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76–574 2012

H.R. 4700, THE TRANSPARENCY IN ALL HEALTH 

CARE PRICING ACT OF 2010; H.R. 2249, THE 

HEALTH CARE PRICE TRANSPARENCY PROMOTION ACT OF 2009; AND H.R. 4803, THE 

PATIENTS’ RIGHT TO KNOW ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MAY 6, 2010 

Serial No. 111–119 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 


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SUBCOMMITTEE ON HEALTH

FRANK PALLONE, JR., New Jersey, Chairman 

JOHN D. DINGELL, Michigan 

BART GORDON, Tennessee 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

JANE HARMAN, California 

CHARLES A. GONZALEZ, Texas 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

NATHAN DEAL, Georgia, 

Ranking Member 

RALPH M. HALL, Texas 

BARBARA CUBIN, Wyoming 

JOHN B. SHADEGG, Arizona 

STEVE BUYER, Indiana 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 1 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 3 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 8 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 9 

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 10 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 11 

Hon. John Sullivan, a Representative in Congress from the State of Oklahoma, opening statement .................................................................................... 12 

Hon. Bruce L. Braley, a Representative in Congress from the State of Iowa, 

opening statement ................................................................................................ 13 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 13 

Hon. Kathy Castor, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 19 

Hon. Phil Gingrey, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 20 

Hon. Donna M. Christensen, a Representative in Congress from the Virgin 

Islands, opening statement ................................................................................. 21 

Hon. Tim Murphy, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 21 

Hon. Betty Sutton, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 23 

Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, 

prepared statement .............................................................................................. 106 

WITNESSES

Steve Kagen, Member of Congress ......................................................................... 23 

Prepared statement .......................................................................................... 27 

Steven J. Summer, President and Chief Executive Officer, Colorado Hospital 

Association, on Behalf of the American Hospital Association .......................... 31 

Prepared statement .......................................................................................... 34 

Regina Herzlinger, Ph.D., Professor of Business Administration, Harvard 

Business School .................................................................................................... 40 

Prepared statement .......................................................................................... 42 

Michael Cowie, Partner, Howrey, LLP .................................................................. 66 

Prepared statement .......................................................................................... 68 

Walter Rugland, Chairman of the Board, ThedaCare, Inc. .................................. 73 

Prepared statement .......................................................................................... 75 

Terry Gardiner, National Policy Director, Small Business Majority .................. 80 

Prepared statement .......................................................................................... 82 

Christopher Holden, President and Chief Executive Officer, AmSurg ............... 84 

Prepared statement .......................................................................................... 86 


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VI 

SUBMITTED MATERIAL

Statement of Hon. Daniel Lipinski, a Representative in Congress from the 

State of Illinois ..................................................................................................... 5 

Statement of Michael C. Burgess, a Representative in Congress from the 

State of Texas ....................................................................................................... 16 

Letter of May 29, 2009, from the American Hospital Association to Mr. 

Burgess ................................................................................................................. 105 

Statement of Financial Healthcare Systems ......................................................... 108 


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H.R. 4700, THE TRANSPARENCY IN ALL 

HEALTH CARE PRICING ACT OF 2010; H.R. 

2249, THE HEALTH CARE PRICE TRANSPARENCY PROMOTION ACT OF 2009; AND 

H.R. 4803, THE PATIENTS’ RIGHT TO KNOW 

ACT 

THURSDAY, MAY 6, 2010 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:05 a.m., in Room 

2123 of the Rayburn House Office Building, Hon. Frank Pallone, 

Jr. [Chairman of the Subcommittee] presiding. 

Members present: Representatives Pallone, Green, Baldwin, Barrow, Christensen, Castor, Sutton, Braley, Waxman (ex officio), 

Shimkus, Buyer, Pitts, Sullivan, Murphy of Pennsylvania, Burgess, 

Gingrey and Barton (ex officio). 

Staff present: Purvee Kempf, Counsel; Robert Clark, Policy Advisor; Alvin Banks, Special Assistant; Allison Corr, Special Assistant; 

Mitchell Smiley, Special Assistant; David Cavicke, Minority Chief 

of Staff; Brandon Clark, Minority Professional Staff Member, 

Health; Marie Fishpaw, Minority Counsel, Health; Peter Kielty, 

Minority Senior Legislative Analyst; Ryan Long, Minority Chief 

Counsel, Health; Cedric James, Minority Staff Assistant; and Kathryn Wheelbarger, Minority Deputy Chief of Staff. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW 

JERSEY 

Mr. PALLONE. This meeting of the Health Subcommittee is called 

to order. 

Today we are having a legislative hearing on three bills: H.R. 

4700, the Transparency in All Health Pricing Act of 2010, H.R. 

2249, the Health Care Price Transparency Promotion Act of 2009, 

and H.R. 2803, the Patients’ Right to Know Act, and I start by recognizing myself for an opening statement. 

These three different bills all having to do with improving price 

transparency in health care are very important in my opinion, and 

I did want to say that they are in some cases introduced by members of the subcommittee, in other cases by other members, but I 

wanted to point out that H.R. 4700 is introduced by my good friend 


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from Wisconsin, Representative Steve Kagen, who we are going to 

hear from shortly. H.R. 2249 is introduced by two of our subcommittee members, Representative Michael Burgess and Gene 

Green, bipartisan. And H.R. 4803 is introduced by our full committee’s ranking member, Mr. Barton, as well as Mr. Burgess, Mr. 

Green and Mr. Stupak, again a bipartisan initiative. 

Without a doubt, our Nation’s health care system is complicated 

and it can be overwhelming to patients at times, especially when 

they are unable to make informed decisions. Someone once said to 

me that understanding health care is like trying to put together a 

1,000-piece jigsaw puzzle of a snowy scene in the dark, and the 

bills we are hearing about today are trying to shine some light on 

this confusing picture and to help patients and their providers 

make better decisions. And so I want to commend the sponsors for 

their efforts to increase transparency and improve public access to 

information in the health care sector. I believe this is a worthy 

goal, and if done correctly has the potential to lead to a more efficient health care system. 

Providing the right information at the right time and the right 

setting has tremendous power. It can provide equity in our health 

care system, something that I know Mr. Kagen cares deeply about 

and talks about with great passion, not only today but many times 

on the floor. It can arm patients and providers with the information they need to be make better decisions that will improve quality and achieve better health outcomes. 

While I think transparency is generally a good thing, as do many 

of my colleagues, experts have cautioned us to proceed carefully. 

They have told us that transparency has its limitations, primarily 

because health care markets do not function the same way other 

markets do. They tell us that purchasing medical treatment is not 

like going out and buying a new TV or a new car. The most costly 

health care services are often provided in emergency situations or 

when a patient is unable to make decisions about his or her treatment. And most of our health care dollars are spent on the chronically ill or towards the end of a patient’s life. These types of circumstances can limit the ability of transparency to empower patients, lower costs and improve efficiency. 

Even in instances where a patient may have the luxury to comparison shop, there are other barriers that they could face. Patients’ choices are often limited by the type of insurance plan they 

have and its requirements. For example, a patient may be able to 

search for a clinic or hospital that has earned high marks for providing quality care at a lower cost but it might be outside of the 

plan’s preferred provider network. Furthermore, while improving 

price transparency could help patients make more-informed decisions, experts also tell us that patients trust their doctors and the 

treatment that they recommend, and patients may not want to go 

against their doctor’s decision in order to find the lowest price. 

So the concern, I guess, is about unintended consequences of too 

much transparency. The Congressional Budget Office has opined on 

this issue. They have said that the markets for some health care 

services are highly concentrated so increasing transparency in such 

markets could lead to higher rather than lower prices because 

higher prices are easier to maintain when the prices charged by 


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each provider involved can be observed by all of the others, and the 

CBO points to the pharmaceutical marketplace as a key example 

of where this kind of scenario might play itself out. 

So as we talk about improving price transparency, I think it 

makes sense to be cognizant of these concerns. Also, I think it is 

important to note, as many of our witnesses do in their testimony, 

that more transparency is just one component of a larger strategy 

designed to improve our health care system. Arming patients with 

the right information is tremendously important but making sure 

that patients are able to access the care they need is of equal if 

not more importance, and the health reform law that was just enacted will go a long way to make sure that people will have quality 

and affordable health care coverage and can access the care that 

they need. 

I also wanted to mention about health information technology because it can play a significant role at building a more efficient 

health care system and it goes hand in hand with the calls for 

greater transparency. HIT can improve the flow of information between patients and providers. While too few physicians and hospitals use HIT or electronic medical records today, the American 

Recovery and Reinvestment Act makes a significant investment in 

encouraging our Nation’s physicians and hospitals to modernize 

their systems and share information. 

So again, I want to thank all the members who have introduced 

bills on this issue. I think improving transparency can be a powerful tool that can dramatically improve our health care system and 

empower patients and their doctors. We just have to make sure it 

is done correctly, and I am looking forward to the testimony. 

I will now recognize our ranking member, Mr. Shimkus, and 

then we will go through the remaining opening statements. Thank 

you. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. Thank you, Chairman Pallone, for holding this 

hearing on an important consumer right-to-know issue in the 

health care delivery system. 

Whether taking the kids for their annual checkup or getting an 

MRI, the true cost of health care services is nearly impossible to 

come by for the average every day consumer. I challenge anyone 

here today to make calls and shop around for the best price the 

next time they need to see a doctor. See what it would cost if you 

paid cash. You will hear silence on the other end of the line. The 

reality is, most of the time this information and pricing are not 

made available to patients seeking care, and patients rarely ever 

find out the true cost of services. Without this information, we take 

the power away from consumers and prevent a market-based 

health care system from functioning. Transparency will drive costs 

down, determine quality and help consumers decide the best value 

at a price they are willing to pay. 

The bills before the committee today are all steps in the direction 

of empowering the consumer with information. I look forward to 

hearing the perception of our witnesses on the issue of transparency. I particularly want to thank our colleague, Representative 


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Steve Kagen, for taking time out of his day to testify. I appreciate 

the bills cosponsored by colleagues on this committee. 

I also want to mention my colleague, the Democrat from Illinois, 

Mr. Lipinski, who has worked years on bringing transparency 

issues to the forefront. While it is disappointing his legislation, 

H.R. 2566, isn’t before the committee for consideration today, I 

would ask unanimous consent to submit for the record a statement 

from Congressman Lipinski on his bill. 

[The prepared statement of Mr. Lipinski follows:] 


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Statement of Congressman Daniel Lipinski (IL-3) 

Committee on Energy and Commerce, Subcommittee on Health 

Hearing on HR. 4700, the Transparency in All Health Care Pricing Act 0/2010; HR. 

2249, the Health Care Price Transparency Promotion Act 0/2009; and HR. 4803, the 

Patients' Right to Know Act 

May 6, 2010 

As health care costs continue to rise, families continue to struggle to pay their medical 

bills. This problem is made worse by the fact that there is no way to know how much you 

will be charged when you go to a particular hospital for care. Lack of information 

prevents families from making well-informed, cost-effective choices. That is why the 

fIrst bill I introduced in Congress was H.R. 1362, the Hospital Price Disclosure Act of 

2005, which required every hospital to give consumers clear, concise information about 

what it charges for common procedures and medications. Every Congress since then, I 

have introduced a version of this bill, most recently H.R. 2566, the Hospital Price 

Transparency and Disclosure Act of2009. Because when it comes to health care, 

information is power. 

Most of us would not consider getting our car repaired at a shop without fIrst receiving an 

estimate of the charges. But this is exactly what we do when we need to go to a hospital 

for treatment. Six years ago, I was involved in a serious bicycle accident.. Breaking my 

hip was the most serious shock, but like anyone else who has spent time in a hospital, I 

was hit with a second shock when I received the bill. Just to give you one example, a tiny 

single-use packet of ointment was billed to me at almost five dollars. If you walk down 

the street to Walgreens you can get a tube 32 times the size for about seven dollars. 

The Hospital Price Transparency and Disclosure Act will make price information 

available for all hospitals and ambulatory surgical centers across the country, giving 

Americans the ability to make informed choices about where they seek medical care and 

helping to drive down surging health-care costs by fostering competition. It would 

mandate that hospitals and ambulatory surgery centers regularly inform the Department 

of Health and Human Services of the prices they charge for the 25 most common 

inpatient procedures; the 25 most common outpatient procedures; and the 50 most 

frequently prescribed medications. HHS would then post the price information online. In 

addition, hospitals and ambulatory surgery centers would have to post notice in their 

facilities that the data is available online. 

In May 2009, my bill was endorsed by Consumers Union, the independent, nonprofit 

publisher of Consumer Reports magazine. Consumers Union has stated that H.R. 2566 

"should help introduce an element of competition into the setting of charges and result in 

lower billings to patients, particularly in those cases where an area hospital's charges are 

most out of the norm." 

While 33 states have proposed legislation or enacted laws requiring hospitals to disclose 

their pricing information, funding shortages have prevented many states from 

establishing databases to publish these data. In the states that have successfully 
6 


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implemented medical pricing databases, recent studies suggest that consumers have 

utilized data when making choices about providers and hospitals, and this has ultimately 

reduced medical costs. Having urged that H.R. 2566 be incorporated into the House 

health care reform bill, I was pleased that the bill included a hospital price transparency 

provision. Unfortunately, the Senate health care reform bill did not contain similar 

language. 

The fact is that prices vary widely among hospitals. When California implemented a price 

disclosure law it found that one hospital charged $120 for a chest x-ray while another 

charged more than $1,500. And while a Tylenol capsule was free at one hospital, another 

charged more than seven dollars. 

At a time when we have more information than ever at our fingertips, health care costs 

remain largely hidden from view. We can shop online for everything from airline tickets 

to clothing, yet it is difficult to do the same with medical care. It's time we changed that 

and gave every American the ability to make better-informed health care decisions for 

themselves and their families. 
7 

Mr. PALLONE. Without objection, so ordered. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

But our transparency discussion in this committee shouldn’t be 

confined to pricing health care. Another week and another missed 

opportunity to hold a hearing to bring about transparency on issues 

we already know exist in the new health reform law. As Chairman 

Waxman said just last week, we can walk and chew gum at the 

same time. We have done a lot of walking since the health reform 

became law; time to start chewing. 

And yet again, we have even more new questions to add to the 

list of reasons why we must hold hearings on this new health reform law. Is the recent CRS memo correct that Congress could be 

fined up to $50 million annually by its own health care law if lowpaid aides apply for government subsides to help pay for their 

health care costs? Will State and local governments be subject to 

fines as well? Is it even constitutional for government to pay fines 

to the government? Why do three-quarters of CFOs recently surveyed believe that health reform law will be bad for America and 

bad for their companies? Why do those same CFOs expect their 

costs to increase more than 8 percent over the next 12 months as 

a direct result of this health reform law? How is this bending the 

cost curve down as promised by the President and the majority? 

And for the workers of these companies, 60 percent of CFOs said 

they will increase copays. Forty-eight percent believe they will have 

to reduce the quality of health care packages they offer employees. 

Forty-six percent say they will have to reduce overall employee 

benefits. For all those employees, can we explain how the prospects 

of paying more and getting less fall under the promise of if you like 

what you have, you can keep it? 

The committee was quick to want to act when companies when 

John Deere, Cat and AT&T announced their financial obligations, 

which is worth noting was required of them by law. Given this survey, we will act quickly to bring in company CFOs to explain how 

this law will affect their business and employees, and what about 

Secretary Sebelius’s comments this week that we must address the 

shortage of primary care physicians? How does the Administration 

intend on doing so? Do we face similar problems in specialty care? 

Last week, Ranking Member Barton and all Republicans on the 

committee sent a letter to the majority requesting a hearing on the 

CMS chief actuary’s cost estimate. This request so far has been ignored. We should not only have CMS but we should also call upon 

Secretary Sebelius to testify on this and other issues we already 

know need to be reformed in this new health reform law. 

Mr. Chairman, the questions continue and the concerns are 

mounting. The majority continues to ignore all of these concerns, 

and I would again plead with the chairman to stop ignoring the 

issues at hand and let the subcommittee do its job and hold hearings on the health reform law or explain to the American people 

why we are not, and I yield back my time. 

Mr. PALLONE. Thank you. 

The gentleman from Texas, Mr. Green, is recognized for an opening statement. 


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OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Mr. Chairman, I want to thank you for holding the 

hearing today on the price transparency in our health care system. 

I have been working on this issue with our colleague from Texas, 

Dr. Burgess, for several Congresses, and most recently the Ranking 

Member Barton and Chairman Stupak. 

Dr. Burgess and I introduced H.R. 2249, the Health Care Price 

Transparency Promotion Act of 2009, for several years. This legislation has been endorsed by the American Hospital Association. 

H.R. 2249 builds on the existing 41 State price transparency systems and requires States on the condition of receiving Medicaid 

funds to disclose information on certain hospital inpatient and outpatient charges and make this information available for the public. 

Under this legislation, all types of hospitals would be required to 

submit the information. It further requires insurers to provide information upon request and estimate out-of-pocket costs for certain 

health care services within 18 months of the enactment of the 

Agency for Health Care Research and Quality, would provide recommendations on the types of health care pricing information consumers find most useful to making health care decisions. 

Dr. Burgess and I intended to offer this amendment during the 

markup to H.R. 3200, America’s Affordable Health Care for Choices 

Act, but there was overwhelming bipartisan interest in the issue. 

During the markup, Chairman Stupak and I worked across the 

aisle with Ranking Member Barton and Dr. Burgess and offered a 

compromise amendment that was adopted by this committee on a 

vote of 51 to zero, and let me remind you, that was on the health 

care bill. 

The original provisions were included in H.R. 3962, the Affordable Health Care for America Act, as passed by the House in section 1783. For several months, Ranking Member Barton and Chairman Stupak, Dr. Burgess and I worked to introduce H.R. 4803, the 

Patients’ Right to Know Act, which was modeled after the original 

Barton-Green-Burgess-Stupak amendment and has been endorsed 

by the Ambulatory Surgery Center Advocacy Committee. 

The Patients’ Right to Know Act establishes requirements on 

health benefit plans to provide specific information to current and 

potential enrollees. Covered health benefit plans are defined as 

plans that are offered by health insurance companies, Medicare, 

Medicaid, CHIP and the FEBP. The specified information to be disclosed about the plans includes covered items and services and lists 

of limitations, restrictions, details about the claims appeals process 

and out-of-pocket cost sharing. This legislation also builds on the 

original Burgess-Green bill by requiring State Medicaid programs 

to administer a price and quality transparency program. 

H.R. 4803 also requires that no later than 2 years after enactment, States establish and maintain laws that require disclosure to 

the public and the Secretary of Health and Human Services of information on prices for and quality of certain services at hospitals 

and ambulatory centers. Although price transparency provisions 

were included in H.R. 3590, mostly in sections 1002 and 1003, 

these provisions are primarily focused on insurance plans and the 

State exchanges through regulations issued by HHS. I believe this 


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hearing today will allow us to look at several issues we must tackle 

including whether price transparency programs should be State 

based or housed at HHS and the type of information that would be 

useful to consumers to help lower health care costs. These are topics we must address before we can enact meaningful price transparency legislation and I hope our witnesses before us today will 

be able to provide us with that insight. 

And like my colleagues, Mr. Chairman, I would like to welcome 

our colleague from northeast Wisconsin because he didn’t wear his 

cheesehead today but I know he has one, and I want to thank him 

for appearing. 

Mr. PALLONE. Thank you, Mr. Green. 

Our ranking member, the gentleman from Texas, Mr. Barton. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman. Thank you, Congressman, for participating in this hearing. 

I basically want to echo most of what, if not all of what, Congressman Green just said. His chronology of the efforts that have 

been made by himself and Mr. Stupak and Dr. Burgess and myself 

on this issue are right on the point. As he pointed out, in my opinion one of the few bright spots in the health care bill that the 

House passed was the amendment that he and I and Mr. Stupak 

and Dr. Burgess offered that was accepted, as he said, 51 to nothing. Unfortunately, that was stripped out or it wasn’t included in 

the bill that came over from the other body. There are some patient 

transparency provisions in the current health care law but they 

primarily apply to individuals who purchase individual coverage. 

That is a start but that is by no means adequate in my opinion. 

So it is helpful to have this hearing on H.R. 4803, H.R. 4700, 

H.R. 2249. If you believe the market-based system is the best approach for health care in America, you should be strong supporters 

of one or all of these bills. You have to provide consumers with 

transparency with not only pricing information, in my opinion, but 

also quality information, availability of care information. That just 

simply doesn’t happen under the current system, Mr. Chairman. 

Health care is one of the few things in America that you basically 

take it on faith where to go to the hospital, which doctor to request 

services for and how those services are going to be provided. We 

don’t even buy used cars like we buy health care in America. So 

this is a good start, Mr. Chairman. 

I do want to echo what Ranking Member Shimkus also said. We 

are apparently not going to be doing a lot on the House Floor this 

summer. It would be good to go through and try to digest the 

health care bill that is now the law of the land. Opinion polls generally tend to indicate about a two to one opposition to it. Those 

of you that are supporters of it, you ought to be able to hold a series of hearings to prove what a good thing it is, and those of us 

that are skeptics of it will participate in a good-faith fashion and 

ask questions and point out areas that we think might be improved. 

This particular issue you are hearing about today is a good first 

step. I would hope that one of these bills or some combination of 


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these bills could actually be marked up this summer and moved. 

That would be a good first step, good-faith effort that we are going 

to try to correct the flaws in the current health care law. 

And with that, Mr. Chairman, again, I sincerely thank you for 

this hearing, and I look forward to working with you, Mr. Waxman, 

Mr. Stupak, Mr. Green, Dr. Burgess, Dr. Gingrey and others to 

move this particular issue forward. Thank you. 

Mr. PALLONE. Thank you, Mr. Barton. 

Next is our chairman, the gentleman from California, Mr. Waxman. 

Mr. WAXMAN. Thank you very much, Mr. Chairman. I am 

pleased that this hearing is well received on a bipartisan basis. I 

think we all want to see greater transparency in the health care 

system so that we can see that the consumer is well served by having all the information that will help them make decisions. I don’t 

think this issue is the first step. The first step we took when we 

passed the national health insurance because the first step is to 

make sure that people have access to care, to insurance, and with 

that, we hope there will be a competitive marketplace through the 

exchanges and we hope through greater transparency that marketplace will work. 

I want to commend Congressman Kagen for his leadership in 

this issue. It is an important one, and I am pleased, Mr. Chairman, 

you are holding this hearing so we can look at it in more depth. 

Mr. PALLONE. Thank you, Chairman Waxman. 

The gentleman from Indiana, Mr. Buyer, reserves his time. 

The gentlewoman from Wisconsin, Ms. Baldwin. 

Ms. BALDWIN. Thank you, Mr. Chairman. I appreciate the fact 

that you are holding today’s hearing. 

Before I begin, I would like to ask unanimous consent to submit 

for the record testimony of the Wisconsin Hospital Association. 

[The information was unavailable at the time of printing.] 

Mr. PALLONE. Without objection, so ordered. 

OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN 

Ms. BALDWIN. Thank you. 

I would like to give a warm welcome to two individuals from Wisconsin. One is the Hon. Dr. Steve Kagen. Welcome to the Energy 

and Commerce Committee. And the other is Walt Rugland of 

ThedaCare, a leading health care system providing excellence and 

value to folks in the northern part of the state of Wisconsin. 

In light of the strong Badger contingency here today, I would like 

to share with the committee some stories about Wisconsin. Our 

State is home to a vibrant set of activities related to transparency 

in health care. In part because of our efforts to share quality measures between institutions, the Agency for Health Care Research 

and Quality in its national health care quality report once again 

named Wisconsin a leader in aggregate measures of quality at the 

top of the ranking of overall performance. In March, our governor, 

Jim Doyle, signed the health care transparency bill into law. That 

means that starting in 2011 health care providers will be required 

to disclose the costs of the 75 most common inpatient procedures 


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and 25 most common outpatient procedures so that consumers can 

make apples-to-apples comparisons on prices. The Wisconsin Hospital Association already has in place a voluntary Web site known 

as Price Point which uses data from hospital systems to compare 

the cost of various procedures. Through that site, some hospital 

systems already provide patients with cost estimates before their 

procedures. And yet much work remains to be done. 

