: 1994 

& 

Safety Code §§108.006, 2005' , 9,11,12 

ENACTED IlILl{S): 

Added: H.B. 1048 (1995); ;+ Amended:S.8. S02 

Q (1997), H.B. 1513 (1999), a. S.B. 872 (2005) 

a 

" STATUTE(S): Added: 2007 

Vernon's Texas Statute Amended; and Codes Health & 1009 5afetyCode § 314.051 

ANDC1(t.JpJtf:'c;, C(;:)2 

f §154.oo2 ENACTED BllL(S): Added: S.B.1731 (2007) 

Amended: H.B. 1156 

!;l (1009) 

.I> 

... 

"Each licensed 

hospital" AND 

"Each licensed 

ambulatory 

surgical 

treatment 

center (ASTC) 

and each 

licensed 

outpatient diagnostic center (ODC)" 

"hospitals, 

ambulatory 

surgical 

centers,and 

free·standing 

radiology 

centers" 

"the 

facility" AND 

"physician" 

"al!claims 

data" 

"coUect health 

care charges" 

"information 

in the guide 

concerning 

fadlitypricing 

I practices and 

the correlation 

afac.ility's average charge" AND 

"the actual, 

bliledcharge" 

common 

procedures, 

only outpatient ' 

payers services,oral! 

biJlabieservices 

every "to the 

inpatient and cornmissioll€r 

outpati!!ot ofhea!th [who} 

discharge" shaliprompUy 

make the data 

availab!efor 

review and 

copying by 

the Tennessee 

hospftal 

association 

(THA)" 

"prioritize "Thecouncll 

data coUectlon shaHdeve!op 

efforts on a statewide 

inpatient and health care 

outpatient data collection 

surgical and system to" 

radIOlogical procedures" 

"an inpatient "to submit to 

admission or the Departoutpatient ment" 

surgica!procedure" 

"shall prescribe 

conditions under which the 

processed and 

verified data 

are available to 

thepubHc" 

"provide public "make 

use data and reports to the 

data collected legislature, the 

I ... J to those governo(,and 

requesting it" the public on 

the charges 

and rate of change in the 

charges for 

health care 

services" 

"shal1make 

available 

onthe department's 

!ntemet 

websIte a 

consumer guide to health 

care" 

87496.091

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§ 

Utah 

STATUTE(5): 

Vernon's Texas Statute 

and Codes Health & 

Safety Code §324.101 

AND O(;:: .. ,', trlC? 

§1OL352 

ENACTED 

BlLl(S): Added: 5.B. 1731 

(2007); Amended: fU. 

2256(2009) 

STATUTE{S): Utah Health 

Code §§26-33a-l04, 

106.1,1065 

Added: 2007 Amended: 

2009 

Added: 1990, 

1996,2007 

Amended; 

ENACTED BllL(S): Added: 19%,2001, 

5,B. 235 (1990), 5.B. 171 Z005,1007, 

{1996}, H.B, 9 (2.007); 2008,2010, 

Amended: S.B. 171 2011,2012 

(1996), H.B. 208 (2001), 

S,6, 132 (2005), H.B. 9 

(2007), H.B. 63 (2008), 

H.B. 294 (lOID), 

H.B. 213 (2011), H.B. 144 

(2012) 

STATUT£(S): Utah Health , Added: 1981 

Code§§26-3-2,4 

ENACTED BllL(S): 

Added: 1981 

"Facility" and "phySician" 

"health care 

provlders" 

"anl.'!stimate 

of the facl\ity's 

[orphysitian'sJ 

charges" 

"measurements of cost" 

AND "rate 

and price 

increases" 

"health care 

costs and 

financing" 

common 

procedures, 

clntyoutpatfunt 

services, or aU 

bnlableservices : 

"for any 

elective 

inpatient 

admission or 

nonemergency 

outpatient 

surgical 

procedlJreor 

other service" 

"purpose of 

thl.'!committl.'!e 

is to direct 

astatewlde effort to collect,analyze, 

and distribute 

health Care 

: data" 

the departmentmay 

[ ... } collect 

and maintain 

health data 

"on request 

and before the 

schedu!ingof 

the admission 

or procedure 

or service" 

: 

"asslstthe 

Legislature and I 

the public with 

awareness 

of,andthe 

promotion of, 

transparency 

inthehealth 

care market by avaHilble,and 

disseminate 

suchstatistlcs 

onaswldea 

b"sisaspracticable" 

87496.092

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In 

Utah 

Vermont 

physidans 

STATUTE(S): Utah Health Added: 2010 "a health care 

Code §26-21-27 facility" 

ENACTED BILl{S): 

H.B, 294 (2010) 

STATUTE(S): Vermont 

Statutes 18 §9405b 

ENACTED BILL(S): 

Added: H. 128 (2003) 

Amended: H, 516 (200S), 

H, 227 (2006), H, 881 

{2006), H. 380 (2007), 

H. 202 (lOll) 

STATUTE(S): Vermont 

Statutes 18 §941O 

ENACTED BIlL{S): 

Added: H.B. 733 {1992}, 

Amended: 5, 345 (l996), 

H. 516 (1005), H. 678 

(2006), H. 861 (2006), H. 

