[Senate Hearing 115-845]
[From the U.S. Government Publishing Office]
S. Hrg. 115-845
REDUCING HEALTH CARE COSTS:
EXAMINING HOW TRANSPARENCY
CAN LOWER SPENDING AND
EMPOWER PATIENTS
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HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
`UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING REDUCING HEALTH CARE COSTS, FOCUSING ON HOW TRANSPARENCY CAN
LOWER SPENDING AND EMPOWER PATIENTS
__________
SEPTEMBER 18, 2018
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Printed for the use of the Committee on Health, Education, Labor, and
Pensions
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
31-610 PDF WASHINGTON : 2020
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
LAMAR ALEXANDER, Tennessee, Chairman
MICHAEL B. ENZI, Wyoming PATTY MURRAY, Washington
RICHARD BURR, North Carolina BERNARD SANDERS (I), Vermont
JOHNNY ISAKSON, Georgia ROBERT P. CASEY, JR., Pennsylvania
RAND PAUL, Kentucky MICHAEL F. BENNET, Colorado
SUSAN M. COLLINS, Maine TAMMY BALDWIN, Wisconsin
BILL CASSIDY, M.D., Louisiana CHRISTOPHER S. MURPHY, Connecticut
TODD YOUNG, Indiana ELIZABETH WARREN, Massachusetts
ORRIN G. HATCH, Utah TIM KAINE, Virginia
PAT ROBERTS, Kansas MAGGIE HASSAN, New Hampshire
LISA MURKOWSKI, Alaska TINA SMITH, Minnesota
TIM SCOTT, South Carolina DOUG JONES, Alabama
David P. Cleary, Republican Staff Director
Lindsey Ward Seidman, Republican Deputy Staff Director
Evan Schatz, Democratic Staff Director
John Righter, Democratic Deputy Staff Director
C O N T E N T S
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STATEMENTS
TUESDAY, SEPTEMBER 18, 2018
Page
Committee Members
Alexander, Hon. Lamar, Chairman, Committee on Health, Education,
Labor, and Pensions, Opening statement......................... 1
Murray, Hon. Patty, Ranking Member, a U.S. Senator from the State
of Washington, Opening statement............................... 3
Witnesses
Binder, Leah, President and Chief Executive Officer, The Leapfrog
Group, Washington, DC.......................................... 6
Prepared statement........................................... 7
Summary statement............................................ 13
Kampine, Bill, Co-Founder, Senior Vice President, Client
Analytics, Healthcare Bluebook, Nashville, TN.................. 14
Prepared statement........................................... 15
Summary statement............................................ 20
Giunto, Nancy A., Executive Director, Washington Health Alliance,
Seattle, WA.................................................... 21
Prepared statement........................................... 22
Summary statement............................................ 45
Tippets, Ty, Administrator, St. George Surgical Center, St.
George, UT..................................................... 45
Prepared statement........................................... 47
Summary statement............................................ 49
REDUCING HEALTH CARE COSTS:
EXAMINING HOW TRANSPARENCY
CAN LOWER SPENDING AND
EMPOWER PATIENTS
----------
Tuesday, September 18, 2018
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m., in
room SD-430, Dirksen Senate Office Building, Hon. Lamar
Alexander, Chairman of the Committee, presiding.
Present: Senators Alexander [presiding], Cassidy, Young,
Murkowski, Scott, Murray, Casey, Murphy, Warren, Kaine, Smith,
and Jones.
OPENING STATEMENT OF SENATOR ALEXANDER
The Chairman. Good morning. Senator Murray is on her way,
but she's asked that I go ahead and begin, because she has
double duty today. The fact is she's here.
[Laughter.]
The Chairman. You know, there was--many years ago, Senator
Everett Dirksen of Illinois was a little bit theatrical.
Senator Murray is not theatrical. But Senator Dirksen was, and
when he would speak at an event, he would wait in the back of
the room until he was introduced and people would begin the
applause. And then he would walk very slowly to the front to
extend the applause for a long period of time.
[Laughter.]
The Chairman. Senator Murray has double duty today. She's
managing the Labor, Health, and Human Services Appropriations
Bill on the floor, and she's here. So I want to recognize that
and compliment her on that piece of legislation, because it has
a variety of good things in it, and, again, I believe, it takes
an important step in increasing funding significantly for
biomedical research at the National Institutes of Health. She
and Senator Blunt have led that effort, and I and others
support it. It sets priorities within the budget limits, and
it's good for our country.
The Senate Committee on Health, Education, Labor, and
Pensions will please come to order.
Senator Murray and I will each have an opening statement.
I'll introduce the witnesses. Then we'll hear from the
witnesses, and Senators will have five minutes to ask
questions.