ThedaCare is a founding member of the Wisconsin Collaborative 

for Health Care Quality, a voluntary group of health care organizations which has served as a leader in improving the quality and 

cost effectiveness of health care for the people of Wisconsin. This 

group is expanding their existing reporting to include measures of 

specialty care and episode-based resource use, and in an effort to 

make this information more salient for the layperson, the group is 

planning to launch a consumer-friendly Web site later this year. 

The site will be a destination and a source of information on both 

quality and price. I am proud of my State for its accomplishments 

and what lies ahead. 

And again, thank you, Mr. Chairman, for calling this hearing. I 

look forward to learning more about the various pieces of legislation from our witnesses today. Thank you, Mr. Chairman. 

Mr. PALLONE. Thank you. 

The gentleman from Pennsylvania, Mr. Pitts. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. PITTS. Thank you, Mr. Chairman. 

The health care sector is unlike any other part of our economy. 

Nowhere else do we consume a good or service without knowing the 

cost upfront. Nowhere else are we OK with one person paying one 

price for a good or service and the next person paying a different, 

sometimes wildly different price for that same good or service. 

When I am in the supermarket, I can comparison shop among different brands. I know what a loaf of bread will cost me before I 

reach the register and I know that the person in line behind me 

will pay the same amount for that same loaf of bread. Because of 

the information on the supermarket shelves and on the products 

themselves, we can comparison shop based on my criteria including 

quality and cost. This leads to competition and competition leads 

to lower prices and better quality. 

That is not so in the health sector. Patients don’t know what 

their care and treatment will cost and providers don’t know how 

much insurance will reimburse them for those things, and I can’t 

make an educated decision on whether to go to hospital A or hospital B for a routine test, a test that one hospital can be dramatically more expensive or dramatically cheaper than at the other hospital but I don’t know that. In no other situation would I as a consumer tolerate this lack of transparency and basic information. 

Health care is complex but giving consumers the tools they need 

to make intelligent choices makes it a little less complicated. As a 

result, we can expect better care and greater efficiency at lower 

cost. 


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The bills before us all today all seek to provide that transparency 

in different ways, and I am proud to be a cosponsor of H.R. 4803, 

the Patients’ Right to Know Act, which is based on an amendment 

that was unanimously approved during committee markup of the 

health care reform legislation last year. This bill will require 

health plans, public and private, to provide enrollees with specific 

information including what the plan does and does not cover, any 

limitations or restrictions on coverage, how to appeal a coverage 

decision, all cost-sharing requirements, the number of participating 

providers, what the plan spends on administrative cost, how the 

plan combats waste, fraud and abuse, and other information. 

Health plans would also have to provide the total of all out-of-pocket costs for a particular service provided by a specific provider 

along with quality data. Armed with this information, we can all 

make better choices for ourselves and our families. Transparency 

is vitally needed in health care, and I hope this is not the last time 

our subcommittee deals with this issue, and Mr. Chairman and Mr. 

Waxman, we still hope that you will have the CMS chief actuary, 

Mr. Foster, to a hearing of our committee or subcommittee on the 

cost estimates of the health care law. 

Thank you, and I yield back. 

Mr. PALLONE. Thank you, Mr. Pitts. 

The gentleman from Georgia, Mr. Barrow, will waive an opening. 

Next is the gentleman from Oklahoma, Mr. Sullivan. 

OPENING STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA 

Mr. SULLIVAN. Thank you, Chairman Pallone, and thank you for 

calling this legislative hearing to examine several pieces of legislation, legislation seeking to improve transparency of health care 

pricing in the marketplace. 

While these bills are important, I would like to remind the chairman that there is a pending request from Ranking Member Barton 

before Chairman Waxman requesting a hearing on the new health 

care law from the CMS chief actuary. Last week, I along with my 

colleagues on this committee, sent a letter to Chairman Waxman 

requesting a hearing from the CMS chief actuary to testify about 

his recent report on future effects of the new health care law. This 

new report confirms what many of us have been saying all along: 

The cost of this new law far exceeds the numbers they used to sell 

it to the American people. Simply put, Obamacare will drastically 

raise health care premiums for families and small businesses 

across the country and it confirms that the new health care law 

clearly puts our Nation on a path to bankruptcy, limits health care 

options for seniors and increases the price families and small businesses have to pay for health care they receive. This is exactly why 

I voted against it. 

I encourage Chairman Waxman and the Obama Administration 

to agree to this commonsense hearing request to allow the CMS 

chief actuary to testify on these recent reports and future effects 

of the new health care law. I yield back the balance of my time. 

Mr. PALLONE. Thank you, Mr. Sullivan. 

The gentleman from Iowa, Mr. Braley. 


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OPENING STATEMENT OF HON. BRUCE L. BRALEY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF IOWA 

Mr. BRALEY. Thank you, Mr. Chairman, for holding this important hearing. I would like to welcome my colleague, Dr. Kagen, to 

the hearing. 

I think Dr. Kagen’s presence along with our colleagues, Dr. Burgess and Dr. Gingrey, highlights why this hearing on transparency 

is so important. When they graduated from medical school, the relationship between a doctor and a patient was dramatically different than it is today simply because of something called the 

Internet. When they graduated and completed their residencies, 

they had patients coming into their office talking to them about the 

administration of certain medical procedures and what was in their 

best interest and rarely did a patient come in having done 5 days 

of research on complex medical terminology and procedures before 

they went to meet with their doctor. So those who say that transparency in pricing is not an important component of health care delivery in the future don’t appreciate that critical distinction. 

Medical consumers are much more sophisticated. That can be a 

dangerous thing, as every doctor would tell you, but it is a reality, 

and if they are demanding more information to be part of their 

treatment choices, they also are entitled to better information and 

information in language they can understand when it comes to 

pricing, and one of the witnesses who is here testifying on behalf 

of the American Hospital Association hits this on the head in the 

fourth recommendation where he writes in his written statement, 

‘‘We all need to agree on consumer-friendly pricing language, common terms, definitions and explanations to help consumers better 

understand the information provided.’’ 

That is why I have been such a forceful advocate for plain language in all government agency communications because we do a 

very poor job of communicating with taxpayers and the American 

public on critical issues that are affecting their lives in language 

they can understand, and that is why I fought to get plain-language requirements in the health care bill we just passed. That is 

why we need to continue focusing on that when we discuss transparency because giving consumers information means nothing if it 

is in a language that is too complex or arcane for them to understand, and that is why I am very, very proud of the work that has 

been done in these bills and I look forward to the testimony of our 

witnesses as we work together to provide a much more efficient 

health care delivery system that engages patients in their care decisions, and I yield back. 

Mr. PALLONE. Thank you. 

Next is the gentleman from Texas, Mr. Burgess. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. Thank you, Mr. Chairman, and I appreciate also 

that we are having this important legislative hearing. I welcome 

you, Dr. Kagen, our colleague. Welcome to Dr. Herzlinger, who is 

no stranger to this committee and we are glad you are back. 

The fact that we have advanced to the point that we are looking 

at specific bills and that we already have a consensus from both 


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sides of the dais that we need to do more in the realm of health 

care transparency is important. A patient should be able to know 

what they are paying and how much they will pay out of pocket, 

and on this, really there is no disagreement. 

Mr. Chairman, I have been working on this issue ever since I 

was summoned into the office of former Speaker Danny Hastert 

and he charged me with developing legislation on the issue because 

of, then, our mutual support for the growing health savings account 

market, and in fact, I went back into the archives and dug up an 

op-ed from May of 2005 that I wrote, but nevertheless, in it I 

quoted Professor Uwe Reinhardt and in quoting Professor 

Reinhardt to move from the present chaotic pricing system toward 

a more streamlined system could support genuinely consumer-directed health care will be an awesome challenge, yet without major 

changes in the present chaos, forcing sick and anxious people to 

shop around blindfolded for cost-effective care mocks the very idea 

of consumer-directed care. 

Mr. Chairman, here is the simple truth. We can’t expect patients 

to be good consumers if they can’t know the cost of the services 

from which they are choosing, and it is important again to stress, 

this has always been a bipartisan effort and I certainly appreciate 

the efforts of Representative Green in working on this issue over 

the years. We could start by looking at transparency provisions 

within the health reform bill, and I think we can agree as we are 

holding this hearing that those provisions while present are not 

substantial enough. I believe that everyone should have access to 

reliable information. 

The Patients’ Right to Know Act, the result of countless hours of 

staff negotiation between Mr. Barton, Mr. Green, Mr. Stupak, is a 

comprehensive measure that provides specific information to patients in regard to hospitals, ambulatory surgery centers and 

health plans. While some of the provisions of this measure were 

adopted under the reform bill, I think it once again speaks to the 

unanimous support of increased transparency on this committee 

that we were able to add a similar provision that passed unanimously to H.R. 3200 when it was presented in committee. 

I do want to spend a moment on H.R. 2249, the Health Care 

Price Transparency Promotion Act of 2009, which was the result of 

work on this issue with Mr. Green and has been largely incorporated into H.R. 4803. When I engaged in this issue, I realized 

that many States had already enacted some and others needed to 

be pushed along the way and others needed to improve what they 

were doing. That is why this bill sets a reasonable federal floor but 

defers to the States to figure out what works best for them, and 

I am pleased that I had the support of the American Hospital Association on this effort, and I would ask unanimous consent to insert 

their recommendation letter into the record. 

[The information appears at the conclusion of the hearing.] 

Mr. PALLONE. Without objection, so ordered. 

Mr. BURGESS. With all the talk of transparency in this Administration, this committee ought to pay not just lip service with this 

hearing but promptly move legislation that will help make the information on health care cost, price and quality more transparent 

and thereby empowering the consumer. 


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I thank the chairman for the consideration. I will yield back the 

balance of my time. 

[The prepared statement of Mr. Burgess follows:] 


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tjames on DSK6SPTVN1PROD with Insert graphic folio 21 76574A.003

Health Care Transparency 

Rep .. Michae/ C. B1Irgess, Af. D. (Texas-26) 

American patients arc fortunate-they have access to the greatest health care system in the 

world, Unfortunately for many, the cost to :lc,'ess that care can be prohibitively high, It 

is ironic that in the world's largest free-market economy, government control and a lack 

of true market forces have led to diminished sophistication among medical consumers 

and runaway health can: costs, Uwc Reinhardt, a professor of political economy at 

Princeton University frames the problem by stating, "To move from the present, chaotic 

pricing system lo\.vard a more streamlined system that could support genuinely consumerdirected health care \vill be an awesome ehaHenge, Yet without major changes in the 

present chaos, forcing sick and anxious people to shop around blindfolded for cost· 

effective care mocks the very idea of consumer directed care, II 

A lack oftransparcncy has created a system where customers don't have the ability to 

hold providers and payers uccountable, \Vc have reached a point where even doctors und 

nurses and other providers have difficulty in being cost conscious because nobody really 

knows what anything costs anymore, In a system like this, double digit cost increases are 

a given from year to year, making health care coverage tmattainable to millions of 

Americans, 

A more transparent pricing system would help give providers and patients more control 

oyer thl:ir health care dolhl!" but there arc great incentives ftw providers to keep 

consumers blindfolded. For instance, every year hospitals normally raise their list prices 

tor services, Because hospitals can increase their net revenue by raising their list prices 

(because of a mix of third party private payers and public payers ultimately pay tbe bill), 

the incentive is to increase thiOir list prices. But hospitals also negotiate discounted 

payments for patients covered by certain health plans, and these discounted amounts are 

not always available to individuals thal may be interested in self-pay, Additional 

breakdowns of hospital operating costs and hmv that impacts hilling could be essential 

information to ii consumer as they try to select the lowest cost provider. Since this 
17 


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information is obscured, the consumer can exert no pressure on a hospital to implement a 

rational pricing structure, 

\\!hat happens when pricing information is available to consumers? '[11e results can be 

dramatic, When the Medicare Prescription Discount Drug Card was introduccd in 2004, 

seniors could log-on to Mcciicarc,gov and scc the cost comparison of what the drugs cost 

at area pharmacies, Seniors could determine 'whether it would be cheaper to get the drug 

[It pharmacy A or pharmacy B. And then the market reacted, Pharmacies and othcr 

organizations that sponsorcd different discount cards began (0 increase thc discotUlts on 

some drugs when their eompeti1or's information \vas available to consumers, This is how 

the system should work every day. 

Even some health plans are getting into the transparency game, Aetna health plan has 

initiated a pilot project in Cincilll1atL Ohio that gives enrollees information on what 

dOl:tors charge and gives enrollees the ability to take action before services are 

performed, This type of infonnation is vital to hold providers and plans accountable ror 

what they charge and what the patient pays, 

Giving new consumer based coverage options, like Health Savings Aecounts, the 

opportunity to plug into a fully transparcnt system would transform the American health 

care system in a radicul manner, improving care for all Americans rich and poor. Patients 

with portable health care dollars lhat can be paid at point of service arc extremely 

attractive to most health care providers who normally have to wait for an iasunmee 

company to process the claim and remit payment months after the service has been 

rendered, To attract the business ofthcse patients, providers could list their charges, 

competing for business on price and quality, With nearly 3 million enrolled in HSAs to 

date and the number growing, health care providers and hospitals would be wise to allow 

transparency to pervade the system to ride the coming consumer wave. 

Congress "all playa role in leveling the playing field in favor of the health care 

consumer, HSAs should be supported and made more attractive to consumers by 
18 


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increasing their portability and maximizing the tax benefits of these accounts. Congress 

has already established seyeral quality reporting programs that are available to the public 

-the same should go for medical costs. Congress should take the lead in developing a 

collaborative approach with all provider stakeholders to make the costs more transparent 

to consumers. Yesterday, the House Energy and Commerce Committee took a positive 

first step in this dialogue by holding a hearing on how we can improve the quality of 

information available to health care consumers. The Greek dramatist Sophocles said that 

"wisdom outweighs any wealth." The American health care system needs a healthy dose 

ofwisdol11 that consumcrs can delivcr given the chance. 
19 

Mr. PALLONE. Thank you, Mr. Burgess. 

Next is the gentlewoman from Florida, Ms. Castor. 

OPENING STATEMENT OF HON. KATHY CASTOR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Ms. CASTOR. Thank you, Chairman Pallone, for convening this 

very important hearing. It is very important to consumers and families. We need all the help we can get to unravel this great mystery 

in health care costs and charges. 

Health care costs and charges and bills are so confusing and so 

unclear that if you are a large business and you have the wherewithal to have a self-funded insurance plan, you are hiring consultants to go out and decipher what charges really cost and negotiate 

those costs with the providers. Unfortunately, the average American family, they simply don’t have the benefit of being able to hire 

a consultant to help sort it out for them and hire and negotiate 

charges. Sometimes there is no rhyme or reason to what consumers 

pay for their health care. Ten different providers in one area may 

charge 10 different amounts for the same services but who can 

really find that out anyway, and it is not married to any quality 

measures, like it should be. 

So it is important that we work to find a solid method to empower consumers to take control of what they pay for their health 

care by providing them with real numbers about what health services truly cost. Consumers and families should understand the 

what and the why for their health care bills and be able to determine when they are being charged too much or more than the actual cost of services. A truly transparent health care system should 

also offer a full understanding to patients and families about the 

cost of care with adequate time in advance for patients and health 

plan enrollees to assess their options and make decisions on what 

is in their best interest. Families should not be put in a position 

where they have received a service and are later stuck paying a bill 

that is unaffordable, too high, simply because they were not provided with clear cost options in advance. Slapping consumers with 

huge bills as they leave the doctor’s office or hospital or any health 

care provider after procedures should not happen. Most patients 

pay what they are told to pay because they need the care. They are 

not equipped with the needed tools to make certain choices and 

most of the time those tools simply aren’t available. 

So let us work together and let us find a way to unravel this 

great mystery surrounding health care costs and charges for consumers and families. I think we will get there because we have the 

benefit of great leadership from Dr. Kagen, my good friend from 

Wisconsin, Congressman Gene Green from Texas and other colleagues on this committee. So I am hopeful that it is going to take 

a lot of work and we are all in this together. 

Thank you, Mr. Chairman. 

Mr. PALLONE. Thank you. 

The gentleman from Georgia, Mr. Gingrey. 


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OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. GINGREY. Mr. Chairman, medical care in this country often 

falls into two categories. First, emergent care, those medical incidents arising out of emergency does not provide much opportunity 

or incentive for a patient to act as a traditional consumer. Patients 

with catastrophic conditions or events do not have an opportunity 

to shop around for medical services as the severity of the issue prevents that. Every patient is susceptible to these types of incidents 

for which health insurance is a great investment and one that 

should be available to all Americans. 

Non-emergent care really is what we are talking about here. 

Non-emergent care, on the other hand, does allow opportunities 

and time for patients to act as traditional consumers in a manner 

that positively impacts the quality and of course the cost of a patient’s health care. In non-emergency settings, patients should have 

the ability to be customers and to shop for health care services that 

they want and need just as they would any other consumer product. This level of interaction between patients and providers where 

the patient can access information on available treatments and discuss them with their medical provider can in many instances create better outcomes, more-effective treatments, and yes, lower cost 

health care. 

So fostering this type of consumerism need not be a partisan 

issue. In fact, we have Democrat and Republican bills that we are 

going to discuss today. If given the right tools and information, patients can have the freedom to exercise choices within our health 

care system that do ensure quality, increased access and allow patients to spend health care dollars wisely, traits that can benefit 

their pocketbooks while containing national health care expenditures overall. 

Health savings accounts alone do not define consumerism. They 

are invaluable tools for patients but insurance products are merely 

a means to an end. It is the ability to shop supported by the necessary information to make informed choices that is the essence of 

consumerism and something that our health care system should 

continue to support, and I certainly do. However, the benefits of informed providers do not end with the shopping for health care services. Many studies support the fact that an informed patient is 

more likely to engage his or her provider and an engaged provider 

is better able to provide a quality diagnosis that results in fewer 

complications and a better outcome for their patients. 

With these thoughts in mind, I look forward to our witnesses 

today. I would like to personally welcome my friend and fellow physician, Member of Congress, Dr. Steve Kagen, on the first panel, 

Steve from the 8th district of Wisconsin. Steve, I look forward to 

your testimony as I do of the other witnesses. In the interest of full 

disclosure, I want to tell you that I am a cosponsor of the Barton 

bill, but I have looked very carefully at your bill. I am looking forward to your testimony. I think there are opportunities to work in 

a bipartisan way, and hopefully we can get to that point. 

Mr. Chairman, I yield back. 

Mr. PALLONE. Thank you, Mr. Gingrey. 


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Next is the gentlewoman from the Virgin Islands, Mrs. 

Christensen. 

OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN, A 

REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman, and thank you for 

holding this hearing. I also want to thank Chairman Barton and 

our colleagues, Drs. Kagen and Burgess, for their legislative efforts 

to bolster transparency in the health care delivery system and all 

of the other witnesses today. 

It is undeniable that far greater transparency in the health care 

system could improve quality and save costs. Studies show that ensuring widespread access to reliable and valid data about the costs 

and quality differentials of the same services and treatments offered by different providers and entities would really inspire positive changes in those providers and entities that are lagging behind 

in quality or are charging more for services, and those changes are 

definitely needed. 

Of course, transparency would also arm consumers with the information necessary to make informed decisions, which would be 

extremely important to those more than 32 million Americans who 

will be leaving the ranks of the uninsured for the first time and 

for the first time be faced with those choices and options about 

their health care. 

In terms of health equity, I think that improving transparency 

could also play an important role in our ongoing efforts to achieve 

equality because it would afford better measures to monitor and reduce the costs and quality differentials that not only occur between 

providers and facilities but between consumers of different races 

and ethnicities and particularly geographic differences where we 

know in poor communities in those poor zip codes costs are different. 

It is clear to me that all of the stakeholders in the health care 

system pay a price for the current absence of transparency and so 

as a physician, as a health care consumer, as a member of this 

committee, I hope that we can work together building upon the Patient Protection and Affordability Care and Reconciliation Act to 

bring about meaningful transparency consistently across the entire 

health care system, and of course including in the territories in a 

manner that doesn’t overburden providers and health care entities, 

especially those practicing in inner cities and rural communities. 

So I thank you. I welcome you, Dr. Kagen, and look forward to 

your testimony and the discussion this morning. 

Mr. PALLONE. Thank you, Ms. Christensen—well, actually, we 

have all these doctors here today, Dr. Christensen, Dr. Burgess, Dr. 

Gingrey, Dr. Kagen, Dr. Murphy who is next. 

I recognize the gentleman from Pennsylvania, Mr. Murphy. 

OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. MURPHY OF PENNSYLVANIA. Thank you, Mr. Chairman. 

Good to see you today, Doctor. 


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You know, I was recently shopping for a used car and I realized 

I could get a vehicle history report that told me about if the car 

has been in an accident, been stolen, had flood damage. I could find 

out if I am going to pay a fair price for it. I can go to Consumer 

Reports if I am buying a new car and get all kinds of information. 

That information is just a click away. I can readily get information 

on cost and quality so I can make value comparisons. But I can’t 

do that with medicine. Oh, I could look up some reports on doctors, 

get information of where they went to medical school and other aspects about that, but when you try and track what you actually do 

with health care, it is a problem. 

Let us say a nerve in your neck has been pinched, so you call an urgent care center that says let us do an X-ray that costs $60 

to $160. Later you find out well, that X-ray is not going to decide 

if you have got a slipped disc. So someone says get an MRI. So 

being price sensitive, you say let me shop around for the best possible price, but no nurse or doctor is going to tell you how much 

it is going to cost or where to get the best MRI procedure and one 

that is going to get you the right information and go on to the right 

doctors or if they have electronic medical records that can then 

pass that information on. What if we are talking about some more 

serious like triple bypass surgery? Chances are pretty good the patient is going to next to nothing about the doctor or the facility. 

You can find better reviews about a blender then you can about a 

bypass, and you are not even going to know if you are going to get 

an infection in that hospital. 

Many people have heard me say repeatedly that hospital-ac- quired infections cost $50 billion and 100,000 lives each year but 

even our recently passed trillion-dollar health care bill doesn’t require hospitals to have a standard public reporting method where 

we can find out about infection rates in hospitals, even though 

States that have done that have seen with hospital awareness a 

great decline in their infection rates. 

You know, if we really do transparency, and I am all in favor of 

this and we need to have price and quality transparency, we would 

really be making some major changes in quality in health care in 

America. Perhaps for the first time we would be making the kind 

of changes that years and years ago people got from an informal 

method from the doctor in town but now the business has grown 

so big and costs have grown so much we just can’t get that anymore. We absolutely have to have price transparency but let me 

add with that, price transparency means nothing without quality 

transparency, and we need to make sure those are joined together. 

So the next people go to Consumers Reports magazine or go online and compare all those little items they can get from the latest 

screwdriver to the latest larger purchase price item, hopefully some 

day we can look at that and say wouldn’t it be great to get that 

kind of information that is going to save the lives of my family, myself and really work to drive down health care costs by driving up 

quality and price consciousness. 

With that in mind, I look forward to hearing some of the insights 

and testimony as you are before this panel of all these health care 

experts as well, and thank you, Mr. Chairman, for holding this 

hearing. 


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Mr. PALLONE. Thank you. 

Ms. Sutton, would you like to make an opening statement? 

Ms. SUTTON. Thank you, Mr. Chairman. I would. 

Mr. PALLONE. You are recognized for an opening statement. 

OPENING STATEMENT OF HON. BETTY SUTTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Ms. SUTTON. Thank you. I appreciate you holding this hearing 

today. 

Transparency is an issue that I care about deeply. In general, 

transparency is a critical factor in decision making. Knowing as 

much information as you can is important, whether you are deciding where to move or what car to buy. There is not an industry 

more opaque and less transparent than the health care industry. 