129 (1007), S. 115 (2007), 

S. 42 (2009), H, 444 

(l009), H. 202 (2011) 

Added: 2003 Amended: 

2005,2006, 2007,2011 

Added: 1992 Amended: 

1996,2005, 

2006,2007, 2009,2010, 2011 

"hospitals and 

other groups 

of health care 

professionals" 

"health care 

prov!def5, health care 

facilities" 

"All health 

insurers" 

"measures that , 

provide valid, 

: reliable, useful, 

andeffident 

tnformationfor 

payers and the 

pubhC for the 

comparison of charges" 

"anyothN 

informationrelatingtohealth 

care costs, 

prices" 

"health insurancedaim" 

common 

procedures, 

only outpatient 

services, or all 

billable services 

"in'patientpro" submitted 

cedures; to "the 

(b) out·patient department" 

procedures; 

(c)the 50 most 

commonty pre" 

scribed drugs 

inthefadlity; 

(d) imaging 

SE'rvices;and 

(e) Implants" 

"forhlgner 

volume health 

care serVices" 

"Thecommissioner[ .. ,lsnall 

[establish] 

a standard 

format for 

community 

reports'" 

"required to 

be filed by the 

commissioner" 

"'The 

commiSSIOner 

i shall publish 

, the reports 

ona public 

website and 

shall develop 

andindude 

a format for 

comparisons 

of hospitals 

within the same 

categories of quality andfinandal 

:lndicatofs" 
135 


87496.093

I 

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87496.094

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Virginia STATUTE{S): Virginia 

Code 32,1-

276.5:1, 

ENACTED BILL{S}: 

Added: H.B. 1307 (1996), 

H.B. 603 (2008); 

Amended: S.B. 396 

(2008), H.B. 710 (2010), 

H.B, 343 (2012), S.B.135 

(2012) 

Added: 1996, 

2008 

Amended: 

2008,2010, 

2012 

"fora!! 

providers and provider types, 

toindude 

hospitals, 

outpatient or 

ambulatory 

surgery centers 

and physician 

offices" 

insurers, or 

carriers to 

reporttothe 

state 

"carriers "pficeinforoffering private: mation"AND 

group health "total charges" 

IflSUfi.!nce 

policies" 

"the aggregate 

information so 

that readers 

will be able 

to determine 

the average 

amount of 

common 

procedures, 

only outpatient 

services, or all 

biUabieservices 

"The COmmlssionershal! 

negotiate and 

enter into 

contracts or 

agreements 

with a nonprofitorganlzation 

forthecompilation,storage, 

analysiS,and 

eVOlluationof data submitted by health 

care providers 

pursuant to thiS 

chapter; for 

the operation 

of the AU·Payer Claims Database" 

"public survey 

reports" 

87496.095

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Washmgton 

.Q 

STATUTE(S): Revised 

Code of Washington 

§70.41.2S0 

ENACTED BILL(S): 

Added: S.55.B. 5304 

(1993) 

, enactment 

Added: 1993 

insurers, Of 

carriers to 

repOJHothe 

state 

"the hospita!" "charges" 

West Virginia STATUTE(S): West Virginia Mded: 1983 "health care "health care 

Codes §§16·29B-l, Amen.ded: providers" costs" 

§16-29B-21, 1991,1997 

ENACTED BllL{S): 

Added: 1983; Amended: 

H.B. 2194 (1991), S.B. 

458 (1997) 

payers 

"all health 

tare services 

ordered" 

"an entity of 

state governmentmustbe 

given authority 

[.,.J to gather 

anddissem, 

lnate health careinforma· 

tion" 

"made available to any 

physicianandl 

or other nealth 

care provider ordering care 

in twspital 

inpatient} 

outpatient 

services. The 

physicianandl 

or other health 

care provider 

may inform 

the patJent of 

these charges 

and mayspecifical1yreview 

them" 

"to analyze 

, and report 

on changes 

in thehea!th 

caredetivery 

system" AND 

"publish and 

disseminate 

'"V 

: information 

which would 

be useful to 

: members of 

I the genera! 

public in 

making 

informed 

: choices about 

he<llthcare 

providers" 

87496.096

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enactment 

West Virginia 5TATUTE(S): Added: 1979 

Amended: 

1991,1996 

Wisconsin 

West Virginia Codes 

§16-SF-2 

ENACTED B!ll{S): 

Added: 1979; Amended: H.B. 2194 

(1991) 

STAfUTE(S): Wisconsin Added: 2005 Statutes §153.0S (1)(a) 

ENACTED Blll(S); 

Added: AB 907 §11-31 

(2005) 

STATUTE(S): Wisconsin Added: 2005 

Statutes§153.0S (1)(e) 

ENACTED BILl(S); 

Added: AB 907 §11-31 

(2005) 

STATUT£(S): Wisconsin Added: 2005 Statutes§153.0S(2mj{a) 

& (8){bl 

ENACTED 8UtS): Added: 

AB 907 §11"31 (2005) 

5TATUTE(S): WisconSin Added: 2005 Statutes §lS3.0S (8)(a) 

ENACTED Blll(S): 

Added: AS 907 §11-31 

(2005) 

physicians 

"Every covered 

facility and 

related 

organization" 

"hea!thcare 

providers other 

than hospitals 

andambula" 

tory surgery 

centers" 

"A complete 

seheduleof such covered 

facillty's 

or related organization's 

then current 

rates" AND "A 

statement of 

aU <harges" 

"health care 

information" 

"insurers" and "health 

administrators" care claims 

information 

, w\threspect 

tothecost, 

quality,and effectiveness" 

"hospitals and "claimsinfor· 

ambulatory mation and 

surgerycen- other health 

ters" careinformation" 

"from health "claims 

care providers, : information other than and other 

hospitals and health care 

ambulatory information" 

surgery 

centers" 

payers 

procedures, 

only outpatient 

services, or all 

biJlableservlces 

"file with the "Copies of such 

board" reports shall be' 

madeavaHable 

to the public 

upon request" 

"the data orga· 

nllation under 

<ontract" 

"a [contracted} 

entity" 

"the 

department 

shaU<ollect" 

"disseminate 

{ ... } in language 

that is under- ' 

standableto 

laypersons. 