As any American--even the Secretary of the Department of
Health and Human Services--knows, it can be difficult to find
out how much a simple healthcare test will cost before a
doctor's visit. Secretary Azar recently told the story of his
doctor ordering a routine echocardio stress test. He was sent--
the Secretary was sent down the street and admitted to the
hospital where, after a considerable effort on his part, he
learned the test would cost him $3,500. After using a website
that compiled typical prices for medical care, he learned the
same test would have cost just $550 in a doctor's office.
Secretary Azar said that consumers are so in the dark, they
often feel powerless.
The Internet has made it easier for consumers to know more
about what they want to purchase before they actually buy it.
You can easily read an online review and compare prices for
everything from a coffeemaker to a new car. This is true for
everything else but not for healthcare. The cost of healthcare
has remained in a black box.
Any one of us who has received a medical bill in the mail
has wondered what we're actually paying for. For years,
patients were more or less okay with that, because insurance
companies and the government paid most of the bills. However,
as premiums have increased, more Americans are covered by plans
with high deductibles, which means they're often paying lower
monthly payments for their premiums in exchange for spending
more out of pocket with they go to the doctor or fill
prescriptions.
According to the Kaiser Family Foundation, half of all
single covered workers in 2017 had a deductible of at least
$1,000, which is Kaiser's threshold for a high deductible. This
is an increase from 34 percent in 2012. And because Americans
themselves are footing more of their healthcare bills, more are
showing an interest in shopping around, as Secretary Azar did
when he had his heart test.
Today's hearing is the fourth in a series on reducing the
cost of healthcare. It's an opportunity to learn how we can
improve what information is easily available about the cost and
quality of healthcare so patients can make their best
healthcare decisions for their families, themselves, and their
wallets. Without better information, healthcare stays in that
black box, making it hard for Americans to be good consumers,
make good decisions, and pay reasonable amounts for necessary
healthcare.
Senator Paul, a Member of our Committee, has talked about
how, with an elective surgery such as LASIK, a patient is more
likely to call doctors' offices to find the best price, calling
an average of four different doctors to find the best price for
that corrective eye surgery. As patients have shopped around
for LASIK, the price started to dramatically decrease. It's
gone down 75 percent over the last 15 years, according to
Senator Paul.
The black box also disguises the quality of care. This is
important, because we think often that high cost equals high
quality. For example, Stephen Joel Trachtenberg, who has spoken
freely about raising tuition to raise the profile of George
Washington University while he was president, has said, quote,
``People equate price with the value of education,'' unquote.
While the price of tuition, unlike healthcare, is easily
available on universities' websites, deciphering the quality of
education and healthcare is hard.
Improving transparency in healthcare prices and quality is
an area where the private sector and states are largely leading
the charge. For example, medical centers like the Surgery
Center of Oklahoma and St. George Surgical Center, one of our
witnesses today, list the prices for the surgeries they offer
on their website so patients know up front how much their
surgeries will cost.
Healthcare Bluebook, represented by another witness, is a
tool that helps employees find the best price for the highest
quality care in their area using their employer-sponsored
insurance. This is a useful tool to lower costs, because, for
example, the amount a patient pays for cataract surgery in
Memphis can range from as little as $2,000 to more than $8,000.
In 2017, the State of Maine passed a bill requiring health
insurers to split the savings with a patient if the patient
shops around and chooses a doctor that is less than the average
price the insurer pays. In Oregon, the state compiles data on
insured residents and uses this information to run a tool
similar to Healthcare Bluebook that shows--that allows patients
to compare the cost of procedures used at different hospitals.
While the private sector is largely leading the charge in
making healthcare information more easily available, the
Federal Government can also play a role, and witnesses today
can inform us about steps that we can take. Secretary Azar told
the story of finding out the price of his heart test in a
speech, announcing that the Administration would focus on
increasing price transparency. For example, in April, Centers
for Medicare and Medicaid Services Administrator Seema Verma
announced that by January 2019, hospitals that participate in
Medicare or Medicaid must list their current standard prices
online.
In an age when you can compare different prices and check a
dozen reviews when shopping for a new barbeque grill, Americans
should be able to know more about the cost of their healthcare.
Senator Murray.
OPENING STATEMENT OF SENATOR MURRAY
Senator Murray. Well, thank you, Mr. Chairman. Thank you
for comments on the Labor appropriations bill, that I will be
leaving shortly to be back on the floor to help manage that,
and I appreciate your support for that, as well as much of our
work here.
Thank you to all of our witnesses today. I'm especially
looking forward to hearing from Ms. Giunto about her amazing
work. Her organization is the Washington Health Alliance, and
it's from my home state. I'm very glad to see you.
The Alliance has actually been an incredible advocate for
quality and value in healthcare and taken on very impressive
projects to increase transparency and arm our patients and
employers and healthcare providers across our state with
information that they can use to provide patient care. One
report from the Alliance details how improvements to our
state's health system could help more kids get checkups, more
women get screened for breast cancer, and more diabetics get
the treatment that they need.