It is not transparent from a number of perspectives from the price 

of health insurance policies to the cost of procedures. Most doctors 

and hospitals are hard pressed to come up with an answer when 

patients ask how much something costs, and the people who have 

the hardest time in the system are the people who are their own 

advocates, patients, patients with no insurance or high-deductible 

health insurance plans and small businesses who are attempting to 

purchase health insurance for their employees. 

While transparency in health care pricing is an admirable goal, 

it is not the panacea to our health care problems because if you 

can’t afford health insurance and health care, you can’t afford it no 

matter how transparent the price might be, and unlike other markets, the health care market does not always respond to transparency. No one who is in a car accident is asking the ambulance 

driver what the cost of ER services is in one hospital as compared 

to another hospital, but there are some instances where the health 

care can respond to price transparency in determining which insurance company provides the most medical care per dollar spent or 

where a patient is looking for a health care provider for a nonemergency procedure like a colonoscopy. 

I look forward to hearing about what we can do to enhance the 

transparency provisions that are already in health care reform and 

to ensure that Americans are given every opportunity to have quality and affordable health care. 

I thank you, and I yield back the balance of my time. 

Mr. PALLONE. Thank you. 

I believe that concludes our opening statements so we will now 

move to our first panel, our only witness, and that is the Hon. 

Steve Kagen, the gentleman from Wisconsin and the sponsor of 

H.R. 4700, the first bill on our agenda. 

I just want to thank him. He, as you know, is a physician. He 

has been very aggressive in pushing this transparency issue, both 

with me and other members, to his credit. We all think it is a very 

important issue but I think that without his pushing us, we 

wouldn’t probably be here today. So thank you, Congressman 

Kagen, and you are recognized. 

STATEMENT OF HON. STEVE KAGEN, MEMBER OF CONGRESS 

Mr. KAGEN. Thank you, Mr. Chairman. I couldn’t agree with you 

more about your opening remarks about why we are here. 


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Thank you for holding this meeting. Thank you to Ranking Member Shimkus and Chairman Emeritus Dingell, who could not be 

here this morning. Thank you to all members of this subcommittee 

for joining us in this very constructive conversation about transforming our health care system and creating a very competitive 

medical marketplace. 

I am Steve Kagen. I have lived in northeast Wisconsin for my entire life, and before becoming a Member of Congress I practiced in 

a privately owned and operated medical clinic throughout northeast 

Wisconsin. I have also served in VA hospitals for 3 decades, so I 

understand both a government-run situation and a private system. 

Today you are going to hear testimony from a number of expert 

witnesses on the importance of establishing a transparent medical 

marketplace to help to guarantee that the highest quality care becomes available to everyone at the lowest possible price. We are 

very fortunate in Wisconsin to be leaders in health care, making 

progress and guaranteeing that there is quality measurement, not 

just within the hospital institution itself but also on the Internet, 

as you will hear from the CEO of ThedaCare Center for Health 

Care Value, Walt Rugland. 

As every member of this subcommittee already knows, health 

care in America is upside down. When someone with no insurance 

gets sick and goes to the hospital, the hospital gives you the big 

bill, but if someone else goes to the hospital and has insurance, 

they get a discount. Health care is upside down. This takes place 

each and every day in my district and every district of the members of this committee and the members of everyone in the House. 

While the passage of our Nation’s health care security law earlier 

this year will help to guarantee that no citizen will lose their home 

or go broke just because they become sick, it needs to take another 

step and to guarantee that everyone can see the price of everything 

they are buying at all times, most especially beforehand. Competition is a good thing. Indeed, it is an essential element of capitalism, 

and when there is a level playing field, competition will drive quality up and prices down. 

Everyone knows that the listed prices for medical services are 

meaningless for the real price is being hidden. Therefore, prices our 

constituents pay for insurance coverage, for prescription drugs and 

for hospital and doctor bills are ‘‘whatever they can get.’’ 

Take, for example, the recent article that appeared in the L.A. 

Times on April 24, 2010, and you can see this slide before you. I 

will quote from that article. ‘‘Tom Taylor learned a lesson about 

health care finances when he had both his knees replaced a couple 

months apart at separate hospitals in northern California. The tab 

for the first hospital was $95,000 but the second cost $55,000. The 

same doctor performed identical surgeries on both knees, and Taylor says he can’t detect any differences between the two.’’ Quotes 

Mr. Taylor, ‘‘Nobody knows what it costs. There is a complete lack 

of transparency in our health care system.’’ 

Well, here in my hand I have a prescription, and everybody understands today that if we all have the same prescription for the 

same medication and go to a pharmacy and stand in line, we may 

all pay different prices for the same prescription our doctor has orVerDate Mar 15 2010 05:51 Jan 19, 2013 Jkt 076574 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 E:\HR\OC\A574.XXX A574

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25 

dered. This has got to come to an end. We have to have open disclosure of all prices all throughout health care. 

Now, some people will make the argument that average prices 

for medical products and services should be available publicly but 

who among us wants to receive average care and who among us 

wants to go to the store and get the average change when you pay 

for your restaurant bill? 

Some will argue that showing everyone all the prices is too complex and there are thousands of prices at any given hospital, but 

today’s technology allows us all of us to go online on the Internet 

and search for items to purchase and find exactly what we want 

and buy it within milliseconds. Some will argue that a hospital 

cannot know in advance what to charge you for taking out your 

gallbladder. Well, you only have one gallbladder and there is only 

reason to take it out: it is bad. So how much does one bad gallbladder cost at everybody’s hospital? 

If you want to do something really complicated, do what I did the 

other way. Go into Subway and order a sandwich. There are two 

to the 23rd power combinations of choices you have to make and 

then you get to the cash register, and what do they say? That is 

$5 for a footlong sandwich. If the owners of Subway can figure out 

how to lump things together and make a living, maybe we ought 

to have that same lumping idea in health care. In restaurants and 

in hospitals, lumping makes more sense than splitting. 

We have made great progress together this year and as I heard 

from all of you in your opening statements, you are in a very cooperative and bipartisan manner right now and I appreciate that. But 

we have to take the next step together. 

When enacted, The Transparency In All Health Care Pricing Act 

of 2010 will guarantee that any individual or business entity that 

offers health care products or services for sale to the public must 

at all times openly disclose all of their prices, including on the 

Internet, and doing so will help to establish a very competitive 

medical marketplace, allow families to find the essential information necessary to make their health care decisions based upon the 

quality, the price and the services being available, not only in their 

hometown area but across the Nation. 

We all believe in transparency and so does President Obama 

when he said, ‘‘Transparency promotes accountability.’’ Without 

transparency in all health care pricing, there will continue to be 

opportunities for fraud and market manipulation, much like occurred on Wall Street in the financial meltdown. 

We can fix our health care system and improve on what we already have done by working together, so let us create a competitive 

medical marketplace where all of the prices we pay are always 

openly disclosed, including on the Internet. 

Thank you, Mr. Chairman, for holding this important hearing, 

and I very much look forward to the testimony of Walt Rugland, 

who has not only devised a way of taking care of patients in a more 

economical fashion by lowering the overhead at his hospital but 

has also increased the quality with zero medication errors in an entire year. It is not a theoretical process; they have actually done 

it in Appleton, Wisconsin. 


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I thank you and yield back the additional minute I took from 

you. 

[The prepared statement of Dr. Kagen follows:] 


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WRITTEN TESTIMONY OF HONORABLE STEVE. KAGEN, M.D., WI 

THE HOUSE COMMITTEE ON ENERGY & COMMERCE 

SUBCOMMITTEE ON HEALTH 

MAY 6,2010 

TRANSPARENCY IN HEALTH CARE PRICING 

PRESIDING MEMBERS: 

HONORABLE CHAIRMAN FRANK PALONE, N.J. 

HONORABLE RANKING MEMBER JOHN SHIMKUS, IL 

HONORABLE CHAIRMAN EMERITUS JOHN DINGELL, MI 
28 


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The Transparency In All Health Care Pricing Act of 2010 (H.R.4700) 

Thank you Chairman Pallone, Ranking Member Shimkus, Chairman Emeritus 

Dingell, and all Members of the Subcommittee on Health for holding today's 

important hearing on transparency in America's health care delivery system. 

My name is Dr. Steve Kagen. I have lived in Northeast Wisconsin my entire life 

and, before becoming a Member of Congress, I practiced medicine in a privately 

owned clinic during three decades as an Allergy, Asthma and Immunology 

Specialist, having also served our military veterans in multiple VA hospitals. 

Today, you will hear testimony from a number of expert witnesses on the 

importance of establishing a transparent medical marketplace to help guarantee 

the highest quality of care at the lowest possible prices. 

In Northeast Wisconsin, we are extremely fortunate to have the highest quality 

care in the nation. We have a number of excellent health care entities, including 

Affinity, Bellin-NEWHVN, Prevea, ThedaCare and Aurora-BayCare health care 

systems - all working to provide integrated models of coordinated continuing 

care. And this morning, you will hear testimony from one of the nation's thought 

leaders in health care reform from my hometown of Appleton, Wisconsin, Walt 

Rugland, the CEO of the ThedaCare Center for Health Care Value. 

As every Member of this Subcommittee already knows, health care in America is 

upside down. When someone with no insurance gets sick and goes to the 

hospital, the hospital gives them the Big Bill, but if someone else who has 

insurance goes to the hospital, they receive a discount. 

This takes place each and every day in your congressional district and mine, 

primarily because there is no price transparency in our health care marketplace. 

While the passage of our nation's new health security law earlier this year will 

help guarantee that no citizen will lose their home or go broke just because they 

get sick or have an accident, it did not create a transparent medical marketplace 

to foster competition between caregivers, pharmaceutical manufacturers and 

health insurers. Competition is a good thing, indeed, it is an essential element of 

capitalism, and when there is a level playing field, competition drives quality up 

and prices down. 

Everyone knows that the listed prices for medical services are meaningless, for 

the real price is being hidden; therefore, prices our constituents pay for insurance 

coverage, for prescription drugs, and for hospital and doctor bills are "whatever 

they can get." 

Take for example the recent case of Mr. Tom Taylor whose story appeared in the 

L.A. Times on April 24, 2010, which reads: (slide 1) 
29 


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Tom Taylor learned a lesson about healthcare finances when he had both 

his knees replaced a couple of months apart at separate hospitals in 

Northern California. 

The tab at the first hospital was $95,000, but the second cost $55,000. 

The same doctor performed identical surgeries on both knees, and Taylor 

says he can't detect any differences between the two. 0 

"Nobody knows what it costs, " said Taylor, 53, a former health insurance 

sales executive. 

"There is a complete lack of transparency in the health care system. "0 

Here in my hand is a prescription bottle with 30 pills in it. How much does it 

cost? The price accepted as payment in full depends upon who is paying for it, 

only because prices are not being openly disclosed to the public. 

There is no reason patients should be prevented from knowing the price of a pill 

before they buy it - and knowing what the person in line in front of them is paying 

for the same prescriptio·n. If all of us in this room have the same prescription, 

and we are standing in line at a given pharmacy, is there any good reason that 

we are all paying a different price? Only in health care is the price nontransparent. 

Some will make the argument that average prices for medical products and 

services should be revealed publicly. But who among us wants to receive 

average care or receive the average change when we buy something? 

Some will argue that showing everyone all of the prices is too complex, for there 

are tens of thousands of prices at any given hospital. But today's technology 

allows all of us to go online on the Internet and search for items to purchase and 

find exactly what we want to buy within milliseconds. 

Some will argue that a hospital cannot know in advance what to charge you for 

taking out your bad gall bladder, because there may be complications, and that 

no two patients are exactly the same. This may be true, but if they want to do 

something really complicated they should go to Sub-Way and order a sandwich. 

There are 2 to the 23rd power combinations of choices to make in placing your 

order, but a foot-long sandwich costs you $5 - no matter what you decide to put 

into it. If the owners of Sub-Way can figure out how to make money by "lumping" 

their prices, so can our nation's hospitals. 

In restaurants and hospitals, lumping makes more sense than splitting. 
30 


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We have made a great deal of progress together improving on what we already 

have in our health care system, and now it is time to finally allow consumers to 

see all of the real prices for health care. 

When enacted, The Transparency In All Health Care Pricing Act of 2010 will 

guarantee that any individual or business entity offering medical products or 

services for sale to the public will at all times openly disclose all of their prices, 

including on the Internet. 

Doing so will help to establish a very competitive medical marketplace, allowing 

families to find the essential information necessary to make their health care 

decisions based upon the quality, the price and the service of available 

caregivers within their hometown area and even across the nation. 

We all believe in transparency and so does President Obama, as he said, 

"Transparency promotes accountability." 

Without transparency in all health care pricing, there will continue to be 

opportunities for fraud and price manipulation - much like occurred on Wall 

Street. We have all experienced economic damages caused by opaque and 

non-transparent financial markets in the greatest economic recession of our time, 

and we must, therefore, prevent such occurrences from taking place in health 

care. 

We can fix our health care system by working together. 

Let's create a competitive medical marketplace, where all of the prices we pay 

are always openly disclosed, including on the Internet. Let's enact H.R. 4700, 

The Transparency in All Health Care Pricing Act of 2010. 

Thank you again Mr. Chairman for holding today's hearing. 

Steve Kagen, M.D. 

Member of Congress 

Wisconsin - District 8 
31 

Mr. PALLONE. Thank you, Congressman Kagen. 

You know, our policy is not to ask questions of Members. Even 

though we love you dearly, we are not going to ask you any questions. So thank you very much and thank you for also bringing 

some of the witnesses today and talking about the witnesses as 

well. 

So we are going to move to the second panel. Would the members 

of the second panel please come forward? We will put the names 

up so you know where to sit. 

Mr. BRALEY. Mr. Chairman? 

Mr. PALLONE. Who seeks recognition? Oh, Mr. Braley, yes. 

Mr. BRALEY. I just want to point out there is another hearing 

going on downstairs and some of us will be moving in and out from 

time to time. 

Mr. PALLONE. OK, sure. I sure also point out that Ms. Blackburn 

wanted to introduce Mr. Holden but she is back in Tennessee because of the floods, from what I understand, so that is why she is 

not able to be with us today. 

Thank you for being here. I want to welcome the panel. As you 

know, the process is that we hear 5-minute opening statements 

from each of you. I hope you can stick to that. And those statements will be made part of the hearing record and then each witness may in the discretion of the committee submit additional brief 

or pertinent statements in writing for inclusion in the record at a 

later time. 

So let introduce each of you from my left to right. First is Mr. 

Steven J. Summer, who is president and chief executive officer of 

the Colorado Hospital Association on behalf of the American Hospital Association. Second is Dr. Regina Herzlinger, who is professor 

of business administration at Harvard Business School. And then 

we have Mike Cowie, who is a partner in Howrey, LLP. And then 

I have Walter Rugland, who is the chairman of the board for 

ThedaCare, Incorporated, and Terry Gardiner, who is the national 

policy director for the Small Business Majority, and finally is 

Christopher Holden, who is president and chief executive officer of 

AmSurg. 

And we will start with Mr. Summer who is recognized, and move 

that over. You probably have to put it pretty close to you and turn 

the green button on. Otherwise we won’t hear you. 

STATEMENTS OF STEVEN J. SUMMER, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, COLORADO HOSPITAL ASSOCIATION, 

ON BEHALF OF THE AMERICAN HOSPITAL ASSOCIATION; REGINA HERZLINGER, PH.D., PROFESSOR OF BUSINESS ADMINISTRATION, HARVARD BUSINESS SCHOOL; MICHAEL COWIE, 

PARTNER, HOWREY, LLP; WALTER RUGLAND, CHAIRMAN OF 

THE BOARD, THEDACARE, INC.; TERRY GARDINER, NATIONAL POLICY DIRECTOR, SMALL BUSINESS MAJORITY; 

AND CHRISTOPHER HOLDEN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMSURG 

STATEMENT OF STEVEN J. SUMMER 

Mr. SUMMER. Good morning, Mr. Chairman, and thank you and 

thank you to Ranking Member Shimkus. I am Steven Summer, 


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president and CEO of the Colorado Hospital Association. I am here 

today on behalf of the American Hospital Association and its 5,000 

member hospitals. We appreciate the opportunity to share with you 

and your colleagues information about the hospital field’s efforts on 

price transparency. 

Patients and their families deserve information about the price 

of their hospital care, and the AHA and its members are committed 

to providing it. Sharing meaningful information, however, is challenging, as we have heard in the statements earlier, due to the 

unique nature of hospital care. An operation for one patient may 

be relatively simple, but for another, it could be more complicated, 

making it very difficult to provide meaningful information up front. 

Moreover, hospital prices do not often reflect important information 

from other key players such as physicians or how much of a care 

is paid for by the patient’s insurance. 

With the passage of health reform hospitals will report annually 

and make public a list of hospital charges for items and services. 

Currently, CMS posts information on the Hospital Compare Web 

site on what Medicare pays for 35 common procedures. But more 

can and should be done to share health care information with the 

public, including, but not limited to, hospital pricing information. 

The path to price transparency has four parts. First, with respect 

to States, working with State hospital associations like the Colorado Hospital Association should expand existing efforts to make 

hospital charge information available to consumers. Forty-one 

States including Colorado already have mandatory or voluntary 

hospital price information reporting activities already in place. 

These efforts vary from making hospital charge masters available 

to the public to making public pricing information on frequent hospital services to making information available on all inpatient services. 

Health insurers should also make available in advance of medical visits information about enrollees’ expected out-of-pocket costs. 

This information is generally provided by a patient’s insurance 

company after care through what is known as an explanation of 

benefits, or an EOB. But consumers need insurers to provide realtime information through either the phone or through the web page 

that that is the EOB that they can get from their insurance company what the insurance company will pay and what their copayments will be. 

We also need more research to help us better understand what 

type of pricing consumers actually want and would find useful in 

their decision making. We all know the kinds of information consumers seek about quality of health care but we know less about 

what they might want about pricing information. 

For uninsured individuals, information is often provided directly 

by the hospital. The hospital in turn in those cases can determine 

if the patient qualifies for certain kinds of public insurance programs whether they would qualify for free or reduced care that is 

provided by the hospital or other forms of financial assistance 

which is available. 

As part of the health care reform bill, tax-exempt hospitals will 

be required to adopt and implement and widely publicize their financial assistance policies. This is consistent with previous policies 


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adopted by the American Hospital Association and the Colorado 

Hospital Association. 

And lastly, we firmly agree that everyone needs to have access 

to consumer-friendly pricing language, common terms, definitions 

and explanations which will help consumers better understand 

pricing information. The need of our patients to understand the 

billing process is paramount. 

I would also like to tell you a little bit about what is going on 

in Colorado. We published starting over 20 years ago what we call 

the hospital charges and average length of stay report. This annual 

publication provides information that allows us to compare charges 

and lengths of stay on 35 of the most common medical treatments 

and surgical procedures provided in Colorado hospitals. The publication includes comparisons that take into account any complications the patients may have and the severity of their illness. It 

lasts average charge and the average length of stay and breaks 

that into four categories of severity. The report also presents statistically standardized ranges of high and low numbers of both 

charges and length of stay. When a patient is given a procedure in 

the hospital, there is a 95 percent probability that they will fall at 

the range within the information of the length of stay and the 

charges in this report. We make this report available on the Web 

and anybody can download it. We also provide it to libraries 

throughout the State of Colorado. 

In 2007, we took a step forward. With the health department we 

began to add a Web site that expands pricing information to allow 

patients and families to compare the quality and safety of their experiences in Colorado hospitals. The information shows the outcome of patient care presented for each hospital for the past 3 

years. Hospitals are identified as being statistically better, the 

same or worse outcomes as compared to other hospitals in the 

State, and right now the Colorado legislature is considering what 

we call an all-payer bill, which will require health plans to provide 

more information to be collected by insurance companies. 

The American Hospital Association supports the Health Care 

Price Transparency Promotion Act introduced by Representatives 

Burgess and Green and we agree that consumers do need accurate 

information when making health care decisions. We appreciate the 

opportunity to be here today, Mr. Chairman, and the American 

Hospital Association stands ready to work with Congress to find innovative ways to build efforts occurring at the State level and 

share appropriate information with consumers. Thank you very 

much. 

[The prepared statement of Mr. Summer follows:] 


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Testimony 

ofthe 

American Hospital Association 

before the 

U.S. House of Representatives Committee on Energy and Commerce 

Subcommittee ou Health 

"H.R. 4700, the Transparency in All Health Care Pricing Act of 2010; 

H.R. 2249, the Health Care Price Transparency Promotion Act of2009; and 

H.R. 4803, the Patients' Right to Know Act" 

May 6, 2010 

Good morning, Mr. Chairman. I am Steven J. Summer, president and chief executive officer of 

the Colorado Hospital Association (CHA). I am here today to testify on behalf of the American 

Hospital Association (AHA) and its nearly 5,000 member hospitals, health systems and other 

health care organizations, and its nearly 40,000 individual members. I appreciate this 

opportunity to share with you and your colleagues information about the hospital field's support 

for price transparency in the health care field. 

The AHA believes that consumers deserve helpful information about the price of their hospital 

care, and is committed to providing it. Sharing meaningful information, however, is more 

challenging because hospital care is unique. For example, a gall bladder 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 reflect important information from other key players, 

such as the price of physician care while in the hospital or how much of the cost a patient's 

insurance company may cover. 
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With the passage of the Patient Protection and Affordable Care Act (PPACA), hospitals will 

report annually and make public a list of hospital charges for items and services, including 

Medicare-Severity Diagnosis-Related Groups (MS-DRGs). The Secretary of the Department of 

Health and Human Services (HHS) will establish guidelines for public reporting beginning this 

year. Currently, the Centers for Medicare & Medicaid Services posts information on the 

Hospital Compare website on what Medicare pays for 35 procedures. These data show the range 

of payments by county and the number of cases treated at each hospital for a variety of 

treatments, including heart operations, implantation of cardiac defibrillators, hip and knee 

replacements, and kidney and urinary tract operations, among other procedures. 

But more can - and should - be done to share health care information with the public, including, 

but not limited to, hospital pricing information. 

BACKGROUND 

Four years ago, the AHA Board of Trustees approved a policy regarding hospital pricing 

transparency. That policy calls for information to be presented in a way that: 

• is easy to access, understand and use; 

• creates common definitions and language describing hospital pricing information for 

consumers; 

• explains how and why the price of patient care can vary; 

• encourages patients to include price information as just one factor to consider when 

making decisions about hospitals and health plans; and 

• directs patients to more information about financial assistance with their hospital care. 

The AHA believes that the path to price transparency has four parts. The first is that states, 

working with their state hospital associations, expand existing efforts to make hospital charge 

information available to consumers. Many states already have mandatory or voluntary hospital 

price information reporting activities in place. An AHA survey found that 34 states require 

hospitals to report information on hospital charges or payment rates and make that data available 

to the public; an additional seven states, including Colorado, have voluntary efforts. These state 

efforts vary, from making individual hospitals' lists of master charges available to the public, to 

making public pricing information on frequent hospital services, to making information on all 

inpatient services publicly available. 

Second, states, working with health insurers, should make available in advance of medical visits, 

information about an enrollee's expected out-of-pocket costs. For individuals with health 

insurance, this information is generally provided after care via an "explanation of benefits," or 

EOB. Consumers need insurers to provide real-time information - either via the phone or an on2 
36 


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line EOB that tells them what their insurance company will pay and what their individual copayment will be. With insurance coverage expected to be expanded to 95 percent oflegal U.S. 

residents under the PPACA, most individuals will need to access such information. 

Third, more research is needed to better understand what type of pricing information consumers 

want and would find useful in their health care decision-making. Through research we have 

learned much about what kind of information consumers are seeking regarding the quality of 

health care, but we know less about what they may want to know about pricing information. 