"disseminate, 

in language 

that is understandableto 

laypersons" 

87496.097

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Wisconsin STATUTE(S): Wisconsin 

Statutes§153,QS (SHe) 

ENACTED 8ILL(S): 

Added: AB 907 §11-31 

(2005) 

STATUTE{S): Wisconsin 

Statutes§153.0B 

ENACTED Blll(S}: 

Added: AB 907 §11-31 

(200S) 

STATUTE{S}; Wisconstn 

Statutes§153.22 

ENACTED BlLL(S): 

Added: AS 907 §11-31 

(2005) 

STATUTE{S): Wisconsin 

ENACTED BIlllS): 

Added: AS 907 §11-31 

(2005) 

Added: 2005 Added: 2005 "hospital" 

Added: 2005 "hospitals and 

ambulatory 

surgery 

centers" 

Added: 2005 "health care 

prolliderthatis 

notahospita! 

or ambulatory 

surgery center" 

STATUTE(S): Wisconsin Added: 2005 "health care Statutes §146.903 (3)(a) provider or 

ENACTEO BllLIS}: 

Added: AS 9{l7 §1l-31 

12005) 

the health 

careprov!der's 

designee" 

insurers,or 

carriers to 

report to the 

state 

"insurers and "health care 

administrators" claims Information" 

"rates or 

charge 

{changer 

"utilization, 

charge,and quality data on 

patients" 

"Charges 

assessed with 

respect to the 

procedure 

code" 

"the median 

biltedcharge, 

3ssumingno 

medical complications" 

"fora health 

careserllic.e, diagno!>tictest, 

or procedure" 

information 

is reported to 

the state 

data 

organization" 

"upon request 

by and at 

no cost to a health care 

consumer" 

publicly report, 

in1.anguage 

that is understandableto 

laypersons 

"pub!isheda 

class 1 nor:\ce 

I ... J ina news-

"annual 

report" 

"pubhcuse 

da1<l '1 r:-.f' 

87496.098

insurers, or 

carriers to 

report to the 

state 

: 

Wisconsin STATUTE(S): Wisconsin Added: 2009 "a healtil care "charge infor· "2Spresentmg "upon request: 

Statutes §146.903 (3)(b} provider" mation" AND conditions byand atno 

ENACTED BILL(S); EXCEPT "1. The median Identified" cost to a health 

Added: AB 614 §S (2009) "A health care biUed charge; care consumer, 

provider til at is 2. If the health provide the 

an association care provider consumer a 

of30rfewer is certified copy of the 

individual as a provider document" 

hea!thcare of Medicare, : 

providers" the Medicare 

payment to 

the provider; 

J. The average 

allowable 

payment from 

private,3rdparty payers" 

" STATUTE(Sj: Wisconsin Added: 2009 "Each hospitaf" "charge "for inpatient "A hospital 

ro "C Statutes §146.9OJ (4)ja) informabon" care for each shall, upon 

a AND "1. The : of the 75 request by and 

" ENACTED BILL(S): :;> Added: A[l614 §5 (2009) medianbliled nosis-re!ated at no cost to 

cnarge; groups { ... J and a health care 

a. 2. The average for each otthe consumer, 

a 

0 allowable 750utpa- provide the 

payment under tientsurgical consumer a 

Medicare; procedures copy of the 

" 3. The average identified" document" 

allowable 

payment from 

i private,3rd- 

party payers" Wyoming UNLEG!SLATED: "all Wyoming "chargeinfor- 

Developed by Wyoming hospitals" mation" 

" Hospital Association [ with data from Hospital Industry Data Institute. 
141 


87496.099

CATALYST 

PAYMENT 

REFORM 

STATEMENT BY CPR PURCHASERS ON PRICE AND QUALITY 

TRANSPARENCY IN HEALTH CARE 

Information about the price and quality of health care services should be broadly available to those who 

use and pay for care 

1. Consumers must have access to meaningful. comprehensive information about the price and quality of services to make 

informed health care decisions. 

Consumers are being asked to pay more for their health care as costs rise and insurance benefits change; they have the 

right to know the price and quality of their health care choices. 

• Such information should be readily available and accessible in a comprehensive format that is relevant and user-friendly, 

including: 

./ Integrated price, quality (especially outcomes data), and patient experience information for specific services that 

is customized to the consumer's benefit design (e.g., real-time deducible, coinsurance, and co~pay information, 

etc.), by illustrating the total cost of care and the amount for which the consumer is responsible . 

./ Provider background, including education and medical training, Maintenance of Certification, services offered, 

access hours, location and online appointment scheduling; and 

.; An easy"to~use and convenient platform or portal including web and mobile applications, paired with support 

from physicians, nurses, coaches or other trained customer service representatives to help patients use the tools 

to maximize their health. 

2. Providers and health plans must make such information available. 

Health plans have made strides and should continue to innovate with the tools they have created to share quality and 

price information with consumers. 

• Some providers continue to resist releasing price and quality information. To develop comprehensive transparency 

tools, providers must make such data available, and provide it at a level which is meaningful to consumers (e.g. at the 

indiVidual hospital or physician level rather than at a health system level). 

Many health plans have agreed that self-insured purchasers should be able to 

use their own claims data, including price information, as needed, though 

some prohibit purchasers from giving it to a third-party vendor to develop 

consumer transparency tools or to assist with interpretation. Health plans 

must eliminate these restrictions to maximize the options for transparency 

tools in the marketplace. 

3. Self-insured purchasers have the right to use their claims data to develop 

benefit designs and tools that meet their needs. 

• Self-insured purchasers have an interest in sharing price and quality 

information with their consumers to encourage them to use high~quality, 

cost-effective care, which may help to drive down health care spending and 

health care prices by encouraging providers to compete on quality and 

afford ability. 

Access to the most complete price and quality information also helps purchasers develop innovative and integrated 

benefit design and payment reform strategies. 

Self-insured purchasers should seek health plan partners with tools that meet their needs or that allow them to use their 

own claims data in a manner that meets their needs, such as having the flexibility to contract with other vendors to 

analyze and display their data. 

4. Current anti~trust laws should be adhered to and enforced to ensure that providers and health plans do not use price 

information in an anti-competitive manner. 

• There could be unintended negative consequences to greater transparency on price and quality information, such as 

providers using it to raise their prices. To address this, appropriate parties must monitor such transparency with 

suitable oversight mechanisms, 

Price and quality information released for use by consumers can be presented in such a way that targets it to 

consumers' expected share of the costs due to their specific health plan benefit design. 
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Statement of Paul B. Ginsburg, Ph.D. 

