Summit Explores Potential of Price Transparency to Lower Medical Costs

UCSF Center for Healthcare Value Convenes Multi-Stakeholder Gathering to Discuss Strategies

Representatives from diverse stakeholder groups, including patients, consumers, employers, doctors and hospitals converged at an Oct. 18 summit on UCSF's Mission Bay campus to discuss possible strategies to increase price transparency in health care. Photo by Susan Merrell/UCSF

Amid growing calls for price transparency in health care, U.S. Health and Human Services Secretary Kathleen Sebelius earlier this year ordered the release of pricing data for the 100 most common hospital services.

The move put a spotlight on the drastic price differences for health care services in  hospitals across the country as well as within communities, and that consumers are largely unaware of the wide-ranging costs.

For example, the cost of a joint replacement in the U.S. ranges between $5,300 and $223,000. Average inpatient hospital charges for services to treat heart failure range from $21,000 to $46,000 in Denver and from $9,000 to $51,000 in Jackson, Miss.

With a focus on the potential for price transparency to help lower the cost of medical care, UC San Francisco’s Center for Healthcare Value (CHV) and its partners, Consumers Union and Catalyst for Payment Reform, convened “The Future of Health Care Price Transparency in California: A Multi-Stakeholder Summit” on Oct. 18 to examine the issue.

The nearly 100 attendees included representatives from diverse stakeholder groups, including patients, consumers, employers and labor unions that buy health care on behalf of their members, insurers, doctors and hospitals.

“Price transparency is a challenging issue, but it’s worth our attention,” says R. Adams Dudley, MD, MBA, a professor of medicine and health policy at UCSF and organizer of the summit.

“Right now it’s virtually impossible for patients to know ahead of time how much health care services will cost, and all we see is the total bill going up and up,” he added. “If we expect consumers to shop for care or health plans and employers to be able to work with providers to figure out fair prices for care, we need to be able to know current prices.”

Referencing only one of the issue’s complexities, Dudley notes that “doctors and hospitals rightly point out that they have to charge unexpectedly high prices because they have to cover not just those who pay, but those who do not, plus the costs of teaching and innovating in health care. It would be helpful, though, if we could make all those subsidies transparent so we could deal with them directly.”

Working to Find Voluntary and Regulatory Solutions

The day’s discussions revolved around two tracks: what might be done on a voluntary basis or using market forces, and potential opportunities for regulatory or legislative solutions.

UCSF Medical Center Exploring Options

“Pricing transparency is simply the right thing to do at the right time, “ said Mark Laret, CEO of UCSF Medical Center and UCSF Benioff Children’s Hospital. “Just as consumers have been more active in discussions about the quality and safety of their care – bringing online health information to their doctors' appointments, for example – they now have a growing appetite and responsibility to understand their own health care costs.

"Our nation’s health care pricing and reimbursement system is complex, and solutions will take time," he added, "but we are committed to giving our patients more timely, accessible information to enable them to make better decisions about their health care."

After hearing from consumers and their advocates about the need for price information when shopping for care, and from purchasers about the importance of understanding the total cost of care, attendees worked together to identify key areas for new initiatives.Talks included an overview of the price transparency issue from Robert A. Berenson, MD, a senior fellow at the Urban Institute; a review of current initiatives to share price information from Joe Smith, MD, PhD, chief medical and science officer at the Gary and Mary West Health Institute; an update on the California Department of Insurance’s contract with Centers for Medicare and Medicaid Services (CMS) from California Insurance Commissioner Dave Jones; and insight into legal barriers and options around price transparency from David Faigman, JD, MA, a professor at UC Hastings College of the Law.

Among those initiatives is a proposed plan to encourage providers and health plans to voluntarily provide data that could be used, for example, to help a patient choose where to have a mammogram or to assist a union health care representative in assessing value and determining the rates of co-pays, Dudley said.

Next steps include developing use-case scenarios to outline how different data types, such as claims data from all insurers or a database of chargemasters, will be used, and determining what constitutes a fair price, he said. If the voluntary route is unsuccessful, the focus will turn to working with the California Legislature to require submission of the data.

Building Momentum Toward Price Transparency

A meeting to present these and other summit findings to policymakers and stakeholders is planned for later this year in Sacramento.

Summit organizer R. Adams Dudley addresses the audience during the event. Photo by Susan Merrell/UCSF

If we expect consumers to shop for care or health plans and employers to be able to work with providers to figure out fair prices for care, we need to be able to know current prices.

R. Adams Dudley, MD, MBA

On Oct. 16, a bill passed by the California Legislature requiring health plans and insurers to disclose data relating to pricing and premium increases was vetoed by Gov, Jerry Brown, who said his administration is already working on a similar program to promote transparency.

Mentioning recent legislative action, along with well-publicized news stories around the issue, such as a May 2013 cover story in Time Magazine, one summit attendee noted that price transparency has “hit its moment.”

“This event served an important function: to bring together those who have both an open mind and a vested interest in this issue,” said Suzanne Delbanco, PhD, executive director of Catalyst for Payment Reform.

That sentiment was echoed by Betsy Imholz, director of special projects at Consumers Union. “These are complex issues, and it’s incredibly valuable to move this conversation forward.”

Summit collaborators included IDEO and the UCSF/UC Hastings Consortium on Law, Science and Health Policy. Support for this event was provided by the California HealthCare Foundation, the Grove Foundation and the Gary and Mary West Health Institute.

The UCSF CHV is focused on advancing rational, science-driven, and clinician-tested healthcare solutions that reduce cost and improve quality. Its work includes three initiatives: Delivery Systems, Research & Policy, and Training. The CHV is being administered by UCSF’s Clinical and Translational Science Institute.