Another refutes the myth that higher cost or a bigger
facility necessarily means better care for patients, and a
report that looked at overused treatments and low-value care
found that nearly half of our patients received that care. That
adds up to $282 million in unnecessary healthcare spending, or
$1 out of every $3 that were spent. That's consistent with
testimony our Committee has heard over the last few months from
experts across the country. Your work shows exactly why
transparency is such an important tool for patients, for
providers, and governments who are looking to lower healthcare
costs and increase value and efficiency and quality.
Unfortunately, instead of taking steps towards greater
transparency, President Trump has only taken steps towards
greater chaos by sabotaging our healthcare system and making it
harder for families to get access to the care they need and the
information that actually helps them get the care they--that
helps with their healthcare decisions.
Look at the Navigator Program, which provides clarity and
transparency and guidance to people who are trying to
understand our complex system and get health insurance for
their families. This program is especially important for
patients who don't speak English as a first language and people
who are less familiar with the healthcare system. Last year,
the Administration cut Navigator funding nearly in half,
slashing it from $63 million to $36 million, and just two
months ago, they did it again. After dragging their feet and
giving very little heads-up to the organizations to adjust,
they cut funding by about two-thirds. It's now down to $10
million.
In addition to cutting funding, they cut the number of
Navigator entities required per state down to one, and they
announced the Navigator organizations serving a state can be
located virtually anywhere, even across the country, far away
from those who need the help. In our stabilization hearings
last year, this Committee heard just how valuable navigators
with a physical presence and cultural competency can be,
especially for tribal communities. We can expect these
communities to be hit particularly hard by President Trump's
sabotage of the Navigator Program.
But while President Trump's decision to shortchange that
program and deny navigators adequate time to prepare for those
changes is disappointing, it is not surprising. Sabotaging the
healthcare system and raising costs for families have become
standard practice for this Administration. From day one,
President Trump has made every possible effort to restrict
access to healthcare and roll back protections for preexisting
conditions, despite people across the country rejecting his
backwards agenda.
Last year, people stood up and spoke out against the mean-
spirited Trump Care Bill which would have hurt families by
spiking premiums, gutting Medicaid, and denying protections for
preexisting conditions. In the end, the people succeeded, and
President Trump's sabotage bill failed.
However, instead of learning his lesson and listening,
President Trump decided to continue to sabotage healthcare from
the Oval Office, like when he handed back control to the
insurance companies, making it easier for them to sell junk
insurance that discriminates against older people and women and
people with preexisting conditions, or when after all his
campaign talk of being for law and order, he actually ordered
the Justice Department not to defend the law of the land and
take the highly unusual step of refusing to defend preexisting
condition protections in the courts, or when he nominated a
judge for the Supreme Court, hand-picked for his willingness to
strike down healthcare protections for millions. At every step,
President Trump has moved healthcare in this country in the
wrong direction.
So while I'm glad to know there is bipartisan agreement
about the importance of transparency in helping ensure quality
and value in healthcare, I hope we can find common ground to
reject the sabotage and address the damage and skyrocketing
prices it has caused. Transparency alone is absolutely not
enough. A drug company being transparent about its exorbitantly
expensive drugs doesn't help the people who can't afford it. An
insurance company being transparent about its discrimination
based on age, sex, and preexisting conditions doesn't help
people get the care they need.
So today, I look forward to hearing from our witnesses
about how transparency can help us move forward, but for the
sake of families in Washington state and across the country. I
hope the conversation doesn't stop there.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murray.
We'd like to ask the witnesses to summarize their testimony
in about five minutes so Senators can ask questions. I want to
welcome each of our four witnesses.
The first, Ms. Leah Binder, is President and Chief
Executive Officer of the Leapfrog Group in Washington, DC, a
nonprofit representing employers and other purchasers of
healthcare that are working on ways to improve safety and
quality in hospitals. Leapfrog Group developed a system to
grade hospitals across the country based on quality and safety
and post this information on a public website. Formerly, she
was vice president at the Franklin Community Health Network in
Maine.
Next we'll hear from Mr. Bill Kampine, Co-founder and
Senior Vice President of Client Analytics at Healthcare
Bluebook in Nashville, Tennessee. Healthcare Bluebook is an
online tool to help individuals find high-quality healthcare
options at fair prices. Prior to this, he served in a number of
executive roles at Healthways, an organization specializing in
disease and lifestyle management. Previously, he was a
healthcare economist and consultant.
Senator Murray, would you like to introduce the next
witness?
Senator Murray. Thank you. I would, and I'm very pleased to
introduce again, as I mentioned, Nancy Giunto. She's the
Executive Director of the Washington Health Alliance. I had the
opportunity to meet with Nancy in my office just about a year
ago here about some of the projects that her organization is
working on, and as I learned then and I suspect we'll hear
about today, her organization has done some incredible work to
help provide information and transparency that can improve
healthcare in our state and possibly serve as a model to many
others.