President, Center for Studying Health System Change (HSC) 

Research Director, National Institute for Health Care Reform (NIHCR) 

BEFORE THE U.S. SENATE 

Committee on Finance 

Hearing on "High Prices, Low Transparency: The Bitter Pill of Health Care Costs" 

June 18, 2013 

NATIONAL INSTITUTE 

FOR HEALTH CARE REFORM 

1100 I-t ST NE_ 12th FLOOR .WASHINGTON .. DC 20002-4221. TEL: 202.484.5261_ FAX: 202.863.1763. WWW.HSCHANGE.ORG 

THE NONPARTlSAN CENTER FOR STUDYING HEALTH SYSTEM CHANGE (HSC) IS AFFILIATED WITH MATHEMATICA POLICY RESEARCH 
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Chainnan Baucus, Senator Hatch and members of the Committee, thank you for the invitation to 

testifY on health care price transparency and costs. My name is Paul Ginsburg, president of the 

Center for Studying Health System Change (HSC) and research director of National Institute for 

Health Care Refonn (NIHCR). 

Founded in 1995, HSC is an independent, nonpartisan health policy research organization 

affiliated with Mathematica Policy Research. HSC also has served since 2008 as the research 

ann of the nonpartisan, nonprofit National Institute for Health Care Reform (www.nihcr.org), a 

501 (c) (3) organization established by the International Union, UA W; Chrysler Group LLC; 

Ford Motor Company; and General Motors to conduct health policy research and analysis to 

improve the organization, financing and delivery of health care in the United States. 

Our goal at HSC is to inform policy makers with objective and timely research on developments 

in the health care system and their impact on people. We do not make specific policy 

recommendations. Our various research and communication activities may be found on our Web 

site at www.hschange.org. 

Health Care Costs and Price Transparency 

To date, most policy activity related to health care price transparency has missed the mark and. 

has not achieved the prime goal oflowering prices by engaging consumers to choose providers 

on the basis of value. Without changes in insurance benefit designs that steer patients to highvalue providers-those that provide high-quality care efficiently-price transparency initiatives 

are likely to continue to have limited impact. Additionally, the effectiveness of price 

transparency approaches is limited by a lack of useful quality infonnation for consumers. I do 

believe, though, there is a role for federal and state policy to achieve lower prices through price 

transparency initiatives that engage consumers. 

One source of confusion in discussions of price transparency comes from the fact that there are 

different goals for price information, and distinct audiences with different needs. The 

importance of transparency as a core value of our society continues to grow, and, by this light, 

transparency is a goal in and of itself. We have a shared beliefthat the public or individual 

consumers should know more about the products and services they are buying and what they 

cost, even in situations where someone else is paying. Some of the interest in price transparency 

on the part of policy makers reflects this important shared value. But the chief goal of pricc 

transparency initiatives is to encourage competition among providers on the basis of both price 

and quality of care. To the extent that consumers choose higher-value providers, they will save 

money and get higher-quality care. And, if enough consumers act on the basis of price and 

quality infonnation, providers will feel significant market pressure to reduce prices and increase 

the quality of care. Such a market level effect will benefit all who use and pay for care. 

At least three distinct audiences have the potential to benefit from health care price infonnation. 

One audience is individual patients deciding what care to get and which provider to use. Patients 

need to know the differences in what they will pay if they choose different providers. The 

second audience consists of employers that purchase health benefits for their employees. For 

this audience, learning that prices vary a great deal from one provider to another, often in a way 
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unexplained by quality differences, can be very influential. Employers can change insurance 

benefit and network designs to make employees more sensitive to price and shift use of services 

to higher-value providers. The third audience is policy makers, who can pursue approaches to 

increase the degree of price competition in the market or, in some cases, regulate prices directly. 

Transparency Initiatives are Coming Closer to the Mark 

The earliest policy initiatives to promote price transparency required hospitals to publish their 

"chargemasters," which are list prices for thousands of services that hospitals provide, down to 

provision of an aspirin. Publishing chargemasters does not have the potential to lead to lower 

prices by engaging consumers, because the price information is far too complex to be useful, and 

does not reflect the prices most consumers and health plans actually pay. A later generation of 

initiatives reported average hospital prices for common treatments, such as a knee replacement. 

These data are more understandable to consumers and policy makers, but the price data are 

typically for list prices (billed charges). These are not very meaningful to policy makers or to 

consumers, however, because private insurers negotiate large discounts and public programs 

(Medicare and Medicaid) set payment rates administratively. 

The Centers for Medicare and Medicaid Services (CMS) recently released hospital charges for 

common episodes of care along with Medicare payment amounts for those services. l For one 

audience-individual patients, these charges are generally irrelevant. They do not reflect what 

anyone pays for care, except for the few uninsured patients who can afford a hospitalization and 

a small number of privately-insured patients who choose a hospital not in their insurer's provider 

network. The Medicare inpatient payment amounts are irrelevant to Medicare patients, who pay 

the same deductible regardless of which hospital they use. And, what Medicare pays clearly isn't 

relevant to privately-insured patients. To me, the most important information from the CMS 

charge data was generated by a New York Times article about the hospital with the highest 

charges in the country, Bayonne Hospital in New Jersey. This information was important 

because it shed light on a relatively new business strategy where some hospitals refuse to 

contract with insurers and instead set extremely high charges, aiming to collect these amounts 

from insurers whose enrollees visit the hospital's emergency department. 