Consumers need different types of pricing information depending ori whether and how they are 

insured. For example, a patient with traditional insurance that typically covers hospital services 

may want to know what the out-of-pocket costs would be for care at one hospital compared to 

another. Those with high-deductible health plans or health savings accounts also would have 

more interest in what their insurers require as out-of-pocket costs, as patients with highdeductible plans are responsible for the out-of-pocket costs of their initial care, up to their 

personal deductible. But people with HMO coverage, who have agreed to use physicians and 

hospitals participating in their health insurance network, likely would have less need for specific 

price information. 

For uninsured individuals of limited means, information should be provided directly by the 

hospital; the hospital, in turn, can determine whether a patient qualifies for state insurance 

programs, free or reduced cost care provided by the hospital, or other financial assistance. As 

part of the PPACA, tax-exempt hospitals will be required to adopt, implement and widely 

publicize (within the community the hospital serves) a written financial assistance policy. This 

new federal policy is consistent with previous AHA policies and field recommendations and 

includes specifications such as: (1) eligibility criteria for financial assistance and whether the 

assistance includes free or discounted care; (2) the basis for calculating amounts patients are 

charged; (3) how to apply for financial assistance; and (4) any actions that may be taken for nonpayment if the organization does not have a separate billing and collections policy. In addition, 

the new law underscores field practice and existing regulations by emphasizing that each hospital 

must have a written policy to provide emergency medical care, regardless of whether or not the 

patient qualifies for financial assistance. Again, consistent with AHA policy and 

recommendations, a hospital is permitted to bill patients who qualifY for financial assistance no 

more than the amounts generally billed to individuals who have insurance coverage for such 

care. 

Finally, we all need to agree on consumer-friendly pricing "language" - common terms, 

definitions and explanations to help consumers better understand the information provided. 

3 
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THE COLORADO EXPERIENCE 

As mentioned above, Colorado is one of the seven states with a voluntary reporting program. 

The Colorado Hospital Association began publishing the Hospital Charges and Average Length 

of Stay Report in 1988. This annual publication provides patients, their families, researchers, 

policy makers, and purchasers of health care such as businesses and insurance companies with 

information to compare charges and lengths of stay for the 35 most common inpatient medical 

conditions and surgical procedures performed in Colorado hospitals. 

The publication has evolved over the years to include comparisons that take into account any 

complicating illnesses patients may have, and the general severity of the patient's illness. It not 

only provides the average charge and average length of stay for each condition or procedure, but 

also includes the average charges and average lengths of stay for each of four categories 

describing how sick the patient is. 

In addition to the average charge and average length of stay, the report presents a statistically 

standardized range of low and high numbers for the charges and length of stay. These ranges 

represent what the patient is likely to experience as a result of his or her care. When a patient is 

treated in a hospital for a given procedure or condition, there is a 95 percent probability that his 

or her charges and length of stay will fall within these respective ranges. 

Other useful information, such as the number of patients each hospital treats for each of the 

conditions and procedures, easy to understand descriptions ofthe conditions and procedures, 

explanations of hospital charges and lengths of stay, what they represent, what their limitations 

are and general demographic information on each hospital, also is presented. 

The report is made available free of charge to the general public on the CHA website and in 

paper format. It also is provided free of charge to public libraries. Hospitals are given a 

specially designed electronic data file that they load into their information systems. It includes 

charge and length of stay data for all the conditions and procedures treated at that hospital. This 

provides hospital staff the ability to give patients charge and length of stay estimates prior to a 

hospital visit. 

In 2007, CHA and the Colorado Department of Public Health and Environment began publishing 

the Colorado Hospital Report Card. This interactive website expands on our pricing publication, 

allowing patients and their families to compare the quality and safety of care in Colorado 

hospitals. Information showing the outcomes of patient care is presented for each hospital for 

each of the past three years. Hospitals are identified as having statistically better, the same, or 

worse outcomes as compared to other hospitals in the state. The website is updated annually 

each November. In addition, last year CHA worked with the Colorado Division ofInsurance to 

4 
38 


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publish a website showing both charges and payment information for 25 of the most common 

reasons for hospitalizations. 

This year, the Colorado Legislature is considering legislation allowing more detailed information 

to be collected from insurance companies. Access to this information will have the potential to 

further enhance the reporting already available to the public. It can be used to provide estimates 

of the out of pocket co-payments associated with a hospital stay. CHA supports this legislation, 

and is looking forward to continuing its tradition of making hospital costs and quality 

information available to our patients and their families. 

LEGISLATION UNDER CONSIDERATION BY CONGRESS 

As previously mentioned, the AHA supports state efforts, like Colorado's, regarding price 

transparency. We also support legislation like H.R. 2249, The Health Care Price Transparency 

Promotion Act 0/2009, introduced by Reps. Michael Burgess (R-TX) and Gene Green (D-TX), 

which would build on this existing state-based structure and also require insurers to participate in 

the disclosure process by providing information on estimated out-of-pocket costs for health care 

services. The 41 states with either statutory or voluntary requirements for hospitals to report 

information on hospital charges or payment rates make the information available to the public, 

either by posting to a hospital website, by publication in a government or hospital association 

report or by making the information available to consumers upon request. H.R. 2249 would 

expand the reporting requirements to all 50 states. The legislation also would require insurers to 

provide information about an enrollee's expected out-of-pocket expenses. H.R. 2249 also would 

require the Agency for Healthcare Research and Quality to conduct a study on the types of price 

information consumers want and would use in their health care decision-making. 

Legislation introduced more recently, H.R. 4803, The Patients' Right to Know Act, also focuses 

on the state-based approach to collecting and disseminating hospital price information, and 

would expand these requirements to ambulatory surgery centers. The bill requires health plans 

to provide to their enrollees information on covered items and services, the claims appeal process 

and out-of-pocket cost-sharing, among other topics. 

H.R. 4700, The Transparency in All Health Care Pricing Act 0/2010, would require reporting of 

a broad range of price information from almost every entity that participates in the health care 

sector. This would include hospitals, physicians, nurses, pharmacies, pharmaceutical 

manufacturers, dentists, health insurers and any other health care-related providers that offer or 

furnish health care for sale to the public (and including any government-run programs such as 

Medicare and Medicaid) and would require them to publicly disclose all prices - all wholesale, 

retail, subsidized, discounted, etc. - that are charged to individual consumers. The HHS 

5 
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Secretary would have the authority to investigate and fine any entities that failed to comply with 

the posting requirements. 

CONCLUSION 

Hospitals are a critical component to the fabric and future of our communities. We agree that 

consumers need accurate 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 that America's hospitals are working to improve the health of their communities. 

The AHA and its members stand ready to work with lawmakers on innovative ways to build on 

efforts already occurring at the state level and share information that helps consumers make 

better and smarter choices about their health care. 

6 
40 

Mr. PALLONE. Thank you, Mr. Summer. 

Dr. Herzlinger. 

STATEMENT OF REGINA HERZLINGER 

Ms. HERZLINGER. Chairman Pallone, Ranking Member Shimkus, 

thank you so much for inviting me. 

Not so long ago, a similar group was testifying about transparency. People would not understand it, it would cause price collusion, what was available through State agencies was good enough. 

Who were the testifiers? They were businessmen in the midst of 

the Great Depression aiming to persuade the U.S. Congress not to 

enact the transparency legislation backed by the great President 

Franklin Delano Roosevelt when he created the SEC. Happily, the 

Congress ignored them. Extensive research demonstrates that financial transparency lowers the cost of capital because investors 

who were more certain about performance required lower returns 

and enabled the investors to reward productive, socially responsible 

firms more than others. 

We now stand at a similar moment. Transparency about the 

quality and cost of health insurance and medical care providers is 

essential not only for the 34 million who will newly shop for plans 

under the health reform legislation but for the rest of us too, essential but not available. Transparency could not only help people but 

could also control the health care costs which are now ruining a 

wonderful economy by revealing which insurance companies and 

policies provide the most medical care benefits and best outcomes 

per dollar, which ones offer the best doctors and hospitals and 

which ones hassle sick people the least. In health care, as elsewhere in the economy, the best providers are frequently the lower 

cost ones. 

Finally, if medical care providers were required to post their 

prices for the uninsured, competition would likely follow. Some 

medical bankruptcies, one-quarter of which are incurred by the uninsured, could be avoided if uninsured people could compare the 

prices and quality with their medical care. Yet despite health care 

transparency’s many benefits, we have virtually none of it. Transparency sites maintained by State governments with the notable 

exception of Wisconsin and some other States and private firms 

contain sparse, frequently outdated information. 

Can transparency be obtained through voluntary efforts? Obviously not. Few health care participants have willingly offered disclosure. Instead, many stakeholders raise objections including the 

allegations that consumers lack interest, lack ability, that 

transparency’s costs will exceed its benefits and that the measurement of quality is infeasible. But the Congressional Research Service has decided that the many benefits of transparency trumps its 

costs and although health care transparency measures are not as 

yet well developed, with time they will be. 

The problem is not that Americans aren’t interested in health 

care transparency, they rated it as their number one health care 

reform they want from the government. Nor is it that they cannot 

wend their way through information. Google and Consumer Reports are there to help them through it. The problem is that Americans still lack the health care transparency they need. Passage of 


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41 

the legislation being discussed today will help ensure they get it. 

Thank you. 

[The prepared statement of Ms. Herzlinger follows:] 


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The Missing Health Care Reform: 

Transparency 

Regina E. Herzlinger 

Nancy R. McPherson Professor of Business Administration 

Harvard Business School 

Baker Library 171 

Soldiers Field 

Boston, MA 02163 

rherzlinger@hbs.edu 

617.495.6646 (phone) 

617.495.0358 (fax) 

May 4,2010 

All rights reserved to author 
43 


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Heal th care transparency was surprisingly absent from the 

health care reforms enacted in 2010. The passage of the 

transparency 

omission . 

Bills presented today will help to rectify this 

After all, transparency can help foster significant cost 

and quality improvements and improve access for the uninsured . 

Additionally, unlike some reform elements, the American people 

very much want the government to effect transparency: the number 

one change Americans wanted from the government in one survey 

"was requiring that performance ratings on hospitals and doctors 

be publically available."l 

Cost contro2-Generally, consumers get better value as 

transparency increases. 2 With health care transparency that could 

help them answer questions like "Which insurance companies and 

policies offer the most medical care benefits per dollar spent? 

Treat sick people the best? Offer the best doctors and 

hospitals? Are disliked by doctors and hospitals because of 

their slow and low payment practices?", consumers could reward 

insurers who gave them the best value, encouraging competition 

and innovation. The health insurance industry is surprisingly 

entrepreneurial: 3 the firms currently dominating the high 

deductible insurance market were formed only nine years ago, for 

example. 4 

2 
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Transparency could help insurers to better control costs by 

constructing narrow networks of the best value doctors and 

hospi tals. Uni tedHeal th estimated savings of $37 billion from 

2010-2019 from incentives to use the highest quality health care 

providers. 5 Health insurers typically do not offer these narrow 

networks because the American people suspect that insurers favor 

low-cost providers, rather than high-quality ones. The 

availability of independent data through which enrollees could 

verify the quality of doctors and hospitals would alleviate such 

concerns. 

Further, the mere act of obtaining data motivates positive 

changes among suppliers, a phenomenon known as "the audit 

effect.,,6 The US Congressional Budget Office, for example, 

estimated that sharing peer profile scorecards with physicians 

would save Medicare $350 million from 2010-2014.£ 

e££ects-Transparency can also spur quality 

improvements. For example, although researchers virtually 

eliminated an ICU infection in Michigan that kills up to 60,000 

people annually in the u.S., their intervention has not spread 

rapidly, perhaps because deaths from infections are invisible. 7 

If hospitals were required to publically report valid data, 

infection rates would likely plummet. 

Evidence suggests that hospitals respond to publicly 

reported data with efforts to improve patient care and their 

3 
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standing in reports. 8 Patients respond too: in New York and 

Western Pennsylvania they increased the market share of higher 

quality providers. 9 When English patients and providers obtained 

information about hospital quality and waiting times, as part of 

a package of reform which included public performance ratings, 

both measures of performance improved significantly.lo 

Access inpact:-Currently, charges for the medical care of 

the uninsured are difficult to find and differ widely. One 

study found that the uninsured paid 75% more for one procedure 

than Medicare patients. II Public posting of charges would enable 

the uninsured to more readily compare competitive prices. 

Yet transparency is not without risks. Some economists 

believe that in a concentrated market, like many in health care, 

transparency can lead to collusion. 12 Others may believe that 

some degree of price discrimination is essential for equity. 

Yet, a recent Congressional report which assessed all these 

risks concluded that transparency can help improve quality and 

reduce costs. 13 

We lack transparency primarily because government has not 

required it, failing to invest in developing robust measures, to 

create standards for measuring quality, and to ensure that 

accurate and reliable data are readily available. The available 

public data are limited. Hospital Compare, the Website of the 

U.S. Department of Health and Human Services, for example, 

4 
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reports on only six medical conditions and 26 surgical 

procedures. 14 It contains measures only of the process of 

providing medical care-did the hospital give you an antibiotic 

before the surgery-rather than outcome data-how often patients 

were infected in this hospital? Yet, consumers do not value such 

process data highly. 15 In 2008, only 6% of surveyed Americans 

heard of Hospital Compare. 16 

Although more than 40 states and a number of private 

organizations 17 provide some health care transparency, they too 

are not fully responsive. Moreover, they offer limited input 

from consumers, 18 although consumers value information obtained 

from people like them highly.19 Further, none of the state sites 

compare their data to the best in class in the u.s. For example, 

Maryland's Johns Hopkins may provide best in class care for 

prostate surgery and the Massachusetts General Hospital for 

thoracic surgery but the users of transparency sites in each 

state will likely not know that. 20 The absence of this 

information also inhibits the nascent movement in inter-state 

medical tourism and its cost savings21 and quality improvements. 22 

Similarly, a survey of the transparency efforts of 25 

nonprofit hospital systems concluded that "none of the 

heal thcare systems studied had information available on their 

Web sites that was relevant, reliable, and transparent in all . 

5 
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categories." Their quality transparency data earned among 

the lowest ratings. 23,24 

Government Success in Transparency 

The public's desire for transparency and the failure of 

markets to create it warrant governmental action. The 

government's efficacy as a transparency agent is exemplified by 

the Securities and Exchange Commission (SEC). It was created 

when Franklin Roosevelt overrode his advisors' counsel that 

government evaluate securities and, instead, opted for 

transparency to cure the stock market's collapse during the 

Depression. FDR fashioned the SEC-he called it the Truth Agencyto require corporations whose securities were publically traded 

to disclose results, using generally accepted accounting 

principles, audited by independent, certified public accountants 

and made readily available to the public. The Federal SEC 

superseded numerous, nonfunctional state and private 

transparency agencies, enabling a national capital market. 

As in health care today, prior to the creation of the SEC, 

investors could access only the piecemeal data corporations 

chose to reveal. Because no generally accepted measurement 

standards existed, investors lacked a clear understanding of 

what the numbers meant and assurance that they were measured 

6 
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comparably across firms. 25 Businessmen argued that the costs to 

them of this new agency would exceed its benefits. 

Al though the SEC failed as a regulator, it was successful 

in creating transparency, which ,in turn ,lowered the cost of 

capital, because investors who were more certain about 

performance, required lower returns; helped protect against 

misappropriation of shareholder returns by managers, as attested 

to by the outcries against CEO compensation, fueled by easily 

accessed mandatory disclosure about executive compensation; and 

enabled appropriate allocation of resources: investors rewarded 

productive, socially responsible firms more than others. 26 

Objections to a Health Care Transparency 

Why do we need government intervention for transparency? 

Al though the impact is uncertain, the available evidence 

suggests that transparency would produce a net good for 

consumers and health care markets, improving quality and 

reducing costs. 27 Governmental action is needed because, like a 

classic public good, the financial gains to providers from 

transparency are dwarfed by the public welfare it 

increasing the quality of life. 28 

7 

creates by 
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Why not ~eave transparency to state governments? 

The best health care providers, and often the lowest cost 

ones, are found in many different states and may excel in 

different types of care 29 ,1l The Dartmouth Atlas and other 

researchers found, substantial variation in the quality of care 

among states. 30 While state level reporting could supplement 

national reporting, state transparency agencies that limit 

information to local providers may prevent insurers from 

creating multi-state networks of best value providers.~ 

Wi~~ the costs o£ transparency exceed its bene£its? 

If the budget of the new transparency commission emulated 

that the SEC's billion dollar budget, estimates of the savings 

to be created by health care transparency easily exceed these 

costs. Further, by consolidating measures, transparency will 

likely reduce the sizeable expenses of private sector providers 

for collecting and reporting different measures for different 

insurers. The recent growth in Federal support for Health 

Information Technology will simplify the measurement process by 

automating retrieval of data now collected manually. 

8 
50 


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Hea~th care is different. The average person wi~~ not use these 

data 

The equilibrators of an effective market are not the 

average buyers but rather marginal consumers. At a high price, 

there are only a few buyers who are more or less price 

insensi ti ve. To attract more customers, suppliers reduce their 

prices. The increased volume of customers more than compensates 

for price reduction. Suppliers continue to cut prices until they 

hit the last tough-minded customers who pay a price roughly 

equal to marginal cost. 

The rest of us benefit from the relatively small last-tobuy crowd. A McKinsey study showed, for example, that only 100 

investors "significantly affect the share prices of most large 

companies. ,,31 These hard-nosed buyers are adept in finding, 

interpreting, and using information. The market for automobiles, 

a highly complex product, illustrates their impact. Automobile 

prices are the lowest in two decades while their quality is the 

highest. 32,33 

Substantial evidence indicates that today's better-educated 

consumers also seek health information. In 2007, 28.7% of the 

population had attained a college education or more, and 85.7% 

were high school graduates. 34 In 1960, in contrast, fewer than 

half the people were high school graduates, and only 7% had a 

college education. 35 Higher levels of educational attainment 

9 
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increase not only income and ability but also self-efficacy.36 

Affluent Web surfers spend more time than others searching for 

information on the Net, finding good values, and improving the 

product for everybody. 37 A 2009 report found that 61% of 

American adults used the Internet for health information. 38 

Millions spent an average of 20 minutes at the government's 

National Institutes of Health Web site, studded with arcane 

medical journal articles,39 and mastered medical skills, such as 

CPR and the use of external defibrillators. 4o 

More than 70% want online evaluations of physicians,~ 

and when they obtain the information, they use it. 41 Consumers 

are willing to change hospitals in response to information about 

their quality.42,43,44 Consumers who had made relatively poor 

health care choices in the past, improved them when information 

was available. 45 

Medical. care outcomes cannot be accuratel.y measured. Providers 

who treat high-risk patients or onl.y a :few patients wil.l. be 

un:fairl.y penal.ized 

More than two-thirds of surveyed physicians indicated that 

the general public should not have access "to information on 

clinical outcomes. ,,46 For example, one complained that the cost 

of collecting the data ranged from $0.59 to $2.17 per member per 

month. But the benefits likely far exceed these costs. For 

10 
52 


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example, if quality data improve the costs of treating a 

diabetic by as little as 1%, the data collection costs will be 

repaid fiftyfold in less than one year. 47 The same report also 

notes that many data cannot be reliably measured for most 

doctors because they treat so few of the sick: "a physician 

would need to have more than 100 patients with diabetes 

for a profile to have a reliability of O.B or better, while more 

than 90% of all primary care physicians at the HMO [he studied] 

had fewer than 60 patients with diabetes. ,,22 A hospital-based 

study similarly concluded that "the operations for which 

surgical mortality has been advocated as a quality indicator are 

not performed frequently enough to judge hospital quality."'8 

These challenges are real. Research is needed to mature 

the science of quality measurement and to minimize and account 

for systematic and random error, ensuring that variation in 

outcomes among providers represents true variation in the 

quality of care. In some care settings, outcomes may need to be 

aggregated to groups rather than individuals. To date, 

investments in advancing the science of quality measurement have 

been minimal. 

But the purpose of performance measurement is to protect 

the patient, not the physician or the hospital. Transparency 

would likely cause the low-volume physicians, medical groups, 

and hospitals that cannot generate statistically reliable data 

11 
53 


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to lose patients to those who achieve excellent outcomes, in 

part because of their high volume, or to consolidate practices 

into larger groups. Providers who see many patients of one type 

are more likely to develop the expertise needed to care for them 

effectively and efficiently.49 

Wby not restrict disclosure or the results to the providers and 

insurers? Wby must the data also be reported to the public? 

An evaluation of the impact on a Wisconsin quality 

improvement initiative which reported hospital performance data 

both publically and privately concluded that "Since quality 

improvement efforts among the public-report hospitals appear to 

be significantly greater than in hospitals given only private 

reports, there is added value to making performance information 

public. ,,50 

Yet, the concerns about issuing misleading outcome data are 

real and valid. Undoubtedly, the science of quality measurement 

must improve before providers will be comfortable with the 

public release of outcome data. It is not that scientists cannot 

develop measures; it is that society has not invested in 

developing them. Surely, if we can sequence the human genome, 

all 3.4 billion base pairs with 99.999% accuracy, we can develop 

quality measures. 

12 
54 


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Hea~th care qua~ity measures are current~y or insurricient 

qua~ity 

Some providers appropriately worry about the quality of the 

information. Much of the language for measuring health care 

quality has yet to be defined; the risk adjusters that would 

make it possible to compare the performance of high-risk 

specialists to those who treat less severely ill patients are 

not yet fully developed;51 raw data are often flawed; and data 

quality control is virtually nonexistent. 52 These are serious 

concerns. For example, a study that compared the rates of 

caesarean sections in hospitals, with and without adjustment for 

the fact that some hospitals might have more patients prone to 

caesareans, found that adjustment caused the performance of a 

fourth of the hospitals to change dramatically :for example, 10% 

of those originally classified as especially high or low users 

of these surgeries were reclassified as normal and some 

classified as normal were reclassified as having greater or 

lesser rates of surgery than the average. 53 Physicians may be 

dissuaded from caring for very sick patients if outcome measures 

do not correctly reflect the severity of illness. 

Measurement issues like these can be resolved with 

investment, time ,and experience as illustrated by the continual 

evolution in financial measures such as beta, the measure of 

risk of different investments. Beta has been continually 

13 
55 


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refined since it was first suggested in 1952 by people so expert 

that one of its developers won a Noble prize. 54 

Conclusions 

Although financial performance measures are not perfect, 

public disclosure forced them to improve continually over time. 

Absent governmental oversight, we have little hope that health 

care will significantly improve transparency. Consumers pay the 

price of the failure of health care transparency, sometimes with 

their lives, and frequently with their pocketbooks. And 

providers, payors, and regulators pay the price too by lacking 

data to effectively and efficiently improve quality and reduce 

costs of care. Health Care Transparency will enable consumers to 

make more informed choice, reduce health care costs, and hold 

health care insurers and providers accountable for the results 

achieved. 

14 
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5, p1201-1207, 7p Is More Information Better? The Effects of 

"Report Cards" on Health Care Providers. David Dranove, 

Daniel Kessler, Mark McClellan, Mark Satterthwaite. The 

Journal of Political Economy, Vol. 111, No.3 (Jun., 2003), 

pp. 555-588. 

29 Jha AK, Zhonghe L, Orav EJ, Epstein AM. Care in U.S. 

hospitals-the hospital quality alliance program. N Engl J 

Med.2005;353(3) :265-74. 

30 Jencks SF, Cuerdon T, Burwen DR, Fleming B, Houck PM, Kussmaul 

AE, et al. Quality of medical care delivered to Medicare 

beneficiaries: a profile at state and national levels. J Am 

20 
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Med Assoc. 2000;284(13) :1670-6. See also 

www.dartmouthat1as.org. 

31 Coyne KP, Witter JW. What makes your stock price go up and 

down. McKinsey Quarterly. 2002; (2)29-39. 

32 Auto Affordabi1ity Index. 2006 May 10. Available from: 

33 J. D. Power and Associates. Initial Quality Study, 2005. [cited 

2006 Jan 27J. Available from: 

ingsguide.asp. 

