Health Care Purchasers, Consumers Need Price Data if We Are Ever Going to Get to a System of Value-Based Care

In a world where health care costs are rising and consumers are taking on a growing share, it is critical they have easy access to understandable information about the quality and cost of their care.  While we have made decent strides in making quality data available, consumers still have little to no information about health care prices, making it difficult if not impossible for them to seek higher-value care.  Numerous studies and articles have explored this problem, such as a recent UCSF study, highlighted in JAMA, which found routine appendectomies can cost as little as $1,529 or as much as $183,000.  As PBGH Medical Director Dr. Arnie Milstein so eloquently stated in the Wall Street Journal, “Fantasy baseball managers have more information evaluating players for their teams than patients and referring physicians have in matters of life and death.”

Now Catalyst for Payment Reform (CPR), an independent, non-profit corporation working on behalf of large employers and other health care purchasers to catalyze improvements in how we pay for health services, has just released a suite of tools to catalyze price transparency.  The suite includes a first-of-its-kind Statement by CPR Purchasers on Quality and Price Transparency in Health Care, endorsed by several partner organizations, that takes plans and providers to task: give us price data by January 2014.

The statement urges providers to share price information and to allow plans to make their rates transparent to consumers, while spurring plans to allow self-insured employers to use their own claims data freely to work with outside vendors to evaluate data and develop shopping tools to meet their employees’ needs.

Some health care providers―hospitals and physicians — restrict access to price data by prohibiting health plans from making their negotiated payment rates publicly available.  This significantly limits price data and price data comparisons in consumer shopping tools.

Meanwhile, some health plans take the stance that they own self-insured employers’ claims data, particularly the payment information, even when employers are footing the bills and health plans are playing only an administrative role.  This prevents employers from giving their own claims data to third-party vendors who may have alternative price transparency tools or ways of interpreting the data that employers want.

Freely sharing price data drives innovation―the kind we see on display at Health 2.0, ultimately raising the bar and leading to the development of new and sometimes better tools for consumers.   And technology can play an important role in empowering consumers, helping us build a better mousetrap, as former Intel CEO Andy Grove explained in a recent issue of Wired Magazine.

Along with the Statement, CPR also released Comprehensive Specifications for the Evaluation of Transparency Tools, which give purchasers and consumer advocates a means to evaluate transparency tools for consumers, providing valuable insights about the features  these tools need to be comprehensive and user-friendly―the holy grail of consumer tools.  Regardless of insurance status, it is important to note that maximizing the consumer benefits of price transparency will require attention to medical literacy issues, including the fact that it can be very challenging for most health care consumers to understand medical terms as well as how health care payment works, including their own insurance benefits and billing.

Along with the Statement and Specifications for Evaluation, CPR also released an Action Brief that gives health care purchasers concrete steps they can take to push for greater price transparency.  In addition to pushing plans and providers, large employers and others who purchase care, along with consumer advocates, can take a number of steps including engaging in advocacy efforts to promote price transparency.  Recent legislation in California, including SB 751 and SB 1196,is a step in the right direction, removing barriers that could ultimately allow Californians greater access to cost data.  Other states have taken important steps creating all-payer claims databases.

CPR has set an important and ambitious goal-to drive change in our current system so that by 2020, 20% of payments are tied to value; price transparency is a core strategy to achieving that goal. We invite others to use our tools and join our movement. Organizations can sign on and show their support for transparency by contacting

Suzanne Delbanco, Ph.D. is the executive director of Catalyst for Payment Reform (CPR). CPR is an independent organization led by health care purchasers, with active involvement of providers, health plans, consumers and labor groups working to improve quality and reduce costs by identifying and coordinating workable solutions to improve how we pay for health care in the U.S. Learn more at

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5 replies »

  1. The solution is legally very simple:

    Any patient who requests a price quote for non-emergency care has a right to receive one. The quote would give prices for all clinics and hospitals in a 25 mile radius.

    This would apply whether or not a patient was uninsured.

    Imagine their reaction if they knew that a hospital outpatient department was charging 4 times what a free standing clinic was charging.

    If they received no quote, after requesting one, they would not be liable for the bill (or their deductible, if applicable.)

    Of course this would take a Ralph Nader as president and all elections supported by taxes rather than corporate contributions.

    But the concept is clear, and it is not even socialism for those who are about such terms. It is just replacing a business model based on price gouging with a business model based on honest competition.

  2. Many contracts that physicians, physician organizations and hospitals sign with health insurers contain strict confidentiality language prohibiting any disclosure of payment terms in their contracts to any outside organizations. This served a strategic purpose for insurers to keep providers relatively ignorant of price terms their competitors negotiated with payers. This has created a conumdrum for insurers who are now working to establish accountable care relationships with provider organizations, since many of these ACO deals have provisions for shared savings. How can an ACO direct its providers to refer high cost imaging, for example, to the lowest cost provider when there is no price transparency? How can a self-funded company direct its employees to use low costs providers under the same scenario? The price for a procedure may be X at Main Street Imaging but a price of 3X at St. Elsewhere Hospital for the same MRI procedure, read by the same radiologist. Clearly price transparency is needed, but I’m not holding my breath for a big change here very soon.

  3. The patient is not the consumer unless the patient is writing the check. Until then the patient is the cash cow, there to be milked.

  4. Suzanne,

    While I applaud CPR’s statement and tool suite release, I’m a little surprised that this activism is so meek. You’ve laid out guidance and some tools. Where are the teeth?

    As it stands, health care pricing and, as you point out, to a lesser degree, quality data are mostly unavailable. Even after nearly four years of the Obama administration, Medicare physician data remains locked. The commercial health plans see these data as proprietary, and refuse to release them in ways that can be more deeply understood. As health care costs spin out of control, we remain, by design, in data darkness.

    If organizations like GE and Wal-mart were really serious about this, they certainly have the enrollee numbers and clout to insist that, to work with them, both providers and ASO administrators must make their pricing transparent and unrestricted. If necessary, they could establish or contract with new TPAs expressly for the purpose, which would no doubt get the BUCAHs’ attention.

    Then they could take the resulting data and generate comprehensive publicly available information that would tell us which physicians and services have high and low performance and value. It does the country little good for a few jumbo firms to lead the way unless there’s a mechanism to generate concrete results and generalize the impact to the larger health system.

    We are now in a box, where a combination of health industry dominated regulatory capture and enforced market-based health care controls (e.g., FFS reimbursement, subjugated primary care) are dragging the US economy off a cliff. RAND showed last year that 4/5 of all household income growth is now siphoned off by health care. In this environment, only non-health care is larger than the health care industry, and only they have the heft, influence and motivation to serve as a counterweight to the rapacious health care industry.

    Like I said, I’m a big fan of CPR’s direction, but given the stakes, I wish you could elicit more action and less motion by your very formidable members.

  5. Hi, Suzanne – good post & great work by CPR. Keep up the efforts to move the needles on payment reform.

    I do have an increasing concern that transparency into the current world of health care billing may be the wrong path — the detailed billing codes are not an ideal way to sell health care services, and certainly not for consumers to buy them. I think some providers/payors will need to make some bold steps in radically simplifying those processes. I discuss this in a recent blog (

    Greater emphasis on value, quality, and price transparency should create added pressures for greater simplicity for consumers…I hope!

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