The Massachusetts Attorney General (AG) in 2010 published much more meaningful price data, 

which have been influential with Massachusetts policy makers and employers and perhaps 

outside the state as well. 2 The AG report published data on the actual rates that private insurers 

paid for hospital carc. It showed very large differences in rates across hospitals, with some of 

the highest-priced hospitals turning out to be the highly prestigious ones, but others apparently 

high priced because of a lack of local competitors. The report was an important factor behind 

20 10 Massachusetts legislation that prohibited hospitals from requiring placement in preferred 

tiers as a condition of contracting. This has opened the door to much greater enrollment in 

I Administration Offers Consumers an Unprecedented Look at Hospital Charges, May 8, 2013. 

http://www.cms.govlNewsroom/MediaReleaseDatabase/Press-ReleasesI2013-Press-Releases-ltemsI2013-05-08.html 

2 Office of Attorney General Martha Coakley, Examination of Health Care Cost Trends and Cost Drivers pursuant to 

g.1. c. 118g, § 6 Y,(b): Report for annual public hearing (Mar. 16,2010), available at http://www.mass.gov/Cago/ 

docslhealthcare/final_report _ w _cover_appendices _glossary.pdf 
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insurance products that differentiate hospital deductibles according to the tier ofthe hospital 

used. 

I and others have raised the concern that the publication of negotiated rates could raise prices. 

There is evidence, albeit from outside the health care industry, that in concentrated markets price 

disclosure leads to higher prices.3 Indeed, antitrust authorities throughout the world generally 

restrict how sellers publicly post prices.4 Anecdotal information from some health care price 

transparency initiatives suggests that low-priced providers were unaware of their prices being 

substantially lower than those of their competitors. At this point, we can only guess about 

whether some providers subsequently succeeded in raising prices; I expect research to be 

appearing on this issue in the future. 

Role of Insurance Benefit Design 

For price information to influence consumers to choose different providers, those choosing 

lower-priced providers need to save money as a result. Enrollment in high-deductible plans has 

been growing rapidly, which makes individuals more aware of the prices they are paying for 

health services. But, even high-deductible plans likely have little influence inpatient hospital 

choice because the cost of almost all inpatient admissions will exceed the deductible. And, many 

current insurance benefit designs lead to patients paying the same amount regardless of provider. 

For example, many plans have uniform hospital deductibles physician copayments. The most 

important aspect of current benefit designs is the incentive to use network providers. Since the 

late-l 990s, most plans' hospital networks have been very broad; recently plans have introduced 

more products that achieve lower premiums by offering a limited provider network. 

Newer benefit designs are more effective in helping consumers identify lower-priced providers 

and rewarding consumers who use such providers. For example, high-deductible plans do 

provide opportunities for enrollees to save money if they choose lower-priced providers of 

outpatient imaging and procedures. Tools to help enrollees find lower-priced providers have 

advanced. For example, I was impressed with the United HeaIthcare's myHealthcare Cost 

Estimator tool, which was sent to me (they administer my health plan) a few weeks ago. 

However, I perceive the greatest potential to obtain lower prices comes from approaches where 

purchasers and health plans, rather than report prices to their enrollees, analyze extensive data on 

costs and quality and provide their enrollees very simple incentives to choose providers 

determined to be higher value. For example, for inpatient care, sophisticated insurers can 

analyze total spending for an episode of care, including all of the providers involved, including 

various physicians and post-acute care providers as well as the hospital, and factor in data on 

quality as well. Such number crunching is behind tiered-network products. 

Reference pricing is a more focused version of the tiered-network approach. CaIPERS, which 

purchases health benefits on behalf of California state employees and employees of many local 

3 Ginsburg, Paul B. "Shopping for Price in Medical Care." Health Affairs. vol. 26, no. 2, March 2007, pp. w208-

w216. 

4 A U.S. example is restrictions on airlines publicizing their prices. 
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governments, has used this approach for those enrolled in its preferred provider organization 

(PPO) plan administered by Anthem Blue Cross. For hip and knee replacements, CalPERS 

established a reference price on the basis ofthe average payment amount for the hospital bill (the 

surgeon's fee is not included in the program). Patients using hospitals where CalPERS pays 

more than that amount must pay the difference. 

These approaches have the advantages of keeping things relatively simple for the enrollee, while 

being based on a sophisticated analysis of cost data. They do not fit with the common vision of 

transparency, such as when a plan provides prices on MRIs for those enrolled in a highdeductible design, but they may be more effective. Of course, the approaches can be combined, 

with network approaches used for inpatient care and price lists used for outpatient services. An 

irony is that hospital resistance has limited the development of tiered designs and reference 

prices, so that more growth has come in limited network plans, which are much more restrictive 

of provider choice. 

Limited information on provider quality has held back the use of price transparency to obtain 

lower-priced care. Consumers need quality data that is meaningful to them before they decide to 

choose a lower-cost provider. Currently, perceptions of quality are based largely on reputation 

among clinicians, but it is by no means clear that a good reputation equates with better outcomes. 

Policy initiatives, such as Medicare Hospital Compare and the National Quality Forum, are 

helping to advance quality measurement and reporting, but much more could be done, especially 

shifting the focus from process measures to outcome measures of quality.5 

Policies to Obtain Lower Prices through Transparency 

Although I have been critical of many public price transparency efforts, federal and state policies 

can be effective. Two federal policies that are not transparency initiatives per se are likely to do 

a lot to change insurance benefit designs toward those that include incentives to choose lowerpriced providers. I am referring to the "Cadillac tax" provision in the Affordable Care Act and 

the design of the premium credits to purchase coverage on insurance exchanges. The Cadillac 

tax will lead to strong incentives to keep premiums low enough to avoid the 40 percent excise 

tax. Since premium credits are based on the premium of the second least expensive silver plan in 

an area and do not vary according to the premium of the plan chosen by an enrollee, consumers 

will be highly sensitive to premiums charged. The Cadillac tax and premium competition in the 

exchanges will pressure plans to keep premiums down, and some of the tools that health plans 

will use will be higher deductibles, limited-provider networks, tiered networks and reference 

pricing. These benefit designs will increase consumer sensitivity to provider prices and 

consumer interest in tools to help them identify higher-value providers. 

The federal government can support these approaches by making Medicare Part B claims data on 

physicians available to insurers and consumer organizations, which have been pressing for it for 

some time. This would allow insurers to assess physician efficiency and quality on the basis of 

, See, for example, Berenson, Robert, "Seven Policy Recommendations to Improve Quality Measurement," Health 

Affairs Blog, May 22, 2013. http://healthaffairs.org!blog!20 13/05/22/seven-policy-recommendations-to-improveguality-measurement! 
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broader experience than they can obtain from their own claims data. Such a change would be 

particularly helpful to smaller insurers, thus making insurance markets more competitive. 