Her experience in healthcare before leading the Alliance
includes the National Institutes of Health, the American
Hospital Association, Intermountain Healthcare, and at
Providence Health and Services.
So, Nancy, it's great to see you again. Welcome back to
Washington, DC. Thank you for making that long trip out here.
We appreciate it.
The Chairman. Thank you, Senator Murray.
Next is Mr. Ty Tippets, Administrator of the St. George
Surgical Center, a physician-owned ambulatory surgical center
in rural southern Utah. In 2014, the surgical center began
posting cash prices online for all its surgical procedures so
that patients could know the cost of their care up front. In
addition to accepting cash, St. George also accepts Medicaid,
Medicare, and commercial insurance for the services provided.
Welcome again to all of our witnesses.
Ms. Binder, let's start with you.
STATEMENT OF LEAH BINDER, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, THE LEAPFROG GROUP, WASHINGTON, DC
Ms. Binder. Thank you, Chairman Alexander and Ranking
Member Murray. I'm very appreciative of the opportunity to be
here with you today.
I'm Leah Binder from the Leapfrog Group. We are a
nonprofit. We are independent, national, based here in DC. We
represent employers and other purchasers of health benefits,
attempting to improve healthcare in part through transparency
by publicly reporting on the performance of hospitals and other
health settings on safety and quality. We've been doing this
for 18 years, so we have a great deal of experience with
transparency and have found it to be a very successful method
of improving care and lowering costs.
We function not only at the national level, but also
regionally, with 40 business groups on health across the
country who represent almost every state in the country, and
two of those states, I want to note, are Washington state and
also Tennessee. They are two of our more notable states.
In Tennessee, we have not one, but two business groups on
health that are very active, one of which our outgoing chair,
Christy Travis, heads up--the Memphis business group on
health--and also Healthcare 21 in Nashville is very active.
From the beginning of Leapfrog, both of them have been active.
In addition, HCA based in Nashville is 100 percent transparent.
They report entirely to Leapfrog--all of their hospitals do--
the only health system of its size to do so. So it's a state
that we think quite highly of and is very much a vibrant part
of the Leapfrog movement.
In Washington state, the Boeing Company has been a very
formidable and active member of Leapfrog since day one. They
formed Leapfrog. They're one of the key partners in doing so.
And, also, we awarded our highest award ever awarded to a
hospital by Leapfrog to the Virginia Mason Medical Center as a
top hospital of the decade.
So it is a pleasure to be here with you and to tell you
just a couple of things about why transparency has been so
effective and what we need to do in the future to maintain and
improve on that record. Leapfrog collects data from hospitals.
We ask on behalf of employers, including those coalitions
across the country who have members who are also purchasers and
consumers. We ask them to report to us data that cannot be
collected from any other source. This includes, for example, C-
section rates by hospital. That is not available at the
national level by hospital except through Leapfrog, and that is
voluntarily provided by almost 2,000 hospitals through
Leapfrog.
We also grade hospitals on how safe they are. For that, we
use data we collect, but also data we get from CMS that is
publicly reported. It's an A, B, C, D, or F on how safe
hospitals are. All of the data we collect is available for free
to the public.
One key issue for us is that price transparency is never
enough. It will backfire if it is only price transparency.
That's because bad care is never a bargain, and, unfortunately,
it is possible to encounter bad care in this country, and, in
fact, errors and accidents in hospitals, safety problems, are
considered the third leading cause of death in this country. So
it's actually quite common. Some hospitals and some health
centers are better at protecting their patients than others,
and consumers deserve to know which is which. That's why we
grade the hospitals.
What we found is that consumers do, in fact, use the
grades. We've seen incredible growth in the use of that
information to drive behavior by consumers. We've also seen a
change in how hospitals perceive their own role in appealing to
consumers and in putting their needs first. We've seen an
incredible uptick by hospitals in trying to achieve that A and
putting patient safety first, including putting their grade
right on the list of bonus incentives for their C suite. We
have seen everything happen as a result of transparency.
We are moving to start to collect data on ambulatory
surgical centers where there is relatively little quality data
publicly available that consumers need. The majority of
surgeries are now performed in either outpatient or ambulatory
surgical centers. That is very important to us.
So our next step is to work with the Administration to
expand the availability of what is available publicly by CMS
and others. We are concerned that CMS seems to be prioritizing
the burden on providers. The burden on others, taxpayers, the
American public, employers also needs to be considered and
should be the priority. So we look to you to help us to expand
transparency.
Thank you.