34 U.S. Census Bureau. Statistical Abstract of the United States: 

2009 (128 th Edition). Washington, DC; 2009. p. 145. 

35 U.S. Census Bureau. Statistical Abstract of the United States, 

2001. Washington, DC: Government Printing Office; 2002. Table 

215, p. 139. 

36 Role in preventing medical errors. Med Care Res Rev. 

2005; 62 (5) : 601-16. 

37 Forrester Research. The millionaire online. Cambridge (MA): 

Forrester Research; May 2000. p. 11. 

38 Fox S, Jones S. The social life of health information. Pew 

Internet & American Life Project. Social Media and Health; 

2009 Jun 11. Available from: 

21 
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http://www.pewinternet.org/Reports/2009/8-The-Social~~i~~~ofHealth-Information.aspx. 

39 PricewaterhouseCoopers. HealthCast 2010. New York: 

PricewaterhouseCoopers; Nov 2000. 

p. 22. Reents S. Impact of the Internet on the doctor-patient 

relationship: the rise of the Internet health consumer. New 

York: Cyber Dialogue; 1999. p. 4. Available from: 

40 Armour S. Just another day at the office: heroes save coworkers' lives. USA TODAY. 2001 Apr 16;8 l-2b. 

41 Miller TE, Reents S. The health care industry in transition: 

the online mandate to change. New York: Cyber Dialogue; 1998. 

Available from: www.cyberdialogue.com. 

42 Sofaer S, Crofton C, Goldstein E, Hoy E, Crabb J. What do 

consumers want to know about the quality of care in 

hospitals? Health Serv Res. 2005;40(6 Pt 2) :2018-36. 

43 Avery S. Net not just for wealthy, statscan says; survey finds 

e-mail most popular activity, medical information top search 

target. The Globe and Mail. 2004 Jul 9;AlO. 

44 Hibbard JH, Stockard J, Tusler M. It isn't just about choice: 

the potential of a public performance report to affect the 

public image of hospitals. Med Care Res Rev. 2005 Jun;62:358-

71. 

22 
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45 Jonathan T. Kolstad and Michael E. Chernew. Quality and 

Consumer Decision Making in the Market for Health Insurance 

and Health Care Services. Med Care R~s Rev 2009 66: 28S-52S. 

46 Romano M. Performance anxiety: is it too late for physicians 

to set their own rules on pay for performance? Modern 

Healthcare. 2005 May 30;6. 

47 Based on costs of $10,000 per diabetic and an incidence of 

diabetes of 7.5%. This leads to costs per 1,000 enrollees of 

$750,000 for diabetics. A 1% reduction, $7,500, will pay for 

collecting performance data from 25 doctors at a monthly cost 

of $2.50 per member, per month. But because the number of 

doctors covering 1,000 enrollees is typically 0.5, the 

payback is fiftyfold. 

48 Dimick JB, Welch HG, Birkmeyer JD. Surgical mortality as an 

indicator of hospital quality: the problem with small sample 

size. JAmMed Assoc. 2004 Aug 18;292(7) :847-51. 

49 Regina E. Herzlinger first suggested this focused factory 

concept in Market-Driven Heal th Care (Addison Wesley, 1997) 

and amplified it in Consumer-Driven Health Care (Jossey Bass, 

1994) and Who Killed Health Care? (McGraw Hill, 2007) 

50 Hibbard, JH, Stockard J, Tusler M. Does publicizing hospital 

performance stimulate quality improvement efforts? Health 

Aff. 2003:84. 

23 
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51 Cucciare MA, O'Donohue W. Predicting future healthcare costs: 

how well does risk-adjustment work? J Health Organ Manag. 

2006;20 (2) :150. Blumenthal D et al. The who, what, and why of 

risk adjustment: a technology on the cusp of adoption. J 

Health Polit Policy and Law. 2005;30(3):453. Clancy C. 

Quality improvement: getting to how. Health Serv Res. 

2003;38 (2) :509-13. 

52 Perspective: The debate over regional variation in health care 

spending. 2010;362(7) :569-574. Bach PB. A map to bad policyhospitals efficiency measures in the Dartmouth Atlas. Skinner 

J, Staiger D, Fisher ES. Looking back, moving forward. 

53 Aron DC, Harper DL, Shepardson LB, Rosenthal GE. Impact of 

risk-adjusting caesarean delivery rates when reporting 

hospital performance. JAmMed Assoc. 1998 Jun 

24;279(24):1968-72. 

54 Kritzman MP. What practitioners need to know: the Nobel Prize. 

Finane Anal J. 1991;47(1). 

24 
66 

Mr. PALLONE. Thank you, Dr. Herzlinger. 

Mr. Cowie. 

STATEMENT OF MICHAEL COWIE 

Mr. COWIE. Thank you for the invitation. My name is Mike 

Cowie. I formerly served in leadership positions at the Federal 

Trade Commission. At the FTC, I supervised antitrust investigations in health care, so my testimony today is based on the perspective of antitrust. 

In antitrust investigations, a major objective of the FTC is to protect consumers from collusion where competitors increase and harmonize their pricing. FTC attorneys and economists follow guidelines to determine whether particular industries are susceptible to 

collusion. One of the key factors is whether pricing terms are available and known among competitors. Collusion among competitors 

to raise prices is more likely in industries where pricing terms are 

known. 

The FTC has opposed regulation requiring public posting of pricing terms, and this FTC price has cut across administrations. An 

example was a State law requiring liquor wholesalers to file price 

lists with the State beverage control agency. The FTC opposed that 

policy expressing concern that the availability of comprehensive 

price information tends to make it easier for industry members to 

coordinate pricing. That was in distilled spirits. The FTC has 

raised the same concerns in pharmaceutical pricing. The FTC staff 

has opposed State legislation requiring PBMs, or pharmacy benefit 

managers, to publish price discounts or price rebates received from 

manufacturers. The FTC warned that the public posting of precise 

details of rebates would make tacit collusion more feasible. 

The FTC has not stood alone on this policy. The Department of 

Justice and the CBO have opposed regulation requiring public filing or Internet posting of price terms. For example, the CBO opposed a proposed policy to force Medicare drug plans to post data 

on price rebates negotiated from manufacturers. Like the FTC, the 

CBO expressed concern that manufacturers would probably reduce 

their largest rebates. 

The views of the CBO, Justice Department and FTC are built on 

a wealth of empirical economic research. Economic studies have 

found that a mandatory publication of pricing terms often leads to 

higher prices for consumers. For example, in the 1980s the Federal 

Communication Commission required the long-distance phone carriers, companies like AT&T, Sprint and MCI, to file publicly the 

rates they charged businesses for long-distance phone services. 

Eventually economists and policymakers found that this led to 

higher prices and price stabilization. 

In coming years, more Americans will have health insurance coverage including prescription drug coverage. Few will be paying retail or list prices. The role of well-informed, large and sophisticated 

purchasers such as PBMs or health plans will grow. Key pricing 

terms will be the product of head-to-head negotiations between 

drug manufacturers and PBMs. These pricing terms should continue to be set through the negotiation process not through public 

or Internet postings. 


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Of the pending bills, H.R. 4700 conflicts with established antitrust principles designed to prevent collusion. It would require 

pharmacies, pharmaceutical manufacturers, insurance entities and 

others to post all of their pricing terms on the Internet. This requirement of Internet price posting may contribute to price stabilization and price increases. Thank you. 

[The prepared statement of Mr. Cowie follows:] 


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Michael G. Cowie 

Antitrust Partner, Howrey LLP 

Before the U.S. House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Health 

May 6, 2010 

Chairman Pallone, Ranking Member Shimkus, and Members of the 

Subcommittee, thank you for the invitation to participate in today's hearing on pricing in 

healthcare. My name is Mike Cowie and I am an antitrust partner at Howrey LLP in 

Washington DC. I formerly served in leadership positions at the Federal Trade 

Commission (FTC). At the FTC, I supervised antitrust investigations in healthcare. 

The Subcommittee on Health is considering legislation that would require 

healthcare companies to make public filings or internet postings of pricing terms.! My 

testimony today focuses on the evaluation of these types of pricing policies from the 

perspective of antitrust. 

FTC Analysis. In antitrust investigations, a major objective of the FTC is to 

protect consumers from anticompetitive pricing through collusion -- that is, pricing 

determined jointly among competing companies rather than independently by each 

individual company. FTC attorneys and economists follow guidelines to determine 

whether industries are susceptible to anticompetitive price increases. One of the key 

factors is whether pricing terms are available and known among competitors. 

Collusion among companies to raise prices is more likely in industries where 

pricing terms are known among competitors. If a company knows how its rivals set 

prices, that company may raise its own prices to meet those of its competitor. Why work 

to undercut the competition if you know customers will pay a higher price? Under the 

! H.R. 4700, The Transparency in All Health Care Pricing Act of2010; H.R. 2249, The Health Care Price 

Transparency Promotion Act of2009; H.R. 4803, The Patients' Right to Know Act. 
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antitrust guidelines, the FTC treats collusion as less likely in industries with non-public or 

private pricing tenus. An FTC investigation and the decision on whether to bring an 

enforcement action may tum on whether competitors have visibility into pricing tenus, 

thereby raising a danger of collusion. 

The FTC has opposed regulation requiring public posting of pricing tenus. For 

example, the FTC staff opposed a state law requiring liquor wholesalers to file price lists 

with a state agency.2 It expressed concern that "[t]he availability of comprehensive price 

infonuation tends to make it easier for industry members to coordinate prices tacitly and 

to detect and discourage deviation from the consensus price."3 The FTC raised the same 

concerns in phanuaceutical pricing. The FTC staff has opposed state legislation 

requiring phannacy benefit managers (PBMs) to list in public filings the price discounts 

or rebates received from drug manufacturers.4 It warned that the posting of "precise 

details of rebate arrangements" would make "tacit collusion ... more feasible."5 

Other Federal Agencies. The FTC has not stood alone on this policy. The 

Department of Justice Antitrust Division has opposed regulation requiring public filing of 

price tenus.6 Likewise, the Congressional Budget Office (CBO) has recognized that 

mandatory posting of pricing tenus may reduce incentives to discount. A few years ago 

the CBO evaluated a proposed policy to force providers of Medicare prescription drug 

plans to post data on price rebates negotiated from drug manufacturers. CBO expressed 

concern that "manufacturers would probably reduce their largest rebates because of the 

2 FTC Director of Regional Office, Statement to the Commonwealth of Massachusetts Alcohol Beverages 

Control Commission, June 26, 1996, www,ftc,gov. 

3/d. at 2, 

4 FTC Office of Policy Planning, Letter to New York Legislature, Mar. 31,2009, at 4-5, www.ftc,gov. 

5 ld.; see also FTC Office of Policy Planning, Letter to Virginia House of Delegates, Oct. 2, 2006, at 13, 

www.ftc,gov. 

6 U.S. Departtnent of Justice, Comments to FCC, FCC Docket No. 90-132, Sept. 28, 1990, at 41,44-46. 

2 
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pressure that disclosure of such large rebates would place on their arrangements with 

other customers."7 This "would tend to increase costs for both the Medicare program 

and, on average, for emollees."8 

Economic Studies. The CBO and the Justice Department, like the FTC, have 

reasoned that posted pricing may reduce incentives to discount and contribute to tacit 

collusion. This view is built upon a strong foundation of economic research. Economic 

studies have found that mandatory publication of pricing terms often leads to higher 

pricing. For example, in the 1980s Congress required long distance carriers, such as 

MCl, Sprint, and AT&T, to file their pricing terms with the Federal Communications 

Commission (FCC). Economists and policy-makers eventually concluded that this 

policy caused long distance rates to converge and increase.9 Academic studies of postedpricing policies in other industries have likewise reached the conclusion that such policies 

have in fact led to price stabilization and price increases. J 0 

Pharmaceutical Pricing. To further the discussion of potential effects of 

transparency in healthcare, it may be helpful to examine the nature of transparency and 

competition in the biopharmaceutical sector. When choosing among medicines, patients 

and prescribers currently have access to a wide range of publicly available information 

about pricing. This includes information on pricing of prescription drugs at retail 

7 Congressional Budget Office, Letter of Director Peter R. Orszag to U.S. House of Representatives, 

Comm. on Energy and Commerce and Comm. on Ways and Means, Mar. 12, 2007, at 4. 

8 !d. at 4. 

9 P.W. MacAvoy, The Failure of Antitrust and Regulation to Establish Competition in Long-Distance 

Telephone Services, 69-77 (MIT Press & AEI Press 1996); Hearing before the House Subcomm. on 

Telecommunications and Finance, Comm. on Energy and Commerce, 102d Cong., 1" Sess., June 19, 1991 

(statement of Alfred C. Sikes, FCC Chairman); Tariff Filing for Nondominant Common Carriers, Notice of 

Proposed Rulemaking, CC Dk!. No. 93-96, 8 FCC Red. 1395 ~ 13, 1993; Haring & Levits, What Makes the 

Dominant Firm Dominant?, FCC Office of Public Policy Working PaperNo. 25, Apr. 1989, at 11-17. 

10 Fuller et aI., Effect of Contract Disclosure on Price: Railroad Grain Contracting in the Plans, 15 W.J. 

Agric. Econ., 265, 271,1990; Albek et aI., Government-Assisted Oligopoly Coordination? A Concrete 

Case, The Journal ofIndustrial Economics, Dec. 1997, Vol. XLV at 429. 

3 
71 


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pharmacies, drug coverage provided by PBMs or health plans, and co-pays or 

coinsurance. Ensuring consumer access to this information is critical. 

Nearly every health insurance plan has a formulary, typically with tiered copays. 

Patients can find which copay or coinsurance amount applies to a given medicine. One 

example of this is the Medicare Plan Finder database. Information on coverage and 

copay levels is widely available to prescribers and is often accessed through handheld 

devices and e-prescribing systems. Notably, the use of tiered formularies has driven 

virtually all prescription drug utilization by insured persons to the tiers with lower out-ofpocket costs. II 

In contrast, public filing or internet posting requirements are ill suited for 

proprietary pricing terms negotiated in the pharmaceutical sector. Such public posting of 

pricing terms between manufacturers and sophisticated purchasing entities is 

unnecessary. These are the pricing terms negotiated between drug manufacturers and 

sophisticated purchasers - PBMs or health insurers. The arms-length negotiation process 

will lead to the best pricing outcome for consumers. The focus on pricing outcome is 

evident in the utilization pattern of medicines. IMS Health reports that in 2009, about 

three out of every four prescriptions used in the United States was filled with a generic. 12 

The share of prescriptions filled by generics is expected to increase from this already high 

level over the next few years, as several brand drugs with large sales go off patent. 

In coming years, more Americans will have health insurance coverage, including 

prescription drug coverage. This means the role of well-informed, large, and 

sophisticated purchasers will grow and more patients will obtain savings on prescription 

11 C. Baker, Drugs - Not the Cost Problem, Let's Talk Health Care, Apr. 13,2007, 

www.letstalkhealthcare.orglprescription-drugs/drugs-not-the-cost-problem!. 

12 IMS Health, IMS Health Reports U.S. Prescription Sales Grew 5.1 Percent in 2009, to $300.3 Billion., 

Apr. 1,2010, 

www.imshealth.com!portallsite/imshealthlmenuitem.a46c6d4df3db4b3d88f611 019418c22a1?vgnextoid=d6 

90a27e9d5b7210VgnVCMIOOOOOedI52ca2RCRD. 

4 
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drugs, rather than paying retail prices. Pricing terms should continue to be set through 

the negotiation process, not public filings or internet postings. 

HR 4700, the "Transparency in All Health Care Pricing Act of 201 0," in 

particular, would conflict with established antitrust principles designed to prevent 

collusion. It would require pharmacies, pharmaceutical manufacturers, insurance entities, 

and others to post all their pricing terms on the internet. The requirement of internet 

price posting - when applied to negotiated agreements between drug manufacturers and 

sophisticated purchasers - may well contribute to price stabilization and less discounting. 

Conclusion. All consumers, particularly healthcare consumers, benefit from 

information enabling them to make informed decisions and to compare alternative 

suppliers and services. However, overbroad laws that require internet posting of price 

terms would undermine consumer interests. Public policy in healthcare should maximize 

incentives for vigorous price competition. 

5 
73 

Mr. PALLONE. Thank you, Mr. Cowie. 

Mr. Rugland. 

STATEMENT OF WALTER RUGLAND 

Mr. RUGLAND. Thank you, and good morning. My name is Walter 

Rugland and I am the non-executive volunteer chairman of 

ThedaCare, which is a four-hospital community-owned health system in Congressman Kagen and Petri’s districts in Wisconsin. Prior 

to retirement, I served as executive vice president of Thrivent Financial for Lutherans. Before that I practiced nearly 25 years as 

a consulting actuary with Milliman. I bring that career expertise 

into play and my testimony here today. 

ThedaCare has long been a proponent of greater transparency. I 

like to call it meaningful patient-focused information, and that is 

on the cost and quality of health care. We were one of the first 

health care systems in Wisconsin to publish data regarding costs 

and quality more than 10 years ago, and while not perfect, it was 

the best publicly available data at that time. ThedaCare became 

the founding member of the Wisconsin Collaborative for Health 

Care Quality in 2003 and the Wisconsin Health Information Organization in 2006, and Representative Baldwin described some of 

the activity of those organizations. 

The commitment to transparency is driven by our strong belief 

that we must change to sustain our obligation of care for our community. We believe that change requires us to measure our performance in order to reduce our costs. Interestingly, when we 

thoughtfully changed to reduce our costs, our quality outcomes improved as well. Our commitment to tracking and reporting meaningful information meant people inside and outside our organization knew how well we were doing and where we needed improvement. In short, sharing the data held us accountable for our results. 

Six years ago at ThedaCare, we shifted to a mindset of improving 

something every day, somewhere, something every day. It became 

catching, and today our culture thrives on improving. Our focus 

centers on the patient outcome, not the system outcome. The goal 

of a sustainable health care operation must be to reduce patient 

costs over time and foster a healthy community. 

Some recent examples of what we have been able to accomplish— 

we developed a new model for our primary care clinics to complete 

the draw of blood, the diagnostics, the care planning within one 

visit. Patient dollar costs decreased and results improved. We used 

a similar approach to revolutionize our hospital design. Using a 

new model, we have eliminated errors during admission, medication reconciliation. We reduced our average length of hospital stay 

and reduced overall costs by more than $2,000 per case compared 

to our traditional inpatient units. These and other continuous improvement efforts have earned us national recognition and we believe our success demonstrates the benefits of meaningful transparency. 

In truth, exposure drives improvement, and in Wisconsin the exposure of cost and patient outcomes has played a key role in moving health care toward better patient value. It is one of the reasons 

that the Agency for Health Care Research and Quality now ranks 


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74 

us as number one, and next week Caroline Clancy from that agency will visit our State to see this firsthand. 

We believe health providers need to move toward transparency. 

We cannot continue to accept the myth that prices don’t vary between providers, facilities or regions. Many who study health care 

costs report that costs are nearly 100 percent redundant, and our 

experience shows that exposure drives efficiency and thoughtful 

cultural change that produces better outcomes. 

One of our challenges in creating meaningful information was 

the lack of common performance measures that would allow for 

comparison. Data must be patient centered and understandable in 

order to force providers to change and to better inform patients, 

and in Wisconsin we believe we have fixed that problem. Now it 

is time to address the same issues nationally. Without meaningful 

information, patients cannot make informed decisions. People make 

purchasing decisions for everything from banking to refrigerators 

based on cost and quality but that is not how it currently works 

in health care as we discussed today. They don’t have access to 

useful and reliable information and we think that can be attained. 

If prospective patients knew how many medication errors a hospital made, for example, they might change where they go, and 

with meaningful information on health care cost and quality, patients would vote with their feet. Choosing providers that deliver 

the best value as insurance deductibles and coinsurance increase 

will be the case in the future. A patient’s vote is more and more 

important. 

In Wisconsin, we report on a full range of costs of care. The most 

meaningful cost data is fully loaded or all in the cost of a procedure 

or health service. Wisconsin has provided this on a retrospective 

basis with aggregate results by provider, institution or group. Interestingly, when we match the cost to outcomes, we see that poorquality care costs more than high-quality care. To break the cycle 

of waste and inefficiency, we must set the stage to provide meaningful information about a patient’s expected costs. 

Our experience securing support for price and transparency legislation in Wisconsin underscores this is not a simple process. It is 

going to take a lot of work. We stand ready to serve and help in 

any way we can. Thank you. 

[The prepared statement of Mr. Rugland follows:] 


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THEDA 

Mr. Walter Rugland 

Chairman of the Board 

ThedaCare, Inc. 

Appleton, Wisconsin 

Invited Testimony 

BEFORE THE U.S. HOUSE OF REPRESENTATIVES 

Committee on Energy and Commerce 

Subcommittee on Health 

May 8, 2010 

Washington, DC 

Walter Rug/and, Cltairman oftlte Board, TltedaCare, Inc. Appleton, Wisconsin; Page 1 
76 


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Good morning. My name is Walter Rugland. I am the non-executive volunteer 

chairman of the board at ThedaCare, a four-hospital, community-owned health 

system in Congressmen Kagen's and Petri's districts in Wisconsin. Prior to 

retirement, I served as executive vice president of Thrivent Financial for 

Lutherans, one of America's largest non-stock life insurers. Before that, I practiced 

nearly 25 years as a consulting actuary with Milliman. I bring that career expertise 

into play in my testimony here today. 

ThedaCare has long been a proponent of greater transparency (I like to call it 

meaningful patient-focused information) on the cost and quality of health care. We 

were one of the first healthcare systems in Wisconsin to publish data regarding 

costs and quality more than 10 years ago. While not perfect, it was the best 

publicly-available data at the time. 

ThedaCare became the founding member of the Wisconsin Collaborative for 

Healthcare Quality in 2003. The Wisconsin Collaborative for Healthcare Quality is 

a voluntary consortium of Wisconsin healthcare providers who publicly report 

performance data. ThedaCare also was a founding member of the Wisconsin 

Health Information Organization in 2006. The Wisconsin Health Information 

Organization is a statewide organization that is developing an all-claims, all-payers 

warehouse of health care data that will allow us to understand the cost and quality 

of care over an entire episode of care that may span several care settings -

physician office, hospitals, rehabilitation, etc. 

This commitment to transparency is driven by our strong belief that we must 

change to sustain our obligation to care for our community. We believe that change 

requires us to measure our performance in order to reduce our costs. Interestingly, 

when we thoughtfully changed to reduce our costs, our quality outcomes improved 

as well. Our commitment to tracking and reporting meaningful information meant 

people inside and outside our organization knew how well we were doing and 

where we needed improvement. In short, sharing our data held us accountable. 

Six years ago, we shifted to a mindset of improving something, somewhere, every 

day. It became catching and today our culture thrives on it. Our focus centers on 

the patient outcome, not the system outcome. The goal of a sustainable healthcare 

operation must be to reduce patient costs over time and foster a healthy 

community. 

Walter Rugland, Chairman of tI,e Board, ThedaCare, Inc. Appleton, Wisconsin; Page 2 
77 


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Let me provide some recent examples of what we've been able to accomplish. We 

developed a new model at our primary care clinics to complete blood draws, 

diagnostics, and care planning within one visit. Patient dollar cost decreased and 

results improved. 

We used a similar approach to revolutionize our hospital care. Using a new model, 

we have eliminated errors during admission medication reconciliation, reduced our 

average length of hospital stay, and reduced overall costs by more than $2,000 per 

case, compared to our traditional inpatient units. 

These and other continuous improvement efforts have earned us national 

recognition. We believe our success demonstrates the benefits of meaningful 

transparency. 

In truth, exposure drives improvement. In Wisconsin, the exposure of cost and 

patient outcomes has played a key role in moving healthcare toward better patient 

value. It is one of the reasons the Agency for Healthcare Research and Quality now 

ranks Wisconsin as #1 in the nation for quality. Next week, Carolyn Clancy from 

AHRQ will visit our state to see this firsthand. 