Legislation recently reintroduced by Senators Grassley and Wyden (Medicare DATA Act) would 

accomplish this. States can also contribute by designing their all-payer claims databases in a 

way that allows insurers to draw on the full database to assess the quality and efficiency of 

different providers. States can also facilitate use of tools such as tiered networks and reference 

pricing by prohibiting hospitals from blocking these tools through refusal to contract. 
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STATEMENT OF HON. ORRIN G. HATCH, RANKING MEMBER 

U.S. SENATE COMMITIEE ON FINANCE HEARING OF JUNE 18, 2013 

HIGH PRICES, LOW TRANSPARENCY: THE BITIER PILL OF HEALTH CARE COSTS 

WASHINGTON - U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance 

Committee, delivered the following opening statement at a committee hearing examining ways 

to improve transparency and lower healthcare costs in America: 

Thank you, Mr. Chairman, for convening this hearing this morning. To be honest, I'm 

nat sure where to begin. 

As we all know, the original impetus for this hearing was the recent article in Time 

magazine about the costs associated with health care. 

While that article didn't present much in the way of new information, it reminded all of 

us how complicated our healthcare system is and how our system of fee-for-service 

reimbursement has resulted in tremendous cost growth aver the last twa decades. 

Congress has had discussions about the cost of health care for years. Unfortunately, I 

think the President's health care law missed a real opportunity to address these issues. 

We know that there are many factors that drive up the cost of care, some appropriate, 

and some nat. 

Those of us who got through the more than 35 pages of the Time article know that each 

sector of the healthcare industry must playa part if we're going to be successful in creating a 

mare rational and affordable system. 

Some have suggested comparing purchasing decisions in our healthcare system to those 

of other industries such as airlines, cars, or hotels. With those types of purchases, websites and 

ather avenues exist that allow consumers to readily find price information and consumer 

reviews. 

While I agree that this is a very rational way to shop, we have to acknowledge that 

health care is very different. Many factors go into priCing health care - factors such as specialty 

of provider, severity of patient condition, and level of resource use. And, different payers 

reimburse at different levels. 

As many have noted, we have one of the best health care systems in the world. But 

there is a Significant debate as to whether our outcomes are good enough to justify the costs. 

This year, Americans will spend $2.8 trillion on healthcare and, of that, Medicare will 

spend $800 billion. 
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In Congress, we tend to focus mostly on spending in Medicare and other federal 

programs, but the enormous amount spent in the overall healthcare system needs to be 

examined. 

For employers who provide coverage to their employees, the rising costs of goods and 

services that make up our health care system are very real. Increased costs mean less money 

that can be spent an wages or other benefits and, perhaps mare importantly, less money to 

spend on hiring additional employees. 

And, for indiViduals, as costs continue to increase and employers have to scale back, 

their aut-of-packet health care costs will only go up. 

The issue that most directly affects people - whether they have health insurance or natis their out-of-pocket costs. Most people aren't interested in irrelevant hospital charge-masters, 

or the details of health plan negotiations. They simply want to know what they'll be paying 

themselves at the end of the day. 

For savvy consumers who will spend time up front researching cost and quality data, 

they want easy to understand information to help them make decisions. For others, it's as 

simple as receiving a bill that is, as they say, patient-friendly. 

As I stated, this is a very complicated issue and many factors need to be considered. 

Most of us would agree that competition in healthcare is generally a goad thing. 

Hospitals, physicians, suppliers, and payers should all compete an quality and price, and 

consumers should benefit from this. 

However, in many parts of the country, consolidation - whether it is provider or payer 

consolidation - has often led to higher prices, without better quality outcomes. 

Mr. Chairman, I think this is an area that is warth further exploration in the future. 

Many of the policies that Congress has enacted -like, for example, accountable care 

organizotians, bundled payments, or health information technology requirements -lead to 

greater consolidation. It's important that we know the consequences of some of these policies. 

Lastly, let me echo the paint made in Mr. Brill's article about the cost of defensive 

medicine. 

As the article stated, much of the high cost of health care is due to over-utilization of 

services as a means of protecting the physician against future litigation. 

In light of this fact, I hope that Congress will work to pass legislation to address medical 

liability reform. This was another missed opportunity in Obamacare, but it's not too late to fix 

that. 

Chairman Baucus, thank you, once again, for convening this hearing today and I look 

forward to hearing from our witnesses and learning about how we can harness the wealth of 

information available to consumers to help them make goad decisions about their health care. 

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It is important to note that what is charged and what patients eventually pay are two different 

numbers. Because nearly all of a hospital's payments are set either by government, which pays 

less than the cost of caring for patients, or through negotiations with private insurance 

companies, the vast majority of patients do not pay what is listed on the hospital bill. 

In addition, hospitals must balance needed financial assistance for some patients with broader 

fiscal responsibilities in order to keep their doors open for all who need care. 

Patients may look at a hospital bill and think the prices they see only reflect the direct care they 

received, when in fact what is reflected are all the resources required to provide the care - such 

as the nurse at the bedside and the myriad staff who keep the hospital running- bundled into the 

price of every item on a hospital bill. 

Making life-saving services such as neonatal intensive care units, trauma centers and burn units 

available 24 hours a day, seven days a week, is cost intensive. This standby capacity is not 

explicitly funded, but patients and communities depend on it - and expect it - to be there when 

they need it because hospitals treat everyone who walks through their emergency department 

doors, including people who do not have insurance or cannot pay. In 2011 alone, hospitals 

provided $41 billion in uncompensated care. The cost of covering these patients, along with 

making up for payment shortfalls by government programs, are built into all bills as well. 