[The prepared statement of Ms. Binder follows:]
prepared statement of leah f. binder
Chairman Alexander, Ranking Member Murray, and Members of the
Senate HELP Committee, thank you for the opportunity to share the
perspective of employers and other large purchasers of health care on
the importance of transparency to improve American health care. It is
an honor to have been invited to participate in today's discussion. My
name is Leah Binder. I am the President and CEO of The Leapfrog Group,
an independent national nonprofit movement founded in 2000 with support
from the Business Roundtable, representing hundreds of the leading
purchaser and employer organizations across the country calling for
transparency of the safety, quality and affordability of care. We also
advocate for value based payment reform as proud members of the DRIVE
campaign, in partnership with the ERISA Industry Committee, the Pacific
Business Group on Health, and many Fortune 500 employers.
We are one of the few organizations that both collects and publicly
reports by hospital on safety and quality on a national level, thereby
bringing a unique perspective to the importance of transparency. In
conjunction with 40 business groups on health that serve as regional
Leapfrog leaders across the country, we advocate for transparency, and
``leaps forward'' in safety and quality of care. We grade hospitals
with an A, B, C, D, or F on how safe they are for their patients.
Senator Alexander, I am pleased to say Tennessee is one of the most
active states in the Leapfrog movement, with not one but two business
groups on health leading the campaign for Leapfrog participation and
employer use of Leapfrog data: the Memphis Business Group on Health and
HealthCare 21 Business Coalition in Nashville. Also in Nashville is the
headquarters of HCA, a healthcare system with an unparalleled
commitment to transparency, including 100 percent of their hospitals
reporting on quality publicly through Leapfrog for over a decade.
Senator Murray, I'm also pleased to tell you to say Washington State is
a place of pride for our movement. The Boeing Company was one of our
leading founders and Seattle's Virginia Mason Medical Center earned Top
Hospital of the Decade--our most prestigious hospital award. States in
the top five in the country for prevalence of ``A'' hospitals in every
single update of our Safety Grade are Maine and Massachusetts. And just
this month, two new business groups joined as Leapfrog leaders in each
of their states, one in Louisiana and one in Alabama. We have history
and relationships in states represented by every Member of this
Committee.
In this written testimony, I will describe Leapfrog's main programs
to improve transparency in health care, offer from our experience how
transparency drives improvement and cost reduction, and summarize why
transparency has emerged as an urgent issue for consumers as well as
employers and other purchasers. I will offer our perspective on the
defining elements of effective transparency, and three general policy
principles and recommendations for Committee consideration.
Leapfrog's Programs to Improve Transparency
Leapfrog is the gold standard in health care transparency in the
United States. We collect data on hospital quality and safety through
the annual Leapfrog Hospital Survey, using evidence-based questions
reviewed and supported by peer-reviewed literature and review by top
experts. Leapfrog Regional leaders, typically business groups on
health, ask hospitals to voluntarily report the information. Leapfrog
makes it freely available to the public.
Almost 2,000 hospitals representing two-thirds of the nation's
hospital beds reported last year. Through the Survey, employers and
other purchasers as well as the public at large can monitor important
issues of quality and safety that are not publicly available by
hospital from any other source. For instance, we report on caesarean-
delivery rates, medication safety, and pediatric patient satisfaction.
That data is used by all national health plans, hundreds of purchasers,
and many publishers of performance data. In 2019, we will launch a
Survey on quality and safety of hospital outpatient surgery and
Ambulatory Surgery Centers.
As mentioned above, Leapfrog publishes the Leapfrog Hospital Safety
Grade, an A, B, C, D, or F assigned to over 2,600 general hospitals in
the United States twice a year. This is assigned to hospitals whether
they voluntarily complete our Survey or not. The Hospital Safety Grade
rates hospitals on their success preventing errors, accidents, and
infections, and provides consumers information to begin their research
when selecting a hospital. We calculate the Grade from 27 measures of
safety derived from the Centers for Medicare & Medicaid Services (CMS)
data and other sources including our own Survey if the hospital
reports. We update the research and the grades every six months.
We find significant variation among hospitals on the prevalence of
safety hazards, and that is costly in lives and dollars. In one
analysis of our Hospital Safety Grades, researchers from Johns Hopkins
Medicine estimated that 33,000 lives would be saved annually if every
hospital were as safe as ``A'' graded hospitals. The researchers found
that purchasers spent an average of $8,000 more for every inpatient
visit as a result of patient safety problems. To help purchasers
estimate lives and dollars at risk for their own employees, we provide
a free calculator which you may find enlightening for estimating
dollars and lives lost among your constituents.
Transparency Drives Improvement and Lowers Costs
A stakeholder consensus report by the Lucian Leape Institute of the
National Patient Safety Foundation concluded ``if transparency were a
drug, it would be a blockbuster.'' The report outlined how transparency
jump-starts improvement from within health systems--when clinicians
communicate candidly to each other--and outside health systems, when
information is shared with the public.