We believe health providers need to move toward transparency. We cannot 

continue to accept the myth that prices don't vary between providers, facilities or 

regions. Many who study healthcare costs report that costs are nearly 100 percent 

redundant. Our experience shows that exposure drives efficiency and thoughtful 

cultural change that produces better outcomes. 

One of our challenges in creating meaningful information was the lack of common 

performance measures that would allow for comparison. Data must be patient 

centered and understandable in order to force providers to change, and to better 

inform patients. In Wisconsin, we believe we have fixed that problem. Now, it's 

time to address the same issues nationally. 

Without meaningful information, patients cannot make informed decisions. People 

make purchasing decisions for everything from banking to refrigerators based on 

cost and quality information. But that's not how it currently works in healthcare. 

Patients typically don't have access to useful and reliable information on the price 

and outcome of the healthcare services they anticipate. Transparent data helps 

provide that information. 

Walter Rug/and, Chairman of the Board, ThedaCare, Inc. Appleton, Wisconsin; Page 3 
78 


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If prospective patients knew how many medication errors a hospital made, for 

example, they might change where they get care. With meaningful information on 

healthcare cost and quality, patients would vote with their feet, choosing providers 

that deliver the best value. As insurance deductibles and co-insurance increase, the 

patient's vote is more and more important. 

The Midwest Business Group on Health identified three ways health pian 

purchasers may unknowingly promote poor quality: 

• Making purchasing decisions based on price without also examining 

plan and provider performance; 

• Focusing on transaction-based (rather than outcomes-based) payment 

structures that discourage overall quality improvement and promote 

waste; 

• Missing opportunities to engage the consumer (employees and 

beneficiaries) on quality and cost issues. 

In Wisconsin, we report a full range of costs of care. The most meaningful cost 

data for patients is the "fully loaded" or "all in" cost of a procedure or health 

service. Wisconsin has provided this on a retrospective basis with aggregate results 

by provider institution or group. 

Interestingly, when we match the cost to outcomes, we have seen that poor quality 

care costs more than high quality care. To break this cycle of waste and 

inefficiency, we must set the stage to provide meaningful information about a 

patient's expected costs. 

In the Wisconsin Collaborative for Healthcare Quality and the Wisconsin Health 

Information Organization, we have experienced firsthand the challenges and the 

value of developing and publicly reporting useful and meaningful information on 

cost, along with resulting outcomes and patient value. 

Our experience securing support for price and transparency legislation in 

Wisconsin underscores this is not a simple process. The legislative journey in 

Wisconsin included a number of hurdles and barriers. We see similar challenges 

with a federal law being proposed. 

Walter Rugland, Cllairman oflile Board, TlledaCare, Inc. Appleton, Wisconsin; Page 4 
79 


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For instance, we grappled with questions like these: 

• What is the definition of price? Is it billed charges or billed charges 

with the average negotiated discount applied? 

• Does the billed price for the same procedure at two different health 

providers include the same items? 

• How do we incorporate quality and outcomes in the formula? Cost 

data by itself is dangerous. 

• How do providers disclose prices and comply with the confidentiality 

provisions of their contracts with third party payers, and adhere to 

anti-trust laws? 

• How do consumers find out the "all in" price of care versus having to 

search several sources to obtain separately the price and quality 

information on the physician services, the hospital services, the 

pharmacy - all the components of the care they receive over the entire 

episode of care? 

We stand ready to work with HHS to bring meaningful information on costs to 

patients and providers. The government is an important partner, well positioned to 

reduce existing barriers and foster the free flow of transparent healthcare 

information. We believe our learning can help craft legislation that puts actionable 

information about costs and quality into the hands of patients and plan purchasers 

so they can make more informed health care decisions. 

We know that healthcare providers use cost information to further drive quality 

and cost improvements within their own organizations. We believe the overall 

result of transparency legislation will improve the value of health care to the 

patient. 

Don't let perfection be a barrier to progress. Improve upon what we have in 

Wisconsin. Keep working to make it better. 

We invite you to visit ThedaCare to see firsthand what we are talking about and 

what we are doing. We also encourage you to contact other leaders in Wisconsin 

healthcare transparency. 

Thank you, Mr. Chairman and members of the committee. I will be happy to 

respond to any questions you might have for me today. 

Walter Rugland, Chairman of the Board, ThedaCare, Inc. Appleton, Wisconsin; Page 5 
80 

Mr. PALLONE. Thank you, Mr. Rugland. 

Mr. Gardiner. 

STATEMENT OF TERRY GARDINER 

Mr. GARDINER. Thank you, Mr. Chairman, and thank you for the 

invitation to be here. My name is Terry Gardiner. I am the national policy director for the Small Business Majority, which advocates on behalf of the interests of millions of small businesses in 

our country. My own personal background is, I have been a small 

businessman all my life both starting out as a self-employed commercial fisherman in Alaska and then a startup company and trying to provide insurance, and fortunately my company was able to 

grow so we had the beneficial experience of being self-insured, but 

I really sympathize with all those companies that never get that 

big, and I want to speak to why small business cares about this 

issue. 

First of all, there are 22 million self-employed entrepreneurs in 

this country. They are basically in the very same boat as individuals and consumers that we all talk about except that they actually 

have to go buy their insurance in the individual market and try to 

navigate and make all these decisions about whether it is buying 

their insurance policy or navigating for them and their family the 

health care system. So we need to remember, there are 22 million 

self-employed that these issues apply to. 

And then when we move up into the 6 million small businesses 

between one and 100 employees, the vast majority of them, 80 percent of them, have under 10 employees. You don’t have an HR director or a CFO researching all these benefits, negotiating insurance, and at the same time when you are in a small business, your 

employees come to work. They are working, that is their job and 

they put everything into their job and they get their insurance 

through you. You are paying on average 75 percent as employer, 

they are paying 25 percent, and they come to you for help trying 

to figure out what is going on, how does the system work, why 

wasn’t this reimbursed, what should they do. They turn to you. A 

lot of these are family and friends. They are people you know. It 

is not like you are in a big organization where you don’t know people and you don’t know their problems. So this is all very real for 

the small business out there and we have got 43 million people 

working at those small businesses between one and 100 combined 

with the 22 million self-employed, so this is a big problem. 

I think from a business owner’s standpoint, I think my own in 

the seafood industry, it is hard to understand why this would be 

so burdensome. I think everybody would like to have a monopoly 

and that is great, but most people in business function in a competitive world. In the seafood world, we as processors would buy 

seafood from small business owners, fisherman, and that is a very 

transparent price. You can go on the Internet and find out what 

the fish are selling. A lot of the fish is sold on auction and some 

of it is not, it is by negotiation, but that information you could go 

on the Internet and find all over the world what fisherman are selling prices their fish as small business owners to processors. At the 

same time, there are wholesale auctions and there is pricing inforVerDate Mar 15 2010 05:51 Jan 19, 2013 Jkt 076574 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 E:\HR\OC\A574.XXX A574

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81 

mation about that, and the world doesn’t come to an end, and if 

they need to, I guess there would be an antitrust investigation. 

But the world goes on, and in our own industry we would have 

to make reports on wholesale prices and all of this to government 

entities. You see this in agriculture. And it works fine. It creates 

a competitive dynamic market. Individually, people as business 

owners like to not have to do more reporting on pricing and all of 

that but it is not going to come to an end. It actually makes for 

a healthy market, and it is fundamentally, this is what health care 

is all about from a small business point of view. It is about the 

cost. That is what is killing small business, and we see the health 

insurance exchanges as a great reform going forward but we need 

to combine this with this transparency of pricing if we really want 

to have these exchanges the 50 States are going to set up. Combine 

these and you are really going to create a marketplace, and I think 

that is going to give all of these millions of small businesses an 

ability which maybe now some governments, some very large organizations can negotiate, they can research, they can get pricing information but the millions of small businesses and tens of millions 

of employees that work for them and count on them don’t have 

these advantages, and this would help create a more equal playing 

field for the small businesses. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Gardiner follows:] 


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Testimony 

Terry Gardiner 

House Committee on Energy and Commerce 

Subcommittee on Health 

Thursday, May 6th, 2010 

Transparency in the health care marketplace 

H.R. 4700, The Transparency In All Health Care Pricing Act Of 2010; H.R. 2249, The 

Health Care Price Transparency Promotion Act Of 2009; And H.R. 4803, The Patients' 

Right To Know Act 

Chairman Pallone, Ranking Member Deal, Members of the Committee, Congressman Dr. Kagen, 

thank you for inviting me to testify today on the importance of transparency in the health care 

marketplace. 

My name is Terry Gardiner and I am the National Policy Director for Small Business Majority. 

Small Business Majority was founded by small business owners to present an impartial view of 

the issues that have the greatest impact on small businesses. Our recent focus has been finding a 

solution to the skyrocketing health insurance bills small firms have been facing over the past 

several years. In addition, we're working on strategies to promote entrepreneurship, improving 

access to capital and small business growth. 

Our surveys of small business owners have consistently found the No.1 problem facing small 

businesses is the cost of health care. Small business health insurance premiums have risen 113% 

over the last 9 years. This is an unsustainable trend both for small businesses and their 

employees. 

What is clear is that we must address the underlying inflation that is driving the cost of 

healthcare premiums up and up. As business owners a logical place to start is by making sure 

the prices of health care products and service are transparent for both employers, who on average 

pay 75% of the cost of insurance and employees, who on average pay 25% of the cost of health 

insurance. 

As business owners we function in a competitive world of where prices are known. In my 

particular industry, seafood, many products are sold on auctions around the world. These prices 

are reported daily, many times by government reports. The prices paid to fishermen are 

published as well as the wholesale market prices the seafood processors sell for. 

As a business if we buy a vehicle, an airline ticket, fuel or borrow money we can easily find the 

price. We can compare prices and ensure we are getting a fair deal. The same goes for 

consumers when they shop for a car, a house or a home mortgage. Consumers can even compare 

products on independent websites on the cost and quality of many products. This creates a 

competitive and dynamic market place for both businesses and consumers. 
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But as a small business owner you can not do that for healthcare. The only thing we can learn is 

how much our insurance premium is going up each year. The employees who must pay their 

share of the insurance premium are in the dark also. Without any infonnation on the cost of 

healthcare how can a business ovmer negotiate his healthcare costs? Small business owners are 

at the mercy of insurance brokers where they find few choices and little justification of annual 

rate increases. 

Even worse off are the 22 million self-employed entrepreneurs that must buy their insurance in 

the individual market. They have even less information and resources to negotiate a fair price. 

The self-employed pay the highest cost of health care. 

The largest employers, the federal government and those who self-insure can demand - and getaccess to some cost and price data needed to make good, infonned decisions and negotiate for 

the best possible coverage and cost. This is one-reason large employers, the federal government 

and the self-insured have lower prices of health care coverage than small businesses. 

Thanks to the proliferation of technology, more data is available to more people than ever before. 

But, this technology still hasn't penetrated health care. An important first step to controlling 

healthcare inflation is establishing transparency in health care pricing. With price transparency, 

we can have a free and competitive healthcare market. Businesses and employees who both pay 

the costs of health care can begin to pushback when they know the source of prices increases of 

all products and services. 

Thank you for recognizing the need for transparency in the health care marketplace for small 

businesses and entrepreneurs. I hope this hearing is only a start, and that you will continue to 

work for a transparent health care marketplace so that healthcare is affordable for small business 

owners and their employees. Entrepreneurs need a sustainable healthcare system so they can 

continue to start businesses, grow their business and create the jobs that our citizens rely on. 
84 

Mr. PALLONE. Thank you, Mr. Gardiner. 

That bell indicates we have three votes but we are going to hear 

from Mr. Holden and then we will break for the votes and then we 

will come back and ask questions, so we are going to ask you to 

stay obviously. I mean, it could take about, I don’t know, half an 

hour or even an hour for the three votes but we need to stay. 

Mr. Holden, you are next. Thank you. 

STATEMENT OF CHRISTOPHER HOLDEN 

Mr. HOLDEN. Thank you, Chairman Pallone, Ranking Member 

Shimkus and other members of the committee. I appreciate the opportunity to be with you here today. I am Chris Holden. I am the 

CEO of AmSurg, headquartered in Nashville, Tennessee. AmSurg 

is a corporate partner supporting 203 ambulatory surgery centers 

located in 33 States and the District of Columbia. AmSurg is a 

leading operator, distinguished as having the largest number of 

ACSs in the sector. 

Over 1.2 million procedures were performed in our centers last 

year. Approximately 10 to 15 percent of all colon cancer screening 

colonoscopies were performed in our centers as well as 3 to 5 percent of all cataract procedures performed in the United States last 

year. 

I am here today in my capacity as a board member of the ASC 

Advocacy Committee, which is the voice of the ASC sector representing the ASC Association, State associations and leading ASC 

operations. We are privileged to be asked to provide this testimony 

and appreciate the opportunity to engage in the process. 

I just want to begin by saying that ASCs have long recognized 

the gap in effective communication of transparency. As a group, we 

have supported H.R. 2049, the Ambulatory Access Act, which called 

for provisions very similar to those in H.R. 4803. H.R. 2049 specifically called for apples-to-apples comparisons of ASCs and HO, or 

hospital outpatient, department quality and coinsurance information. We have encouraged CMS to introduce quality transparency 

requirements and we have educated our physicians about those 

same requirements. We have developed our own voluntary reporting system, and today 20 percent of ASCs voluntarily report their 

data to the ASC quality collaborative using the six measures endorsed by the National Quality Forum, and that data is available 

online at ASCquality.org. 

Why do we support transparency? We believe that policymakers 

should be asking the question of why 50 to 60 percent of procedures are performed in the most expensive setting today. If properly executed, we believe transparency will accelerate migration to 

high-quality, lower-priced modalities of care. If, for example, half of 

the Medicare cases currently performed in the hospital outpatient 

department setting migrated to ASCs, Medicare would save over 

$10 billion over 5 years. Why? Because Medicare pays 42 percent 

less when procedures in freestanding ASCs. 

We also believe transparency will tap low-hanging opportunities 

to improve our system. Using ASCs as an example, increased 

transparency will shine the light on the underutilized potential of 

lower priced, higher quality modalities of care. 


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ASCs, for those of you who are not familiar, provide surgical and 

preventive surgical services with no overnight stay. The modality 

is only 40 years old and it has rapidly expanded over the last 25 

years. The primary drivers have been the migration again from 

high cost to low cost and the increased use of preventative care 

services available through ASCs. 

By way of background, in the early 1980s less than 1 percent of 

all surgeries were performed in ASCs. Today, 35 to 40 percent and 

25 million procedures are performed in freestanding ASCs. And you 

may also be interested to know that colon cancer mortality has declined over 40 percent since the mid-1980s directly correlated with 

proliferation of ASCs. With over 5,200 ASCs providing vital access 

to care across this Nation, ASCs are now an integral part of our 

health care system, and you should know that national providers 

like AmSurg are the exception and not the rule. The sector is relatively new and highly fragmented with 60 to 65 percent of ASCs 

classified as unaffiliated small businesses with no corporate or hospital partner, and today only 20 percent have some type of hospital 

partner. 

That said, other nations are still looking to our model and seeking operators like me to give them advice on how to possibly duplicate the ASC model in their countries as a means to expand access, 

improve quality and control costs. 

So where does transparency fit in? Despite the unprecedented 

migration and growth of the service, today over 40 to 50 percent 

of all outpatient surgical procedures are done in more expensive 

modalities and there has been no appreciable change in outpatient 

surgery market share between hospitals and ASCs in the last 3 

years. So why the slowing in migration? We believe lack of transparency is a contributing factor. 

As we move forward with transparency, we think we should 

highlight three things. Number one, that the out-of-pocket expense 

is considerably higher, especially for Medicare patients, treated in 

the hospital outpatient department setting versus the freestanding 

ASC. The difference can be one and a half to three times greater. 

A cataract procedure, for example, costs the patient $300 more out 

of pocket versus the two modalities. Secondly, the Medicare program itself pays 42 percent more for the treatment of patients in 

the HOPD setting. And three, patients today, as has been mentioned over and over, have a difficult time making any judgment 

on what are the quality standards in one modality versus the next 

or from one center to the next. 

As part of our next steps as a group, the ASC Advocacy Committee is supporting the Patients’ Right to Know Act, H.R. 4803, 

and—— 

Mr. PALLONE. Mr. Holden, I don’t know if you are almost done 

but—you are? 

Mr. HOLDEN. I am. 

Mr. PALLONE. Because you are almost a minute over. 

Mr. HOLDEN. With that, I will just end and say thank you again 

for this opportunity. Thanks for the cue. 

[The prepared statement of Mr. Holden follows:] 


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Good morning Chairman Pallone and Ranking Member Shimkus. I am Chris Holden, President 

and CEO of AmSurg and Member of the Ambulatory Surgery Center Advocacy Committee 

(ASCAC) Board. AmSurg operates 200 ASCs in 33 states. I speak today on behalf of the ASC 

Advocacy Committee, the voice for the ASC industry and comprised of leading ASC operators, 

state associations and the ASC Association working on behalf of the industry to raise awareness 

about the important role ASCs play within the health care system and community. 

Ambulatory Surgery Centers (ASCs) are health care facilitates that specialize in providing 

essential surgical and preventative services in an outpatient setting. With approximately 5,300 

facilities across all 50 states, ASCs perform more than 25 million surgeries and procedures a 

year, which constitute about 35-40 percent of all outpatient surgeries. We have become a 

major component of the health care continuum and an essential point of access for important 

preventive benefits such as colonoscopies to detect colon cancer and cataract surgeries to 

repair eye sight. We are dedicated to providing high quality care to our patients at an 

affordable cost to them as well as private and public payors. 

Despite our significant presence in the outpatient surgery sector, there is very little information 

available to patients about the relative price of services offered by the different types of 

providers in their community. Medicare and most insurers post information about the price 

paid by Medicare or the beneficiaries' out-of-pocket liability in the traditional silos of facility 

type rather than presenting information across settings. As a result, there is very little 

awareness of the significant savings available when patients to choose to have their surgical 

service performed in the ASC setting. Under Medicare, there is a 42 percent difference in 

payment for a service performed in the hospital and the same service performed in the ASC 

setting. Medicare always saves money when patients choose an ASC for their outpatient 

surgery. 

We believe that patients and their physicians can make the most informed decisions based on 

their clinical needs. That decision-making can be greatly enhanced if patients and providers can 

compare their options on the basis of price and quality. For this reason, the Ambulatory 

Surgery Center Advocacy Committee announced our support for the Barton-Stupak legislation, 

"The Patients' Right to Know Act" (H.R. 4803). The "Patients' Right to Know Act" is especially 

timely: the recent health reform legislation instructed the Secretary to report on quality 

measures and a system for linking payment to quality for the ASC setting by 2011. The program 

she develops for rewarding high quality and low cost should enable the Medicare program, 

patients, and physicians to make comparisons among all providers of surgical services--within 
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settings and across settings. Establishing the goal of transparency now will provide important 

direction for pay for performance programs in ASCs. 

We believe this bill will empower patients with critical information in order to make more 

informed decisions on where to receive their care. In particular, it will provide consumers with 

information on the quality and price of services paid by private insurers, Medicaid and 

Medicare at hospitals and ambulatory surgery centers (ASCs). Providing this information will 

enable patients and their physicians to choose the highest quality, lowest cost setting 

appropriate for their care. For example, a patient contemplating cataract removal should be 

provided information on hospitals and ASCs in their area - health outcomes, patient 

satisfaction beneficiary cost-sharing and reimbursement to those facilities in an easy to 

understand manner. 

Understanding Differences in Payor Mix 

ASCs are licensed to treat patients who can receive care and return home on the same day of 

their surgery. Presenting information on the payor mix of services across settings requires an 

understanding of the types of services offered in each setting as well as payment and other 

policies. 

Types of cases performed in ASCs 

In 2007, forty-six percent of Medicare payments to ASCs were for eye procedures, primarily 

cataract removal/lens insertion (40 percent). Colonoscopy and upper GI procedures accounted 

for 25 percent of Medicare ASC payments in 2007. Cataract removal and colonoscopies, two 

services essential to the Medicare population, accounted for 57 percent of total Medicare 

payments to ASCs. Eye procedures are simply less common in the non-Medicare population, 

making the ASC payor mix more heavily weighted toward Medicare than the hospital setting. 

On the other hand, colorectal cancer screening guidelines call for testing to begin at age 50, 

meaning that centers focused on GI procedures will have a lower percentage of Medicare cases 

and higher percentage of private insurance. Colorectal cancer screenings remain underutilized 

in the Medicaid and indigent care populations, although we have made huge strides over the 

past decade to expand access to CRC screening. We are optimistic that a provision in the health 

reform legislation to waive the coinsurance for CRC screening will improve access to and 

utilization of recommended services. 

Payment policies that affect site of service 
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In addition to differences in the types of services performed in ASCs and hospitals, payment and 

tax policy also has a strong influence on the types of patients treated in each setting. In the 

hospital setting, several important policies expand hospitals ability to care for the un- and 

under-insured. For example, 

• Not-for-profit hospitals are obligated to provide a charitable benefit to maintain their 

tax-exempt status. Some experts suggest that the value of tax-exempt status is worth 

$20 billion to the hospital industry.l 

• Medicare and Medicaid Disproportionate Share Hospital (DSH) Payments were originally 

intended to compensate hospitals for the higher operating costs they incur in treating a 

large share of low-income patients. More recently, many policymakers present DSH 

funds as a mechanism to preserve access to care for Medicare and low-income 

populations by financially assisting the hospitals they use. The federal Medicaid DSH 

allotment for 2009 was approximately $11 billion. Medicare DSH Payments are 

projected to be $9.8 billion.2 

• Medicare pays hospitals for a portion of their Medicare bad debt. As the only provider 

receiving bad debt payments, hospitals are partially shielded by federal subsidy when 

the facility is unable to collect the beneficiaries' coinsurance. 

Each of these adjustments has a sound basis in Medicare policy; however, there are no 

companion policies to encourage other providers to subsidize the uninsured. While the 

hospital industry is primarily tax-exempt, most ASCs are for profit entities that pay federal, 

state, and local taxes. In addition, ASC owners pay taxes on their revenue from the facility as 

well. In some areas, states levy a tax on ASCs to pay for uncompensated care delivered in 

hospital settings. 

Empowering patients with information on the price and quality of services will supplement the 

expanded coverage of the uninsured and help patients and payors stretch limited financial 

resources most efficiently. 

Providing Meaningful Price Comparisons 

Today more than ever, Americans are facing higher coinsurance or are covered under highdeductible health plans that expose them to significant out-of-pocket costs before coverage 

kicks in. Even in Medicare, out-of-pocket obligations are considerable. As a result, price has 

1 NANCY M. KANE, TAKING THE PULSE OF CHARITABLE CARE AND COMMUNITY BENEFIT AT NONPROFIT 

HOSPITALS, STATEMENT TO THE U.S. SEN. COMM. ON FINANCE 2 (Sept. 13,2006) (estimating value of exemption 

from all sources as approaching $20 billion per year) 

2 http://www.nhpf.org/library/the-basics/Basics DSH 06-1S-09.pdf. accessed OS/03/2010. 
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been an important determinant to of whether patients seek important preventive services like 

screenings colonoscopies. We applaud the Congress for acting to eliminate patients' liability for 

services recommended by the us Preventive Services Task Force. In the outpatient surgery 

setting, this should be a tremendous benefit to increase the use of screening services for colon 

cancer that have been proven to be cost-effective measures to prevent colon cancer and 

reduce mortality. Despite tremendous strides in increasing screenings, there are still millions of 

Americans who are not receiving recommended screening services. 

Providing meaningful information that allows patients to compare the price of services and 

their out-of-pocket liability should also allow patients to select the least costly setting 

appropriate to their clinical needs in consultation with their physician. Because many 

outpatient surgeries can be performed in hospitals and ASCs, it is critical to provide patients 

with meaningful price comparisons across settings. 