THE CHALLENGE OF PROVIDING MEANINGFUL INFORMATION 

Hospitals strive to provide care to those who need it while ensuring that patients have the 

necessary infonnation - including the cost and quality of care - to make decisions about their 

care. Sharing meaningful information, however, is challenging because hospital care is 

specifically tailored to the needs of each individual patient. For example, a gallbladder operation 

for one patient may be relatively simple, but for another patient, it could be fraught with 

unforeseen complications, making meaningful "up front" pricing difficult and, perhaps, 

confusing for patients. Moreover, hospital prices do not include physician and other 

professionals' costs or, most importantly, how much of the cost a patient'S insurance company 

may cover. 

More than 40 states already require or encourage hospitals to report information on hospital 

charges or payment rates and make that data available to the public. These state efforts range 

from making public information about individual hospitals' lists of prices (i.e., master charges), 

to pricing infonnation on frequent hospital services, to infonnation on all inpatient services. 

The AHA supports these state-based efforts regarding price transparency, including the Health 

Care Price Transparency Promotion Act of20l3 (H.R. 1326), which would require states to 

have or establish laws requiring hospitals to disclose infonnation on charges for certain inpatient 

and outpatient services, and require health insurers to provide to enrollees upon request a 

statement of estimated out-of-pocket costs for particular health care items and services. 

Introduced in the House by Reps. Michael Burgess (R-TX) and Gene Green (D-TX), the 

legislation also requires the Agency for Healthcare Research and Quality to study the types of 

health care cost information that consumers find useful, and ways it might best be distributed. 
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Hospitals are committed to providing more useful information to patients. It also is important to 

note that, for most patients, what is most important and relevant is how much they will be 

required to pay out-of-pocket. Because insurers determine how high their customers' out-ofpocket rates will be, patients need insurers to provide real-time information. 

PRINCIPLES FOR HELPING PATIENTS WITH PAYMENT FOR HOSPITAL CARE 

Today's complex billing system did not develop overnight, so it will require thoughtful 

examination involving all stakeholders to find the right solutions that will benefit patients. 

In November 2003, the AHA Board of Trustees approved a Statement of Principles and 

Guidelines on practices hospitals are embracing for patient billing and collection. The guidance 

was updated in May 2012 to reflect advancements in the field and changes made by the Patient 

Protection and Affordable Care Act (ACA) applicable to tax-exempt hospitals. The guidelines 

reflect that commitment and demonstrate the shared partnership/responsibility between hospitals 

and patients to address billing issues in a timely, transparent and forthright manner. Moreover, 

the AHA Board of Trustees is developing a plan to continue to improve the billing system. 

America's hospitals are united in providing care based on the following: 

• Communicating effectively with patients - Hospitals work to provide financial counseling 

to patients about their bills and make the availability of such counseling widely known. 

Hospitals strive to respond promptly to patients' questions about their bills and to requests 

for financial assistance, and use a billing process that is clear, concise, correct and patient 

friendly. Hospitals are making available for review by the public specific information in a 

meaningful format about what they charge for items and services. 

• Helping patients qualify for financial assistance - For years, hospitals have worked with 

patients to help them with their bill as part of their mission of caring. Under the ACA, nonprofit hospitals have a written financial assistance policy that includes eligibility criteria, the 

basis for calculating charges and the method for applying financial assistance. Hospitals 

work to communicate this information to patients in a way that is easy to understand, 

culturally appropriate, and in the most prevalent languages used in their communities, and 

have understandable, written policies to help patients determine if they qualify for public 

assistance programs or hospital-based assistance programs. The ACA also requires that nonprofit hospitals widely publicize (e.g., post on the premises and on the website and/or 

distribute directly to patients) these policies and share them with appropriate community 

health and human services agencies and other organizations that assist people in need. 

• Ensuring hospital policies are applied accurately and consistently - Hospitals work to 

ensure that all financial assistance policies are applied consistently and that staff members 

who work closely with patients (including those working in patient registration and 

admitting, financial assistance, customer service, billing and collections as well as nurses, 

social workers, hospital receptionists and others) are educated about hospital billing, 

financial assistance and collection policies and practices. 
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• Making care more affordable for patients who qualify for financial assistanceHospitals strive to review all current charges and ensure that charges for services and 

procedures are reasonably related to both the cost of the service and to meeting all of the 

community's health care needs, including providing the necessary subsidies to maintain 

essential public services. Under the ACA, non-profit hospitals also have policies to limit 

charges for emergency and other medically necessary care for those who qualifY for financial 

assistance to no more than the amounts generally billed to individuals who have insurance 

covering such care. 

CONCLUSION 

Hospitals are a critical component to the fabric and future of our communities. We recognize the 

costs associated with health care and have worked hard to hold down our costs. Some progress 

has been made, with recent data clearly showing that hospital costs and price growth have 

slowed; the rate of growth in hospital cost per service, at only 2.1 percent, is below inflation and 

at a decade-low. Hospitals remain committed to helping bend the cost curve for their patients, 

communities and the nation. 

We agree that consumers need useful information when making health care-related decisions for 

themselves and their families. Providing understandable and useful information about health 

care costs is just one way America's hospitals are working to improve the health of their 

communities. 

The AHA and its members stand ready to work with policymakers on innovative ways to build 

on efforts already occurring at the state level, and share information that helps consumers make 

better choices about their health care. 
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Federation of 

American 

Hospitals® 

THE FEDERATION OF AMERICAN HOSPITALS 

PRESENTS A 

STATEMENT FOR THE RECORD 

BEFORE 

THE SENATE COMMITTEE ON FINANCE 

HIGH PRICES, LOW TRANSPARENCY: 

THE BITTER PILL OF HEALTH CARE COSTS 

JUNE 18,2013 

On behalf of our member hospitals, the Federation of American Hospitals ("F AH") 

appreciates the opportunity to provide our views to the Senate Finance Committee concerning 

today's hearing on High Prices, Low Transparency: The Bitter Pill of Health Care Costs, The 