One example the report cited came from Leapfrog, a case where
transparency about maternity data drove dramatic improvement
nationally. Specifically, after Leapfrog began publicly reporting
hospital rates of early elective deliveries--deliveries scheduled early
without a medical reason--rates began plummeting. Until the data was
transparent, progress lagged--despite efforts by some of the most
influential organizations in the country, like the American College of
Obstetricians and Gynecologists (ACOG) and the March of Dimes.
Reporting rates by hospital galvanized the efforts of those
organizations, hospitals, and others, so that the national average went
from 17 percent in 2010 to lower than 3 percent today, saving countless
babies and mothers from harm.
We also see the power of transparency to drive improvement in
patient safety. The measures that have been prominently reported by
CMS, Leapfrog, and others, such as central line infections, have shown
dramatic improvement nationally. Measures that have not been reported
publicly or less prominently reported show less improvement. Extensive
peer-reviewed literature suggests that the cost of complications and
errors is highly significant; one study saw as much as $39,000 per
infection for private purchasers. We conclude that driving improvement
through transparency generates significant cost-efficiency as well as
better care.
Consumers and Payors Want Transparency
At Leapfrog we see rapid growth in consumer interest in our ratings
and ratings from other organizations. When we update our ratings every
six months, at least 3,000 news outlets across the country cover them,
and hundreds of local radio stations broadcast news items or interviews
about the new hospital ratings. The breadth of coverage increases with
every update. And perhaps as significantly, hospitals pay close
attention to how consumers perceive their performance. Many hospitals
tell us senior executive compensation is tied in part to the Hospital
Safety Grade, or clinicians are waging a major campaign to improve
infection rates or readmissions because a quality rating or ranking
made the local newspaper. Most patient safety advocates find this
highly gratifying, because traditionally there appeared to be few if
any consequences for hospital leaders that did not put a priority on
patient safety and quality. Transparency changes that.
Part of the interest in health care ratings comes from the growth
of ratings throughout American culture, now ubiquitous in all
industries and driven by a digital economy. But that's not the whole
story, because health care doesn't typically stay on trend with the
rest of the economy. Few doctors use email to reach patients, much less
social media, for instance, and fax machines have disappeared almost
everywhere except doctor's offices and hospitals. The growth in health
care ratings comes in large part from the advent of high deductible
health plans (HDHPs), coupled with tax-protected Health Savings
Accounts or other arrangements to cover the deductible. Such plans were
first authorized in 2003, with passage of the Deficit Reduction Act
during the administration of President George W. Bush. Subsequently
high-deductible plans accelerated in adoption during the Obama
administration, authorized as part of state exchanges in the Affordable
Care Act.
Employers embraced HDHPs, in part as a way to put the brakes on
their health costs and avoid the so-called ``Cadillac Tax'' in the
Affordable Care Act. With the threat of the Cadillac Tax, it is no
longer a competitive disadvantage for a company to offer an HDHP. In
2004, a handful of Americans had a high deductible plan, while today
one in three workers are covered by one. This is a very significant
shift, impacting our health care system and indeed our entire economy.
HDHPs are different from more traditional health plans, like PPOs
or HMOs, where consumers pay one fixed copay for each physician visit
or prescription even if their plan has a deductible. With HDHPs
consumers pay the whole bill from the doctor or the hospital, and they
shoulder the full cost of each prescription, until they spend past the
deductible. But deductibles are so high most people never reach it in a
given year, so they are paying every dime of their care all the time.
This prompts them to think differently about their role in selecting
the doctor, approving a service, or taking a drug. They ask new
questions: do I really need this $2,000 test? Is there a drug option
cheaper than this prescription costing $500?
This kind of consumer engagement creates a market and markets fuel
competition, which can reduce costs. Indeed, a number of studies as
well as actuarial reports cite HDHPs as a factor when national health
spending growth slows. The idea that spending growth in health care
could ever slow suggests something dramatic about the infrastructure of
our health care system, which has stubbornly resisted cost control over
decades. Employers report savings of varying significance when they
shift to HDHPs, and not one ever found that HDHPs raised their health
spending. That alone is a breakthrough for employers who have longed
for some relief from the seemingly endless escalation in health costs.
There are many debates about the merits of HDHPs and whether people
get adequate care when covered by one. But HDHPs are a reality and
policymakers and business leaders alike should work together to improve
their effectiveness. The challenge for all of us is to shape HDHPs in a
way that works best for the health and economic well-being of
Americans. Employers have worked to accomplish that by subsidizing or
in some cases fully funding Health Savings Accounts, offering second-
opinion services and help navigating the system, and providing direct
support like telemedicine and onsite clinics.