Under Medicare, there is a 42 percent difference in payment for a service performed in the 

hospital and the same service performed in the ASC setting. Medicare always saves money 

when patients choose an ASC for their outpatient surgery. Beneficiaries can save even more. 

This year, a patient needing cataract surgery would face an average difference in copayment of 

61%. When the service is performed in the ASC, the beneficiary would be liable for $196; 

however, the patient would owe $496 if the same service were instead provided in the hospital 

outpatient department. Building an awareness of this among the Medicare population and the 

physicians who refer patients can help the Medicare program leverage the buying power of its 

beneficiaries. 

Comparison of 2010 ASC and HOPD beneficiary copayments 

HCPCS Description ASCCopay HOPDCapay Difference 

66984 Cataract surg w!iol, 1 stage $192.49 $495.96 61% 

43239 Upper gi endoscopy, biopsy $73.89 $143.38 48% 

45378 Diagnostic colonoscopy $76.05 $186.06 59% 

45380 Colonoscopy and biopsy $76.05 $186.06 59% 

45385 Lesion removal colonoscopy $76.05 $186.06 59% 

66821 After cataract laser surgery $46.81 $104.31 55% 

64483 Inj foramen epidurall/s $59.20 $97.09 39% 

66982 Cataract surgery, complex $192.49 $495.96 61% 

45384 Lesion remove colonoscopy $76.05 $186.06 59% 

29881 Knee arthroscopy $209.92 $403.36 48% 

63650 Implant neuroelectrodes $699.19 $885.85 21% 

29827 Arthroscop rotator cuff repr $327.64 $804.74 59% 

It is also important to present consumers the payment rates for procedures at the facility level. 

In Medicare, many components of the payment system adjust hospital and ASC payments 
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based on their geography (the wage index) or based on hospital-specific characteristics 

(outpatient hold harmless rates, cost-based payment, and other add-on payments). The wage 

index alone produces significant differences in the price of services at an ASC and HOPD within 

the same metropolitan statistical area as shown below. 

Payment for arthroscopic procedure in selected markets (29828) 

Payment Ratia af ASC:HOPD 

Geographic Area OPPS ASC Payment 

Wheeling WV-OH (OH providers) $2,987 $1,625 54% 

Connecticut $3,719 $2,041 55% 

Wilmington, DE-MD-NJ (NJ providers) $3,543 $1,891 53% 

Pine Co., MN* $3,294 $1,847 56% 

* Reflects application af out-commuting adjustment of 0.0812 to rural MN index 

Values reflect final FV2010 IPPS wage index and proposed ASC CV 2010 wage index values 

If just half of the patients who sought surgical services in the hospital last year had instead gone 

to an ASC, the Medicare program would save Medicare about $2 billion a year and the 

beneficiaries hundreds of millions of dollars in lower copayments. 3 The transparency provided 

in your bill can generate even more savings for patients, Medicare and Medicaid as patients are 

empowered to select providers on the basis of price and quality. 

Providing Meaningful information on Quality 

In addition, ASCs welcome greater transparency on quality metrics. More than 20 percent of 

ASCs are voluntarily reporting results on ASC quality measures endorsed by the national Quality 

Forum (NQF) while our industry continues to urge the Centers for Medicare and Medicaid 

Services to implement a system for nationwide quality measurement. In addition, our patient 

satisfaction rates are better than 90 percent. An apples-to-apples comparison of ASCs to 

hospitals for similar procedures will provide critical transparency and encourage individual 

hospitals and ASCs to continue to improve their health outcomes. 

CMS has the current authority to require ASC quality reporting but has not utilized it, and our 

industry has repeatedly encouraged CMS to implement a mechanism for ASC quality reporting. 

In addition, current law does not require CMS to collect and share comparable quality 

information from ASCs and HOP Os, diminishing the utility of having data from each setting. The 

3 ASC Association analysis of comparing the ASC and HOPD cost of half of the procedures performed in the HOPD in 

2008 which are eligible for payment in the ASC. 
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ASC industry supports H.R. 2049, the Ambulatory Surgery Center Access Act, which includes a 

provision similar to the requirements of H.R. 4803. The ASC Access Act would require CMS to 

present side-by-side comparisons of ASC and HOPD quality and beneficiary coinsurance in each 

geographic area. Like the ASC Access Act, the Patients' Right to Know Act will help facilitate 

meaningful comparisons of facility quality by requiring ASCs and hospitals to report similar 

information where appropriate. 

Although CMS has not implemented quality reporting for ASCs, our industry has come together 

behind an initiative to develop quality measures and collect performance on those measures 

from centers across the country. Today, approximately 20 percent of the industry voluntarily 

submits quality data to the ASC Quality Collaboration on the 6 measures endorsed by the 

National Quality Forum for ASCs. 

ASC Quality Measures Endorsed by the National Quality Forum 

Measure 

Patient Fall in the ASC 

Patient Burn 

Hospital Transfer/Admission 

Wrong Site, Side, Patient, 

Procedure, Implant 

Prophylactic IV Antibiotic 

Timing 

Appropriate Surgical Site Hair 

Removal 

Description 

The frequency of ASC admissions experiencing a fall while in the confines of an ASC 

The frequency of ASC admissions experiencing a burn, regardless of severity, while 

in the care of an ASC 

The frequency of ASC admissions experiencing a transfer or admission to a hospital 

upon discharge from an ASC 

The frequency of ASC admissions experiencing a wrong site, wrong side, wrong 

patient, wrong procedure or wrong implant event while in the care of an ASC 

ASC admissions having an order for an antibiotic to help prevent surgical wound 

infection that received the antibiotic in the appropriate timeframe 

The percentage of ASC admissions that had body hair removed with electric 

clippers or hair removal cream 

As you move forward, we want to work with you to ensure that the pricing information 

disclosed is accurate presents the most meaningful comparison for consumer choice. We look 

forward to working with you to advance this bipartisan legislation that empowers patients and 

the providers who care for them. 
92 

Mr. PALLONE. I apologize. 

I think there is only 6 minutes left, so I think we are going to 

break here. I don’t know, it could be half an hour, an hour probably 

at the most, so maybe the best thing is, if you want to get some 

lunch and come back, or I don’t know if you have enough time. But 

we do want you to stay, obviously, and thank you all for your testimony and we will anticipate the questions. So the subcommittee is 

in recess. 

[Recess.] 

Mr. PALLONE. The hearing is reconvened, and we left off by having all of our witnesses make their opening statements and now we 

will go to questions starting with myself. I will recognize myself for 

5 minutes. 

And I wanted to start with Mr. Cowie because I noted with interest your comment that price transparency in certain instances 

could lead to higher, not lower, prices for services. Many of us have 

long supported price transparency in the belief that this transparency would move the market towards lower prices, for example, 

in the area of prescription drugs, advocating for disclosing not simply the average wholesale price or even the average manufacturing 

price but disclosing what the real price is for the product, net of 

discounts, rebates and other price concessions. So could you explain 

your comment on how in certain markets transparency could lead 

to a price increase as opposed to a price decrease and what specific 

factors in these markets could make that happen and what we 

could do about it all in a minute or less? Do the best you can. 

Mr. COWIE. Chairman, in your initial comments I think you 

made a reference to health care differing from TVs and car buying. 

Let me use the TV industry to illustrate the antitrust point. So big 

TV producers are Samsung, LG and Sony. They sell to big distributors. Those are folks like Walmart, Best Buy, Target, and us consumers looking for competitively priced TVs will comparison shop 

at Walmart, Best Buy, Target. We will use the Internet, and we 

want information and that is healthy. But if transparency is the 

goal, if that is the goal, then what you might recommend is 

Samsung, LG, Sony publicly disclose the pricing they have in details with the big distributions like Walmart, Best Buy and Target. 

Those details are subject of head-to-head negotiations between very 

large and sophisticated players, and in antitrust, we would rather 

have those types of deals remain private, and if we had Internet 

posting or public filing of those pricing terms, that would present 

a risk of collusion. 

Mr. PALLONE. So I am not sure. I mean, I want to get a second 

question. You would advocate that we do that or not do that? 

Mr. COWIE. We would advocate that we not just woodenly require 

disclosure of all pricing terms. We can have—when we shop for 

TVs, we have transparency, we can compare Best Buy to Target, 

we can—— 

Mr. PALLONE. You mean the basic retail price? 

Mr. COWIE. Yes, but when we are talking about the price between the manufacturer and the distributor—— 

Mr. PALLONE. So you don’t want that? 

Mr. COWIE. Correct. 


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Mr. PALLONE. But you would have—you think the retail pricing 

should be transparent but not the larger wholesale deals? That is 

what you are saying? 

Mr. COWIE. Yes. 

Mr. PALLONE. Let me ask Mr. Summer a question. You actually 

commented on this but I wanted you to give us a little more information on how the health care reform legislation recently passed 

took steps towards greater transparency, and I am not suggesting 

that we don’t need to do more. Otherwise we wouldn’t be having 

this hearing today. But just give us what—talk to me about what 

steps the hospitals will be taking to implement the requirements 

under the health reform legislation that would make them more 

transparent and more meaningful to the public. 

Mr. SUMMER. Thank you, Mr. Chairman. I think what we would 

see happening under that bill is more comprehensive information 

available that is right now available in some States and not all 

States, much like I spoke about Colorado, and I think the bill will 

provide opportunities for patients and their families to get access 

to—— 

Mr. PALLONE. Well, let me—I know I keep cutting you off, but 

it requires uniform definitions, description of all covered items and 

services including exceptions, the cost-sharing for benefits, the outof-pocket payment structure, a facts label that has common benefit 

scenarios allowing people to compare coverage and prices for a typical episode, requires charity hospitals to charge uninsured individuals no more than what is generally billed to insured patients for 

the same services. You don’t have a lot of time obviously but just 

some idea how you are going to implement these things, if you 

could. 

Mr. SUMMER. Thank you, Mr. Chairman. I think that what we 

are looking for and what will come out of that is for this information to be available at the State level so that, as you mentioned in 

your remarks, it will provide some standardization of what that information is, some common definitions and then the information related to both the charges and the length of stay will then be available for consumers to look and check, also, I think the patient safety information, the quality information, and I think it is important 

to look at them differently because people can check out quality 

and patient safety information at any time but the pricing information is obviously related to the need for procedure and that will 

vary very much by the individual patient and the severity of their 

illness. 

Mr. PALLONE. Are the hospitals going to have a problem doing 

this? 

Mr. SUMMER. No, sir. In fact, already in over 40 States in the 

country, it is available right now, and you heard two examples 

here, Wisconsin and Colorado. 

Mr. PALLONE. So it is really more a question of uniformity than 

anything else at this point? 

Mr. SUMMER. Yes, sir, it is available and we see no problem with 

making it available and we think that would be a positive step towards transparency. 

Mr. PALLONE. Thank you. 

Mr. Shimkus. 


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Mr. SHIMKUS. Thank you, Mr. Chairman. 

Let me say for the record I think that the recently passed health 

care law is an unmitigated disaster, and we are going to go off the 

cliff. 

Let me move in a direction. Let us talk about transparency. Did 

you know that the transparency provisions only rely to those who 

purchase their health insurance through the new State-based exchanges? Did you know that, Mr. Summer, that the transparency 

provisions in the law only pertain to those who purchase their insurance in the new State-based exchanges? 

Mr. SUMMER. Yes, Congressman. Those apply to health plans. 

What I am talking about, what we are here—— 

Mr. SHIMKUS. Yes, but the question was on the law. The law says 

transparency only for the new exchanges, that there will be transparency for. So that is not my main issue but I just want to counter 

what my colleague was talking about, transparency, that the transparency provisions, why we had this hearing is because we blew 

away transparency provisions. We didn’t address transparency provisions in the law. 

Let me go to Mr. Gardiner real quick. I want to ask about in 

your Alaska fishing days. How many different businesses did you 

have an aggregate cost of over $600 per year with? 

Mr. GARDINER. Well, my last company grew from a startup over 23 years to $125 million in sales. 

Mr. SHIMKUS. So how many businesses—say when you first 

started, you know, if you just had a boat going out to fish, how 

many different, as a small business, self-employed, how many businesses would you deal with aggregate payments to of over $600? 

Mr. GARDINER. Well, the average commercial fisherman like I 

was would have one to six crewmen who legally are self-employed. 

Mr. SHIMKUS. What about gas? What about feeding? 

Mr. GARDINER. Yes, you would buy a lot of stuff, probably—— 

Mr. SHIMKUS. Food? 

Mr. GARDINER. —a third of your expenses, you buy groceries, fuel 

every week. 

Mr. SHIMKUS. Water, petroleum, a lot of different businesses that you would pay at least $600 to annually? 

Mr. GARDINER. That is correct. 

Mr. SHIMKUS. As a small businessman, if you had to file a 1099 

for each transaction, would you feel that that is an additional business obligation? 

Mr. GARDINER. Well, we do as fish processors, we had to file 

every time we purchased fish from a fisherman, you know, 

every—— 

Mr. SHIMKUS. No, I am talking about for the food for your crewmen, for the gasoline you purchased, for the repair of your net. 

Mr. GARDINER. No, we didn’t have to. 

Mr. SHIMKUS. But the point is, you will as a small businessman 

under this law, the health care law. If you have a contractual obligation of over $600, you have to file a 1099. That is why we are 

going to hire 15,000 more IRS agents. 

Mr. Summer, how many—in an individual hospital, how many 

individual contracts are payments out of over $600 does an average 

hospital have in the State of Colorado? 


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Mr. SUMMER. Mr. Chairman, I have no idea. There probably are 

hundreds. 

Mr. SHIMKUS. Given the potential paperwork nightmare this provision could become, would you commit to surveying your members 

to determine this figure? 

Mr. SUMMER. We would certainly be willing to talk to you about 

that but, Mr. Chairman, also—— 

Mr. SHIMKUS. I am just the ranking member. 

Mr. SUMMER. I am sorry, Mr. Ranking Member. 

Mr. SHIMKUS. This is the chairman. 

Mr. SUMMER. Congressman, thank you. The positive side for—— 

Mr. SHIMKUS. What I am asking is, I want—I would like for your 

help to determine all the individual contracts. Here is an example. 

If you cut grass in America and you are a kid and you have $600 

of gas bills to a retail location, you are going to be required to provide that gas station a 1099 under this bill. Now, just multiply that 

by the size of the business, and that is why the projection is 15,000 

more IRS employees. 

Let me move to Medicare and Medicaid real quick. You have 

heard us talk about the chief actuary of CMS and his projections 

that suggest that roughly 15 percent of Part A providers would become unprofitable. Do you have an identification? Do you, first of 

all, agree with that number, and which 15 percent of the hospitals 

of Colorado will basically close because of this new health care law? 

Mr. SUMMER. I have not, Congressman, read that report but I 

think—— 

Mr. SHIMKUS. No, the CMS actuary did. The actuary for the Centers for Medicare and Medicaid Services, it is their projection based 

upon us taking $500 billion out of Medicare. Wouldn’t that be in 

effect, affect the cost of reimbursement to the hospitals in Colorado? 

Mr. SUMMER. Congressman, we are so thrilled that there will be 

32 million more people covered by that plan, that that is really the 

focus of our attention at the moment. 

Mr. SHIMKUS. So you are unconcerned about the $500 billion cut 

in Medicare or the trillion dollars additional in taxation? 

Mr. SUMMER. Congressman, I think the net gain from that legislation is very positive for Colorado. 

Mr. SHIMKUS. Well, you are speaking the policy line and I appreciate that, but I respectfully disagree. 

My time is expired, Mr. Chairman. Thank you. 

Mr. PALLONE. Thank you, Mr. Shimkus. I have to admit that 

when you were asking Mr. Gardiner about fisheries in Alaska, I 

turned around and I thought I was back on my—before I chaired 

the Health Subcommittee, I was the ranking member on Fisheries, 

Wildlife and the Oceans, and I was wondering what was going on 

there for a minute. 

Mr. Braley. 

Mr. BRALEY. Thank you, Mr. Chairman, and with due respect to 

my colleague from Illinois, I would like to point out that section 

2715 of the health care bill that he is referring to specifically applies not just to those plans that are part of the exchange but to 

all group health insurance plans which make up the vast majority 


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of health care that is provided in this country and so the point I 

think was not accurate. 

I would like to start, Mr. Cowie, with you. I know that you spent 

a great deal of your life dealing with antitrust issues. In your statement, you talked about concerns about price fixing and collusion, 

which is always an issue in antitrust cases, but one of the things 

we know about this marketplace is that it differs from many other 

marketplaces that would be considered a free-market environment, 

which is not constrained by other external forces. We all know that 

the 800-pound gorilla in health care payment is Medicare, and we 

know that Medicare controls prices in every jurisdiction in this 

country because we see it from the hospitals and doctors that we 

represent. We also know that most private pay plans are driven 

from some derivative of the Medicare pricing formula from a baseline and then a multiplier. So I don’t understand how giving consumers more information about the cost of health care in that environment is similar to giving people information about TVs and 

other consumer products that they are pricing. Can you explain 

that? 

Mr. COWIE. Congressman Braley, health care sectors is distinguishable because Medicare and Medicaid plays an important role 

but, you know, at the FTC, we wanted to make sure consumers got 

the benefit of vigorous price competition, so competition between 

drug manufacturers, competition between hospital systems, competition between large physician groups remains important in 

health care just like it does in other sectors. Where publication 

pricing can become problematic is if you are dealing with parts of 

the industry where commercial suppliers are negotiating with other 

large commercial suppliers. In many cities in this country, there 

are only two or three hospital systems and those two or three hospital systems are negotiating pricing with Blue Cross, with Aetna 

or CIGNA, and those are big boys negotiating hard, and in general 

in antitrust, our view is if, you know, you are playing poker, you 

shouldn’t have to show your cards. You actually get better outcomes if they are negotiating head to head privately. 

Mr. BRALEY. Well, that may be true but I think you are focusing 

on primarily urban area if you are talking about the potential of 

three competitive systems within a marketplace because in rural 

parts of the country, you may be lucky to have one hospital in your 

community, and one of the other related problems we know, and 

this came out extensively during the health care debate was in 

many States like mine, 80 percent of the private coverage is written by one or two companies, and in that case you have an unnatural negotiating environment because you have got a dominant player that has much more leverage than the people they are negotiating with, and so, Mr. Summer, I would like you to comment on 

that because you represent a vast group of hospitals from large 

urban hospitals to hospitals that are in rural communities and may 

be dependent upon a lot of other facts that are affecting what type 

of services they can provide. Do you believe that more transparency 

in pricing is going to hurt the medical consumers in your State? 

Mr. SUMMER. No, Congressman, I think that the transparency 

that takes place at the State level where they provide the range 

of charges for certain diagnoses that are adjusted do help patients 


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give them some indication of the ranges. However, the real issue 

is what health insurance plan they belong to, and like your question, the answer is, there are places where there are not choices of 

providers. That is where you need to go, and so it gives a range 

of what is available but there is really not a lot of choice on price. 

Mr. BRALEY. Mr. Rugland, I want to talk to you about your statement about the commitment to transparency that you talked about 

in your opening statement: ‘‘Driven by our strong belief, we must 

change to sustain our obligation to care for the community.’’ You 

talked about how quality improved as a related aspect of a commitment to pricing and to transparency in the way you price the services you provide and also emphasizing getting the most efficiency 

into the system. One of the things that was mentioned was a reference to taking $500 billion out of Medicare over the 10-year cost 

that CBO scored this bill and yet many health care economists estimate that each year there is somewhere between $500 and $700 

billion of inefficient or wasted services within the health care delivery system. So I would like you to comment on how becoming more 

efficient and becoming more transparent promotes quality outcomes, promotes efficiency in the system and achieves the goal that 

we all are looking for. 

Mr. RUGLAND. Let me start out by saying it is our view there is 

a trillion dollars a year of waste within the medical system, the 

health care system. Fifty percent of the system is redundant and 

waste. When we started working on the issue of how will we sustain our health care in our community, which was about 7 years 

ago, I like to say it this way, we put a bet on the fact that the 

model was going to need to change. It would not sustain itself as 

it operated, that over time a patient would have more and more 

voice in what their health care decisions were, and in order for us 

to be positioned in order to deal with that, we had to do several 

things. One is there had to be more information available, meaningful information. The first step was to work with the hospitals 

in Wisconsin to gather data on cost and quality, and then we also 

had to go into our own system and change the way we did things 

so that we could redesign the process to remove the waste. 

Now, one of the things we found out was that as we understand 

and had transparency about price and quality, and some of that information is in my written testimony, and we posted it in the hospitals and in the clinics, we got better. We found out that people 

working in health care don’t want to be at the bottom of the rank, 

they want to be good. They are committed passionately to what 

they are working on, and they want to be better, and their response to posting this data was that we got better. So as we moved 

to change our processes, our quality got better and that was what 

I was trying to get at in my testimony. 

Mr. BRALEY. Thank you, and I will yield back. 

Mr. SHIMKUS. Mr. Chairman, can I ask unanimous consent just 

for 1 minute to address this language of law that was raised by— 

to my friend from Iowa, the out-of-pocket cost transparency provision in section 101014 only applies to insurance purchased through 

the exchanges. Section 10104 amends section 1311E of the bill 

which is the exchange section, which is the exact important reason 


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why the Green-Barton bill needs to be addressed because it will address transparency across the board to all insurers. 

Thank you. I yield back. 

Mr. PALLONE. The gentleman from Pennsylvania, Mr. Pitts. 

Mr. PITTS. Thank you, Mr. Chairman. 

Mr. Summer, the health care law we just passed imposes a 2.3 

percent tax on medical devices when they are sold. Are hospital 

purchasers of medical devices? 

Mr. SUMMER. Yes, sir, they do. 

Mr. PITTS. Do you think it is likely or not likely at all that the 

medical-device manufacturers will pass the tax through to the purchaser of the product in the form of increased sales price? 

Mr. SUMMER. Congressman, we are hopeful that does not happen. 

Mr. PITTS. But you think it probably will? 

Mr. SUMMER. I can’t comment on that. 

Mr. PITTS. You can’t? OK. Well, would it be fair to say that the 

tax on medical devices will increase the cost of procedures at your 

hospitals because the cost of medical devices used in those procedures is higher? 

Mr. SUMMER. Congressman, certainly all the components of a 

procedure including the medical devices are factored into the cost 

of what that procedure would cost. 

Mr. PITTS. OK. Dr. Herzlinger, what are the proper roles of the 

government and the private sector in ensuring Americans have access to the information they need to make good decisions? Is there 

any information that if released could lead to collusion and increased costs for consumers? Should the government insist on keeping that kind of information private or pursue other responses? 

Ms. HERZLINGER. Well, the danger of collusion is of course great 

in oligopolistic industries. If there is free entry in the market, if 

Mr. Cowie and I colluded on price, then Mr. Summer, Mr. Rugland, 

Mr. Gardiner could all enter the market and cut our prices. So the 

only circumstance where we could collude effectively is if he and 

I are the only participants in the market. In most of the American 

economy, that is not so. Health care, for example, the health care 

delivery system is hugely fragmented and famous for its fragmentation. We have over 700,000 physicians, over 5,000 hospitals. 

The danger of collusion which may be there in the pharmaceutical 

industry where a pharmaceutical company may hold a patent and 

be a virtual monopoly is not so in the rest of the delivery system. 

And in the rare cases where there has been transparency of prices 

and quality, prices have improved and quality has gone up in 

health care like the rest of the economy. 

Mr. PITTS. What is the full range of information that Americans 

need to make good decisions about their health care? 

Ms. HERZLINGER. They need to know the prices that they are 

going to pay, and the Indian hospitals, which are the hospitals in 

the country of India, are creating themselves to compete with the 

American hospital industry, they quote full prices. So if you were 

to go to India and say I needed open heart surgery, they wouldn’t 

say to you, well, we can’t give you a price. They would give you a 

price and they stick with that price. So clearly you need price information, but that is not enough. You need to know what the quality 


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is as well, and when it comes to insurance, we also need to know 

how good is that insurer in dealing with people like me, do they 

hassle people like me or are they great to people to me, how great 

are they to the doctors that I deal with. That is the kind of information we need. 