F AH is the national representative of more than 1,000 investor-owned or managed community 

hospitals and health systems throughout the United States, Our members include teaching and 

non-teaching hospitals in urban and rural parts ofthe United States, as weJl as inpatient 

rehabilitation, psychiatric, long-term acute care, and cancer hospitals, 

We commend the Committee on its leadership in addressing the need for greater, and 

more accurate, transparency across our health care system, We agree with those that consider it 

critical for consumers to have relevant, up-to-date and useful information so they can 

meaningfully compare health plans, choose health insurance coverage that best meets a patient's 

medical needs, and make treatment choices that best meet their individual needs. This should be 

based on what is important to consumers, which is what they will pay for coverage and their outof-pocket costs. 
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HEALTH INSURANCE TRANSPARENCY: 

WHAT PATIENTS NEED TO KNOW 

Hospitals' mission is to care for patients regardless of when a medical need or crisis 

strikes. This is why our local hospitals provide compassionate round-the-clock care, including 

comprehensive emergency care to patients every day of the year, regardless of ability to pay. 

Patients who are uninsured or underinsured are typically eligible for charity care or generous 

discount policies to help ensure that the amount they may owe for the cost of that care is 

affordable. 

Most hospital patients are insured, and with the implementation of the Patient Protection 

and Affordable Care Act ("ACA"), tens of millions more will have this protection. The ACA 

also promotes transparency of meaningful information that will strengthen everyone's ability to 

become more active and prudent purchasers of health care, enabling them to shop for and 

compare health insurance plans and choose the plan that best meets their medical needs. 

Specifically, the ACA contains extensive, broad-based health insurance transparency 

provisions aimed at providing millions of consumers - whether they are currently insured or will 

purchase insurance for the first time through an Exchange with the tools they need to 

understand easily the reality of how each health plan will work and what it will cost. This 

transparency necessarily is required before a patient chooses a health plan so that patients will no 

longer have to be surprised after they access treatment thinking they have health insurance, only 

to be denied coverage, after the fact, for some unknown or attenuated reason. 

The ACA requires health plans (offering group and individual coverage) to provide 

enrollees and applicants with a uniform summary of benefits and coverage (SSC) so that 

consumers can compare health care coverage, including cost-sharing, limits, exceptions, 

reductions and coverage. The SSC must be written in plain language and contain no fine print, 

and must include examples to illustrate common benefits scenarios, including pregnancy and 

serious or chronic medical conditions and related cost-sharing. The ACA provides the Secretary 

with broad authority to implement these provisions and require plans to provide consumers with 

the information they need to compare health plans. 

Further, the law requires all health plans to provide certain information to help consumers 

understand how reliably the plan reimburses claims for covered services, a plan's network 

adequacy, and other practical information, such as the number of claims denied, payment 

policies and practices, rating practices, cost-sharing and payment for out-of-network coverage, 

enrollee rights, and other important information. The ACA also provides that Exchanges, upon 

request of an individual, must require qualified health plans to give consumers cost-sharing 

information for specific items and services in a timely manner through at least an Internet 

website and otherwise for those without access to the Internet. 

These provisions are sound public policies that are steps in the right direction, and the 

FAH strongly supports them. The Department of Health and Human Services ("HHS") has 

taken steps to implement some of these policies and should continue to do so to ensure the 

maximum benefits oftransparency for consumers. The Committee should consider exercising 
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oversight over HHS to ensure the Department is implementing these provisions to the fullest 

extent. When shopping for health care coverage, not only are quality metrics important, but a 

smart consumer will want to know what a health insurance plan will cost them and their families 

out-of-pocket. They will want that information to perhaps compare among and between insurers 

so they can make wise decisions prior to enrollment. Further, once enrolled in an insurance plan, 

the enrollee should have up-to-the minute access to out-of-pocket cost-sharing information to 

help make their medical treatment choices. This is the information that will drive marketplace 

competition and greater efficiency in health care delivery. 

Ideally, this transparency should extend across an entire episode of care. Patients often 

are furnished care by separate providers during a single episode of care, and these providers may 

bill the patient separately. The health plan is in the best position to provide all of the information 

to the consumer in "one-stop" shopping. Thus, logic dictates that the health plans should be 

required to provide estimates of the cost of care based on specific services provided by specific 

providers involved in providing the care. 

Therefore, the F AH urges the Committee to encourage HHS to expedite implementation 

of the ACA provisions requiring health plans to provide consumers with cost-sharing and other 

key information prior to choosing a plan and getting medical treatment. The Committee should 

also ensure health plans comply with these important ACA provisions. Further, the Committee 

should ensure that the Administration's proposal to encourage "health care data pricing centers" 

results in states and insurance companies working together to provide useful cost sharing 

information that would allow Americans to be better informed. All of these initiatives are 

critical for consumers to make meaningful decisions about their health care. 

HOSPITAL COST TRANSPARENCY: CMS MISSES THE MARK BY 

PROVIDING INCOMPLETE INFORMATION FOR CONSUMERS 

The ACA also contains a provision requiring hospitals annually to make public, in 

accordance with guidelines developed by the Secretary, a list of standard charges for hospital 

services, including DRGs. Instead of working with hospitals to issue guidelines to implement 

this provision, the Centers for Medicare and Medicaid Services ("CMS") recently released 

hospital charge data for Medicare inpatient and outpatient procedures. The F AH supports efforts 

to promote transparency and provide quality and price information that enhances consumer 

choice. Yet, CMS' s hospital charge data misses the mark in providing true price transparency to 

consumers. Indeed, it would have been more meaningful for consumers as well as policymakers 

to list Medicare payments compared to costs. That data would have revealed how far Medicare 

payments fall below the cost of care for seniors and disabled Americans six percent through 

2013, as projected by the Medicare Payment Advisory Commission ("MedPAC"). 

Unfortunately, the CMS charge data release is more likely to confuse consumers than 

provide meaningful, useful information, and even worse, it could mislead consumers into making 

a wrong choice that could actually harm them. This is because the charges posted by CMS are 

not prices in the conventional sense that consumers think of them that is, the actual price 

patients arc expected to pay for care. 
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