But employers always aim to preserve the fundamental principle
behind HDHPs: that individuals should have incentives to ``shop'' for
health care services, which over the long run will be key to improving
quality and costs. For that reason, we must ensure that people covered
by HDHPs, as well as all Americans, can access information they need to
make decisions. Though we have made progress on transparency--and
Leapfrog was founded to help push that progress along--still today
consumers have far too little information on quality and price to make
truly informed decisions. That makes living with an HDHP much more
difficult, and limits the effectiveness of consumer behavior and
opinion to drive positive change. It is hard for markets to gravitate
toward the best care at the best price when information is inadequate.
Effective Transparency: Two Defining Elements
Before turning to Leapfrog's recommendations on policy principles
for improving transparency, it is important to specify what Leapfrog
means by transparency. In health care, too often transparency is
compromised by smoke and mirrors meant to protect sensitive special
interests. Other industries in the American economy are accustomed to
high levels of market transparency, so Leapfrog turns to those examples
to define the level of transparency we seek in health care. Without a
true level of transparency, no market cannot optimally drive change in
quality and cost-effectiveness. Here are the two defining elements of
effective market transparency.
1. Government releases good data, the private sector motivates
consumers to use it. The two roles are different.
Government agencies should make data available and
remove barriers to getting that data. They should also ensure
data protects patient privacy and protects providers from
miscalculations and unscientific misrepresentations.
What government agencies should avoid is excessive
focus on communicating that data for public use. There are many
talented enterprises prepared to assemble data into formats
usable by the many different kinds of consumers. Government
communications of data tend to be politicized, tiptoeing around
sensitive findings, and not as interesting in presentation
because it's not what agencies do best. The private sector will
compete to present data in ways that interest people.
2. Data should allow people to compare services among various
providers. This sounds obvious, but it's not the norm in health
care reporting. For example:
For political reasons, government agencies often
deliberately obscure meaningful variation that exists between
providers. Hospital Compare, the consumer-facing website
produced by CMS, for instance, reports about 90 percent of
hospitals as average on every measure. This contradicts what we
know from enormous bodies of research: that variation among
providers is a hallmark of our health care system. They are not
all the same.
Measures of performance are also developed
separately for different kinds of facilities, so consumers
seeking one particular procedure cannot compare apples-to-
apples an Ambulatory Surgery Center against a hospital if both
offer that procedure. Measures should be standardized to meet
the needs of consumers, not the facility-level nuances
providers deal with.
MACRA allows physicians to pick and choose which
measures of performance they will be held to. This has no value
for consumers comparing among practice options, and little
value to purchasers negotiating value contracts.
Three Policy Principles for Expanding Transparency to Improve Care and
Reduce Costs
Principle One: Safety First
Avoidable harm from safety problems is the third leading cause of
death in the U.S. according to BMJ. One in four patients admitted to a
hospital experiences some form of harm. According to our research and
data, some hospitals have two or three times more incidences of harm
than other hospitals, and the average employer pays nearly $9,000 on
average per hospital admission for medical errors.
The public cares deeply about this problem--as long as we define it
correctly. In our market research, we find that people comprehend the
term ``patient safety'' as fire safety or security guards. But when we
clarify our interest in errors, infections, and accidents, they become
very emotional about the enormity of the problem. Virtually every
individual we interviewed or focus-grouped has a story about an
infection or mistake they or a loved one suffered.
Some of the most critical safety information that consumers and
purchasers care deeply about comes from the Centers for Disease Control
and Prevention (CDC), from information reported by hospitals as well as
other facilities including long term care facilities and ambulatory
surgery centers to a CDC program called the National Healthcare Safety
Network (NHSN). Among the important information NHSN collects and risk-
adjusts are some of the most common and deadly infections.
Unfortunately, CDC shields the rates data from public view. That should
change.
The good news is that CMS requires hospitals that accept Medicare
to publicly report NHSN infection rates for five distinct types of
infections, and then makes the NHSN rates publicly available--though
not necessarily by individual hospital, because health systems are
permitted to report one rate for the whole system. Then last Spring,
CMS issued a proposed rule to remove all of those infection rates as
well as a number of other critical patient safety measures from the
Inpatient Quality Reporting program, created under the Bush
Administration for the purpose of public reporting. The reason given
was that it was too burdensome for hospitals to report the data. After
a story about this broke in USA Today, there were hundreds of consumer
and purchaser advocates who came forward to advocate continued
transparency of this patient safety information. We were pleased when
CMS said in final rulemaking they will preserve full reporting of the
measures, and made a strong statement of commitment to transparency.
The Leapfrog Group is the business community's strategy to get
around the barriers and threats to transparency that exist in current
federal policy. Hospitals may voluntarily make their infection data
public through the Leapfrog Hospital Survey, by simply giving
permission to Leapfrog to draw down their infection data from NHSN.
Leapfrog reports infections by individual hospital, never by system.
This method adds no burden to hospitals for reporting infections. And
it gives peace of mind to purchasers and consumers that if government
agencies try to hide critical information in the future, we at least
have an alternative voluntary mechanism to preserve it.