Mr. PITTS. And is it preferable for the government to empower 

Americans with good information about the quality and cost of 

their health care or to task government bureaucrats with determining which procedures and treatments are cost effective and 

medically effective? 

Ms. HERZLINGER. I think the models that we have in transparency elsewhere in the economy, for example, in the SEC. The 

SEC has the power to enforce transparency but it has ceded that 

power to professionals, in this case, the accounting profession who 

are not stakeholders and interested in preserving truth. It is solely 

interested in doing a good job of measurement. That is a very good 

model to follow. 

Mr. PITTS. Finally, Mr. Holden, I understand Medicare pays ambulatory surgery centers about 58 percent of the hospital outpatient rate and that beneficiaries can save even more with their 

copays. What are the current obstacles to informing patients and 

other consumers of these potential savings and how would the Patients’ Right to Know Act create a more informed consumer? 

Mr. HOLDEN. The biggest obstacle is lack of a forum, lack of a 

vehicle for the communication. Right now it relies on the communication between the patient and the physician as a general rule, 

and even among physicians those are facts not well known and not 

facts well known in almost any forum in the country. 

Mr. PITTS. My time is up. Thank you, Mr. Chairman. 

Mr. PALLONE. Thank you. 

Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman, and again, I would like 

to thank our panel for their patience. Between votes and everything else, it is sometimes hard to actually get a full hearing in in 

a day, even with one panel. 

Mr. Summer, both Congressman Burgess and I are original cosponsors on the Health Care Price Transparency Act, H.R. 4803. It 

is a State-based approach building on what we have. Could you discuss the different between a State-based price transparency system 

such as your system in Colorado and a system, say, we would 

house at the Health and Human Services here in Washington, or 

HHS? 

Mr. SUMMER. Thank you, Mr. Congressman. 

Congressman, all decisions for health care are local, and the experience has been that a system that is built locally at the State 

level, and there are plenty of models to look at, are much more useful and helpful to patients and their families. So we believe that 

the State-based system which allows the hospitals to put the information in and aggregate it as is being done in almost 41 States 

would provide the better information for the consumers. 

Mr. GREEN. H.R. 3590, the Patient Protection Act, created a system of State-based health insurance exchanges, and do you believe 

setting a federal floor on States that adhere to with regard to price 


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transparency is a logical way to proceed with price transparency 

even though those exchanges will be State based? 

Mr. SUMMER. I am sorry. I couldn’t understand the question, 

Congressman. 

Mr. GREEN. The bill created a system of State-based health insurance exchanges, and is it better, would it be better to have federal, for example, minimum standards which we are going to have 

for those exchanges anyway? That is what current law—but transferring that into transparency, should we have some type of minimum amount of transparency that all States would have using the 

best of the 31 States we have, for example? 

Mr. SUMMER. I think some federal guidelines, some uniform definitions would certainly help for the comparability of that information, yes. 

Mr. GREEN. Of course, I say that because just a few days ago the 

governor of Texas decided he wasn’t going to participate, and I am 

ever so thankful that we put in there that we will have a State exchange in Texas but it will be without State participation because 

obviously our small businesses and folks need it. 

You referenced the need for a study of consumer-friendly pricing 

language or common terms or some sort of agreement among hospital providers on pricing language. Do you have any suggestions 

on the study or implementation using these common terms? It 

seems that universally common pricing language should be regulated or guidance should be issued by HHS so we would know 

across State lines whether it is a State exchange on the type of policy we are purchasing or the information that we are being provided, whether you are in Texas or Louisiana or New York. 

Mr. SUMMER. Congressman, I think very much to your point, I 

think there needs to be some comparability, some standardization 

because borders are very porous when it comes to purchasing 

health care and using health care facilities. There is a distinction 

in our mind with borders but that is not how people buy health 

care and so there would need to be that standardization or some 

comparability between the terms and the information. 

Mr. GREEN. Thank you. 

Mr. Holden, how would the quality reporting requirement in the 

Patients’ Right to Know Act regarding apples-to-apples comparison 

of quality metrics across sites of care create more useful quality information for a patient considering an outpatient surgery at an 

ASC or a hospital, and does the ASC industry have—what are they 

doing now on quality reporting? Because I think we know hospitals 

are having to do it. Are the outpatient surgical centers also doing 

it? 

Mr. HOLDEN. Yes, sir. As I mentioned, we are reporting voluntarily about 20 percent of centers in the United States through the 

ASC quality collaborative posted online at ASCquality.org. In addition, we formed the ASC quality collaborative to pursue this initiative on our own, assuming that there may not be a forum like we 

have here today to discuss it and take it to the next level, so it is 

something that we have been pushing internally. I think the first 

part of your question is, what would it take to—— 


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Mr. GREEN. To create these apples-to-apples comparisons, because consumers need both pricing information but they also need 

to know quality so they can make that informed decision. 

Mr. HOLDEN. Obviously we need, as I think has been mentioned 

several times, the pricing information across modalities, and, you 

know, the NQF data is available today but we need to expand the 

data set. You would need to tailor it to a consumer-friendly, consumer-relevant set of metrics, like if you or I were sitting down trying to decide where do I get a cataract surgery, you would want 

to know—you wouldn’t need that many data points much like, I 

think the example was given on the car. You know, if you had the 

various consumer reports and repair records and things like that, 

in a similar vein you could make those decisions pretty quickly. 

Mr. GREEN. Well, and I know most people and I know in my own 

family if their doctor recommends some type of surgery, they are 

going to particularly go where the doctor suggests, but I think we 

are going to empower a lot more consumers to say if I need a bypass, I can tell you there are lots of facilities in Houston, Texas, 

than can provide bypass surgery, and both having the quality and 

the information there, particularly if they are having to pay, you 

know, their 20 percent copay. We know seniors now are concerned 

because they have to come up with that Medi-gap or that 20 percent on Medicare. A lot of folks, though, below 65, you know, don’t 

do that. So I think the information we would provide by this legislation would help. 

Mr. HOLDEN. There is no forum today, there is no place to go for 

that information across the outpatient platform. The best we could 

think of was doing it amongst ourselves but for it to be correct it 

needs to compare across all modalities, and we don’t have the 

power to make that happen. 

Mr. GREEN. Thank you, Mr. Chairman. I appreciate your patience. 

Mr. PALLONE. Thank you. 

Mr. Burgess. 

Mr. BURGESS. Thank you, Mr. Chairman. I have a particularly 

difficult task because I only have 5 minutes, and although we 

heard from Dr. Kagen on the first panel, there is no doctor on the 

second panel so I feel obligated to be that doctor on the second 

past, so I may ask myself a few questions and respond because I 

think the doctor’s perspective is important to have before the committee. 

I just have to say one thing, too. Atul Gawande, who before he 

became famous for traveling to McAllen, Texas, also did some other 

travels, and I think it was 2004 wrote an article for the New Yorker called The Bell Curve, and I know I have heard Dr. Herzlinger 

speak of issues like this before, but to have the actual report card, 

if you will, on hospitals, on doctors so that consumers, patients can 

make the best choice if they are supposed to have a whatever, knee 

replacement, what have you, that they can then—you know, maybe 

they don’t want necessarily the best price but they want to go to 

the place with the best results for knee surgery. Actually the article on the bell curve that Dr. Gawande wrote was on the treatment, the long-term treatment, the management of cystic fibrosis 

and how the very meticulous management of these patients could 


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actually translate into years added on to the end-of-life expectancy. 

So it is a theoretic point but it also has some practical applications, 

and Mr. Summer and Dr. Herzlinger, I wonder if you could just 

comment on that because that seems to be the direction of what 

we are discussing today. What about the concept of having a report 

card for your hospitals and for physicians? 

Mr. SUMMER. Congressman, I will speak for the hospital side 

only, and I would say we could not agree with you more. In fact, 

that kind of information, we work with the State of Colorado and 

there are over three dozen quality measures available today on our 

web page that you can essentially slice and dice them any way to 

do any kind of comparisons among hospitals and procedures, so we 

fully support that. I think the basis for that is best done at the 

State level but that as you said in combination with the pricing information is important information and so we have moved forward 

and in collaboration with the State of Colorado to put that information and make it available today. 

Mr. BURGESS. Thank you, and of course I know the physician’s 

perspective and some pushback that would come from my community, but Dr. Herzlinger, let me even ask you from someone in the 

business world or perhaps even the patient’s perspective, what 

about those type of models? 

Ms. HERZLINGER. Well, clearly, patients love information. Consumers love information. That is what made Consumer Reports so 

powerful. It was a New York Times or Wall Street Journal article 

yesterday lauding Consumer Reports and other information intermediaries, people like JD Power, who is a real person, Bloomberg, 

those are people that take information that is provided by the government and they translate it and make it useful for consumers 

and they are well rewarded for their efforts. So consumers, when 

you look at surveys of what do they want in health care, one of the 

primary things they want from the government is they want transparency. 

I would like to comment on whether the transparency should be 

State based or federal based. There are many good reasons for 

doing it by State but the Dartmouth atlas shows tremendous variations in the quality of care across States and across institutions. 

It would make sense for somebody who lives in Wisconsin on the 

border of Michigan to be able to have information so that they 

could compare the quality of information of health care, not only 

within their own State but in the growing market. 

Mr. BURGESS. And I don’t mean to interrupt, but I can’t help myself. I have got to ask Mr. Cowie some questions, and I found myself intensely agreeing, intensely disagreeing with you as you gave 

your testimony. In fact, it reminded me of why in my first term I 

submitted an amendment to defund the Federal Trade Commission 

in one of our appropriations bill because of what you were doing 

to physicians and their inability to compete with insurance companies because we were never allowed to negotiate but of course insurance companies could do so freely. They could collude freely on 

price, but if doctors, even if there was a hint or a whiff that we 

were talking to each other, we would be hauled up before your commission, eventually cleared but not before we spent $100,000 or 

$200,000 which we couldn’t afford. 


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But on the issue of not having data up there because it could 

lead to an unfair advantage to a third-party payer, I actually do 

support that notion and I worry that if I put my price for delivering 

a baby up on the Internet that I will give CIGNA, that United and 

Blue Cross will quickly say, hey, look what this guy will do this for 

and they will be right back in with a new contract that reflects 

that lower level, but the real problem is not CIGNA and Blue 

Cross. The big problem is the Centers for Medicare and Medicare 

Services and the sustainable growth rate formula which every insurance company in the country almost pegs to the SGR, and as 

a consequence when we cut doctors’ pay 5 percent, 6 percent, 21 

percent, which we are threatening to do at the end of this month, 

every insurance company out there in the country is salivating and 

rubbing their hands together because now they are going to be able 

to offer new contracts based on that percentage of the SGR formula. So really, shouldn’t the FTC go after CMS with all the vigor 

that it attacked physicians a few years ago? And I know I am out 

of time but I would like to hear a response. 

Mr. COWIE. Congressman, I would need to study that issue and 

get back to you to address it intelligently. 

Mr. BURGESS. I will accept that deferral. It is—it does become— 

you know, this is a very, very complex problem. I didn’t get to question the ambulatory surgery center but we have the whole issue of 

physician-owned hospitals which we have essentially outlawed in 

the health care bill and yet if you want the best bang for your 

buck, if I am uninsured and I need a moderate procedure done, I 

can get that procedure for one-tenth of the cost that I can get it 

in the hospital if I go to an ambulatory surgery center. The doctor’s 

fee is likely to be the same in each facility because it doesn’t matter to them. They are indifferent as to what facility they use, but 

the big cost driver is hospital versus the ambulatory surgery center. Not all facilities are equal, and unfortunately in the construct 

of this bill, we really didn’t delve into why those differences exist 

and what we might do to mitigate them. 

And Mr. Gardiner, I appreciate your comments as well. You 

talked about having a federalized exchange so that there would 

be—you wouldn’t be beholden to State issues. I just wonder why we 

weren’t able to ever talk seriously about selling insurance across 

State lines because that too would make sense. Now we have the 

federal government doing it for us. We might have had the private 

sector competing for us. Now we have the federal government 

which competes with no one, and I submit my previous issue on the 

SGR, but now we have the federal government that competes with 

no one setting those prices across the country and we may have 

gotten the absolute worst of both worlds. 

I didn’t get to talk about Medicaid, but I appreciate the extra 

time, Mr. Chairman. I will yield back. 

Mr. PALLONE. Thank you. 

I had a unanimous consent request from Mr. Shimkus to enter 

into the record the statement of Tim Estes and Travis Gentry, cofounders of Financial Healthcare Systems. 

[The information appears at the conclusion of the hearing.] 

Mr. PALLONE. Without objection, so ordered. 


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104 

Mr. SHIMKUS. Nothing, Mr. Chairman, except for instructions to 

the panelists that if we have follow-up questions—— 

Mr. PALLONE. Oh, yes. Let me mention that. I will remind the 

members that you may submit additional questions for the record 

to be answered by the witnesses, and those are submitted to the 

clerk normally within the next 10 days, so you may get additional 

written questions from us within 10 days. The clerk will notify you 

and obviously we would like you to answer as quickly as possible. 

Mr. BURGESS. Mr. Chairman, I would ask unanimous consent 

that this op-ed that appeared in May of 2005 in the Washington 

Times that was well written and so well constructed and quoted 

Dr. Reinhardt, that that be inserted into the record. 

Mr. SHIMKUS. Reserving the right to object, Mr. Chairman. 

Mr. PALLONE. Let us look at it. Oh, it is by you? Oh, OK. 

Without objection, so ordered. 

Let me thank all of you for being here today. This is a very important issue. As I said in the beginning, we did have a legislative 

hearing on all three bills today because we know it is important 

and there is certainly a possibility that we would move forward 

with legislation. We are not clear on that yet but obviously today 

helped us in that regard a great deal, so thank you very much really for your testimony, and without objection, the subcommittee 

hearing is adjourned. 

[Whereupon, at 1:00 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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Ainerican Hospiital 

Association 

May 29, 2009 

The Il0norable Michael C. Burgess, MD 

Unitcd States House 

229 Cannon House Offiee 

DC20515 

Dear ConglreS!,m(ll1 Burgess: 

On behalf of the American Hospital Association (AHA), our more than 5,000 

health systems and otl1e1' health care and our 40,000 individual membcrs, lam 

to support your 2249, the Health Care Price TrfmSirun·,'l1.'.1J ["rt}f1!n/iol1 

meanilllgwi information about the 

this information as 

stales, with 

source data. In fact, 34 states 

information on or payment rates and make tIlIl! data an 

additional seven stales have voluntary efforts. Your builds on this existing structure, 

and also insurers to participate in the disclosure process by infotrnation on 

estimated costs for health care services. 

for Healthcare Research and Quality to conduct a study on 

consumers want and would find useful in their health care 

(le'~l~i,on-maKln[t. This is valuable beclluse, while we have research on thc kind ofil1fonnatiol1 

consumers want about health care we knov" less about 'what want to know 

about 

Wc aplJ1reciatc 

your "'C''''"',"''''. 

Sincerely, 

leadership on this issue and 'we look forward to 

Executive Vice President 

with you to advance 
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Congressman Robert E. Latta 

The Committee on Energy & Commerce 

Subcommittee on Oversight and Investigations 

Opening Statement - For the Record 

May 6, 2010 

MR. CHAIRMAN; RANKING MEMBER BURGESS: Thank you for holding this 

subcommittee hearing on the role and performance of the Food and Drug Administration in 

ensuring food safety. It is an honor to have been recently appointed to the Energy and 

Commerce Committee, and I look forward to working with all of you on the important issues 

that come before the Oversight and Investigations Subcommittee. 

Incidences of contaminated food products are a serious concern for public health. Just 

this week, the FDA announced that contaminated materials were used in the production of 

several lots of pediatric Tylenol products, and about 1,500 lots of bottled products are currently 

being recalled. Furthermore, as the percentage of the U.S. food supply imported from foreign 

countries increases, and bio-terrorism continues to be a threat, food safety is a critically 

important issue. 

Last summer, the House debated H.R. 2749, the Food Safety Enhancement Act, and it is 

expected that the Senate will soon take action on the legislation. I represent the largest 

agricultural district in the state of Ohio, and am a former member of the House Agriculture 

Committee. I was displeased that H.R. 2749 did not adequately address the concerns of the 

agricultural community, nor was it referred to the Agriculture Committee for any hearings. 

Additionally, the Congressional Budget Office estimates that H.R. 2749 will authorize 

$2.314 billion over Fiscal Years 2010-2014, and that it will take $3.5 billion for the FDA to 

administer the new regulatory activities under this legislation during that time. 
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CBO also estimates that the president's budget plan will increase the public debt to $20.3 

trillion by 2020, and a $655 billion deficit has been incurred in just the first five months of this 

fiscal year. Recently the President's Budget Director Peter Orszag, stated that "deficits of this 

size are serious, and ultimately unsustainable" and that significant changes in policy are required. 

The spending level authorized by H.R. 2749 is of great concern to me, especially when 

the September 2009 GAO report found that gaps in enforcement and collaboration currently 

undermine food safety efforts among Customs and Border Patrol, the FDA, and USDA's Food 

Safety and Inspection Services. Furthermore, the same report indicates that there is a lack of 

information-sharing between the FDA and states during a recall, which impedes states' efforts to 

quickly remove contaminated food. 

The safety and security of the nation's food supply is ofutrnost importance. However, 

with 15 federal agencies already administering at least 30 federal laws concerning food safety, I 

am concerned by the prospect of an increased size in bureaucracy, budget and statutory authority 

for the FDA when improvements in communication, collaboration and teclmology have been 

recommended by the GAO. 

Mr. Chairman, thank you for this opportunity, and I look forward to hearing the 

testimony from the witnesses on the panel today. [Yield Back] 
108 


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~) 

($. f;t> 

(f: 

CORP 

lit¥i(eUt.ld 

Statement for the Record 

Tim Estes and Travis Gentry 

Co-Founders 

Financial Healthcare Systems (FHS Corp) 

Subcommittee on Health Hearing 

Legislative Hearing on H.R. 4803, H.R. 4700, and H.R. 2249 

May 6, 2010 

Thank you for the opportunity to provide testimony to the Subcommittee on Health hearing on 

Transparency in Health Care Pricing. We at FHS Corp design and sell our software, 

FHSClearQuoteTM to help health care providers estimate the patient's out of pocket at or before 

the time of service. 

Do patients understand the concept of price transparency in the healthcare industry and the 

benefits they can gain from it? And how can providers prepare themselves for a movement 

toward patient consumerism? In the search for solutions, what are the different roles offered 

by technology and changes in process? 

The concepts of price transparency and patient empowerment are both noble and basic to 

American culture. However, the transition from concept to reality contains significant 

challenge. Today, transparency has been defined simply the publication of provider charges. 

For self-pay patients, such a display of charges can be meaningful; however, self-pay patients 

represent only about 5 percent of the average payer mix. Growth of the self-pay population 

does not justify this weak solution to the issue of price transparency. True transparency occurs 

only when patients understand their out-of-pocket expenses ... not just provider charges. 

Patients view healthcare as any other transaction ... with a buyer and a seller. Patients are the 

buyer and the providers are the seller. In the mind of the patient, the payer is just a third party 

to. whom they or their employer has paid a health insurance premium in order to gain access to 

the provider. Patients are typically unaware of the complexities of the relationship between 

the provider and the payer, and they are specifically unaware of the way the payer-provider 

relationship affects the patient's out-of-pocket expenses. 
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If patients want to understand consumerism, they need to understand the unique relationships 

between the entities (contracts, charges, and benefits). To achieve transparency and empower 

providers and patients to work together, payers need to provide better access to patient 

eligibility information via Internet and 270/271 EDI transactions. Providers need tools that allow 

ready access to their contracts and charges to determine how a procedure will be paid. 

Integration of contracts, charges, and benefits provides all the necessary information for 

patients to evolve into educated consumers. 

Typically, payers and providers store 

critical data from contracts, charges, and 

benefits in separate computer systems, 

even though integration of those systems 

could create meaningful information for 

patients. Today, several companies 

leverage technology to offer the 

healthcare Industry a variety of pro-price 

transparency/patient consumerism tools. 

'These robust tools include such features 

as demographic and address 

validation/correction, charity advisors, 

patient liability estimators, credit scoring, 

e-cashlering, and A/R segmentation. The 

tools are offered to providers on various 

levels, formatted for use by an individual 

organization or combined with others, and with integrated solutions. The needs and 

personality of the organization and its tendency to champion and adopt change will determine 

the best approach. 

Payers and providers must embrace technology to be prepared to meet tomorrow's demands 

for price transparency and patient consumerism. Process creates change; technology supports 

change. The end result is an empowered healthcare industry prepared to educate and care for 

patients. 

Estimating the patient's out of pocket up front, has two primary advantages: educating the 

patient and helping the provider collect from the patient. In today's market, collecting from 

patients is a necessity for healthcare providers. Payers are selling health plans that shift a 

greater burden of reimbursement from them to the patients. The condition of the economy 

has forced employers to reduce benefits which further shift more of the financial burden to the 

patient. Historically, the portion due to the hospital could be overlooked and not collected. 

Today, those dollars are the difference in reducing services, laying off employees, and even 

closing the hospital. . 

Patients are in an equal peril. The need to be transparent with cost and quality has been 

steadily increasing for the past five years. With the economy in a recession and high 
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unemployment, patient income and ability to pay their bills is at an all-time low. Nonetheless, 

patients have a right to know how much their healthcare will cost. Just like any other goods or 

service, patients have the right to shop and compare the cost and quality of their care amongst 

healthcare providers. 

The responsibility is shared between the payers, providers, and patients. Payers need to make 

their health plan coverage and benefits more transparent to patient and providers. Providers 

need to communicate with each other more efficiently and leverage clinical and health benefit 

information to deliver estimates to patients. Patients need to understand their health plan and 

benefits and also set aside the financial resources to pay their bills. 

FHS Corp fully supports the efforts of Representatives Barton, Green, Burgess, and Stupak and 

would encourage all members of the Energy and Commerce Committee to help H.R. 4803 

become law. While the transparency provisions in the recently enacted health reform 

legislation are a small step in the right direction, we would challenge the committee to go 

further. Every patient should be presented with an estimate for their out of pocket cost. 

limiting the requirement to the 29 million people buying insurance through the Exchanges is an 

extremely low goal. If the process to produce an estimate is efficient, the provider/payer 

industries should have to incorporate this as part of the continuum of care and part of a 

patient's bill of rights. 

The payers and providers are mutually responsible in this effort of transparency. Providing only 

"charge" information to the patient population who have insurance is nothing short of 

irresponsible. Payers and providers negotiate the reimbursement of every procedure. 

Depending on that reimbursement contract, charges may not be applicable. The payers would 

have no incentive to provide this information to the patients and. have no negative recourse if 

this information is less than credible. Payers need to provide efficient and comprehensive 

health plan and benefit information. 

Payers are not the right organization to provide estimates to patients. Payers lack the 

information required to generate the estimate. Providers have the Information and are the 

organization that patients look to for the estimate. Patients expect a "buy/sell" transaction like 

in every other aspect of their life. The hospital is the seller of the services and the patient is the 

buyer. Because of the patient's insurance, the patient will receive a discount based on the 

contract negotiated between the payer and the provider. The provider will send a bill to the 

patient and the patient owes the money to the provider. It makes no sense for the payer to 

generate and communicate an estimate to the patient when they "do not have a dog in the 

fight." 

FHS Corp also supports enacting the provisions of H.R. 4803. Whether a patient is underinsured or has no insurance at all, incorporating a financial analysiS provides a clearer picture 

for the provider as to the resources of the patient. This will help by obviously subsidizing those 

who may need some financial support. It also allows a provider to avoid a potentially 
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embarrassing conversation when the patient has no ability to pay. This financial analysis may 

not completely offset the financial requirement; it may just reduce the obligation owed. 

o