Anesthesia and Pain Medicine and the Growing Trend Toward Price Transparency
Price transparency is playing a more and more critical role in health care. As Costs of Care Executive Director Neel Shah, M.D. has stated, “We make purchasing decisions for every other commodity based on transparent price and quality information (think Yelp, Travelocity). Why not healthcare, too?”
There is a widely-held view that publishing price information could both rein in the enormous range of costs people pay and lower the level of prices in general. This kind of price transparency potentially may allow patients to comparison shop for health care as they would a car, house or television, forcing higher priced providers to lower their prices to stay competitive.
The Patient Protection and Affordable Care Act (ACA) has enabled an additional 15 million individuals to obtain health care insurance. With many of the newly insured (and others) choosing one of the less expensive “bronze” or “silver” plans, which typically cover 60 to 70 percent of the costs of treatment and with the growing popularity of high deductible health plans, price information becomes increasingly important. “Employers, who are working to manage the cost of providing health insurance to their employees, are also very interested in tools that can direct employees to higher value providers—those that offer quality outcomes at a competitive price,” according to James Landman of the Health Care Financial Management Association, which has established a Price Transparency Task Force.
More than over 30 states have passed or have proposed legislation to increase price transparency. (Newhook E. Illuminating Health Care Prices: Organizations to Watch. The George Washington University, MPH@GW blog, October 8, 2014.) A majority of state-run initiatives publish average or median prices for individual services, e.g., Minnesota, which publishes the average payments made by health plans for select surgical and gastrointestinal procedures and mental health, obstetrical and laboratory services as well as office visits. The Minnesota web site also posts quality ratings by site of care.
In several states, physicians and other providers are now required by law to make price information available to patients. Sweeping payment reform legislation passed in Massachusetts in 2012 (Mass. General Laws Chapter 111, Section 228) provides that if asked by a patient, a physician or a hospital must disclose the allowed amount or charge of the admission, procedure or service, including the amount for any “facility fees” required within two working days. The law defines “allowed amount” as the contractually agreed amount paid by a carrier to a health care provider. As stated on the Massachusetts Medical Society website:
What Physicians Need To Do
- Provide the patient with the CPT codes for all anticipated services and procedures. Patients will provide those codes to their health plan to obtain the contracted costs for the professional services, facility fees, and out of pocket costs related to the request.
- Patients should also be given the number of the facility's billing office which may be able to provide additional information relative to facility costs
- Cooperate with health plans' requests for further information in a timely fashion, to help the health plans make the most accurate estimates possible for your patients.
Further information, including a sample information form that physicians and practice staff can fill and give to patients to submit to their health plans, is available from the medical society.
We have previously noted the New York “Emergency Medical Services and Surprise Bills” scheduled to go into effect on March 31st of this year. (Restrictions on Billing Anesthesia Patients Who Go Out of Network, ABC Alert October 13, 2014.) The law will limit patients’ liability for emergency out of network (OON) expenses to amounts no greater than the amounts they would have incurred if the services had been furnished by an in-network provider. It will also allow patients who receive “surprise bills” to assign their insurance benefits to the OON providers, limiting their responsibility to the in-network cost-sharing amounts. Surprise bills are defined as those that a patient receives for out-of-network services: (i) received at an in-network hospital or surgery center without the consumer’s knowledge, (ii) received based on a referral by an in-network provider with the patient’s written consent, and (iii) received by a patient who was not insured for the services and who did not receive proper disclosures required under the law. The disclosures that physicians must give patients include the following:
- Prior to providing non-emergency services, providers must disclose to patients their right to know what will be billed for the procedure and, if the patient requests, they must disclose the anticipated cost, warning patients that costs could go up if unanticipated complications occur.
- Providers must provide patients with their network and hospital affiliations in writing or online.
- When patients make appointments, providers must indicate whether they participate in a patient's network.
- If other professionals will be involved in a patient's care, the patient must be advised of who it might include and how to learn how much the network will cover for those doctors.
The New York and Massachusetts laws impose disclosure requirements on physicians (and hospitals, and health plans). What about voluntary disclosure? There can certainly be advantages to the physician in patients’ understanding and—ideally—accepting their personal responsibility before bills go out. The current prevailing lack of transparency leads to “Consumers [who] do not understand why they are receiving bills when they have insurance and providers [who] are left in a relentless battle with health plans over fees.” (Schopmann MJ. New York Law Bans “Surprise Bills” by Out-of-Network Providers. NYSSA Sphere, 2014 (66:4); 27-29)
Beyond avoiding the unpleasantness of the collections process in many instances, upfront price disclosures may yield a competitive advantage. An ASC in St. George, UT has had a very good response to the posting of flat, inclusive prices for more than 70 multi-specialty procedures on its website; its administrator told Outpatient Surgery Magazine (Does Price Transparency Pay Off? Outpatient Surgery Magazine Online, published January 15, 2015) that “we've had people calling from Canada, and making a 14-hour drive from Northern California." The prices quoted on the website, which apply to self-paying patients who remit or arrange for the financing of the full amount by the day of surgery, include physician, anesthesia and facility fees as well as one preoperative and one postoperative visit, but not the cost of preoperative testing, implants or hardware, treatment for complications or physical therapy and rehabilitation consultation.
The model for the St. George Surgery Center was the six-O.R. Surgery Center of Oklahoma in Oklahoma City, founded and managed by two anesthesiologists, that was the subject of our January 27, 2014 Alert (Payments for Anesthesia Services in the Sunshine). As we noted, the Surgery of Center of Oklahoma:
lists more than 100 procedures on its website, each with an all-inclusive price covering the facility fee, the surgeon’s fee and anesthesia (but not hardware and implants). The Center keeps its prices relatively low in part by requiring up-front payments from self-pay patients, and by not participating with Medicare or most private payers. The 47 surgeons who perform between 600 and 700 cases per month are all financially invested in the facility and thus have a shared interest in maintaining high quality. The Center has attracted the attention not just of patients with no insurance or with high deductibles, but also of self-insured employers, and even of a neighboring full-service hospital, to which the Center sends patients who “need another day or 2 to sleep it off after their surgery” for a predetermined per-day price (Burger J. Is Surgery Ready for Price Transparency? Outpatient Surgery Magazine 2013 (9); 46-63).
This is not to say that anesthesia and pain medicine practices should be thinking about posting their prices publicly today—although, for various reasons including the growing prevalence of bundled pricing programs, they should develop a good understanding of their costs so that they are prepared to offer the flat prices that will be demanded in the not too distant future.
As more and more services appear that help consumers identify medical costs in advance—the Healthcare Bluebook, FAIR Health and Clear Health Costs to name just a few—alongside an even newer development, payer-supplied pricing tools such as that launched recently by Blue Cross and Blue Shield of North Carolina, it will become imperative for all medical practices to seek to frame the issues and to turn transparency to their advantage.
Robin Gelburd, president of FAIR Health, observed that “For us, transparency isn’t even the catch word anymore. We see a huge difference between transparency and clarity…We try to not create a chaotic pile of data, but really contextualize the data and use language that is comprehensible that gives people a foundational understanding.” (Newhook.) There is an opportunity for physicians to help give patients a foundational understanding that encompasses quality and defines value.