Recommendations
Americans shouldn't need Leapfrog to gain access
to critical safety data collected by our public agencies. NHSN
data should be made public by the CDC, reported by individual
hospital, and all federal agencies should lean toward
transparency.
CDC could also require more entities to submit
infection data and they should publicly report those rates as
well. These include Ambulatory Surgery Centers, pediatric
hospitals, and other facilities that deliver important services
to millions of Americans. CDC should work with CMS and the
Agency for Healthcare Research and Quality (AHRQ) to assure
they are reporting the same measure across settings so
consumers can have apples-to-apples comparisons among places
that offer the same service.
CDC should also make public its surveillance of
other key safety issues, such as antibiotic stewardship at
hospitals, and do the same surveillance at ASCs and other
facilities.
Principle Two: Price Transparency Alone Can Backfire
We appreciate and commend HHS Secretary Alex Azar for pursuing
price transparency for services delivered in hospitals and health
systems. This is important leadership. But we add one proviso: for
purposes of improving health care and controlling its costs, price
transparency alone is meaningless or worse, misleading enough to drive
up healthcare costs and harm quality. That's because the quality of
care determines the spending. A procedure may be offered at a good
price, but it is no bargain if 1) the patient suffers from an infection
or medical error, 2) the procedure wasn't needed in the first place, or
3) the procedure is poorly performed and has to be corrected. The
National Academy of Medicine estimates that one-third of health
spending is wasted, mostly on one of those three issues.
For example, a hospital with a high risk-adjusted Cesarean section
rate will cost more even if the price of each procedure seems low.
Price transparency in this case should be coupled with transparency
about C-section rates and other maternity quality data. Leapfrog
monitors a standardized rate of C-sections and finds substantial
variation, where one hospital may have twice the rate of another down
the street without a medical reason. Indeed, variation applies for
virtually every service provided in health care, even including
services many believe are uniform in practice, such as MRIs. A
misdiagnosis on an MRI will lead to unneeded or even unsafe treatments
down the line, so the actual cost far exceeds whatever price the MRI
provider charged. Consumers, payors, and employers deserve to have both
cost and quality data available to them so they can choose the best
care at the best price.
Recommendation:
Enact policies that expand price transparency, but
require that quality data be reported alongside pricing.
Principle Three: Don't Kill The Measurement
In rulemaking CMS reiterated a goal expressed by a stakeholder
report published by the National Academy of Medicine: trim measures of
provider performance into a ``parsimonious set of measures.'' In the
dictionary, the word ``parsimonious'' means ``frugal'' or ``cheap.''
The National Academy of Medicine did not recommend parsimony in their
earlier report about $1 trillion in wasted spending (mentioned above),
but frugality is the marching order for measurement. CMS appears to
have aligned with this goal in its campaign called ``Meaningful
Measures.''
The movement for measurement in health care is bedrock to the
advancement of transparency. And like transparency, it is still in its
infancy. It has been little more than a decade and a half since
hospitals reported quality and safety measures through CMS, AHRQ
fostered measure development, and the National Quality Forum (NQF)
began endorsing measures. This is a fragile and pioneering effort,
difficult and not lavishly funded.
It has enabled us to provide valid and meaningful information to
the public and payors. While a national strategy on measurement is
worthwhile, parsimony should be reserved for the real waste in health
care, not the measurement that will ultimately root it out.
Recommendations
We need a national strategic framework for
measurement that pivots on public and payor interest. NQF,
provider stakeholders, and measure developers can then assure
availability of optimal measures within each category. The CMS
Meaningful Measures initiative defines categories as set by a
variety of providers and other stakeholders, but the categories
should be driven primarily by the priorities of patients, not
preference of industry. This is how measurement takes place in
other industries; an assessment of broad categories of consumer
interest is fundamental to reporting quality of cars, mutual
funds, appliances, and virtually every good or service. Through
this framework it is feasible to trim duplicative measures and
identify gaps, but without that consumer-driven purpose we risk
undermining effective transparency and allowing special
interests to obscure performance reporting.
Public and private sector transparency efforts
should be coordinated. Public sector efforts should build on,
and not duplicate, best practice transparency strategies and
vice-versa. As one example, CMS, the federal employees benefits
program, the Veterans Administration (VA), and the Defense
Health Agency could have hospitals to report data to Leapfrog
Hospital Survey. At no financial cost, this would drive a
stronger, more aligned market for quality and cost-efficiency.
Already we have seen inroads in this area, as VA hospitals are
considering reporting to the Leapfrog Hospital Survey, and the
Defense Health Agency is including Leapfrog maternity data in
two programs to improve hospital care for military families.
Policymakers should expand innovations in how we
measure. To date, policy has focused on development of valid
measures of performance, which is helpful. But other techniques
for comparing performance could be built or expanded, such as
patient surveys to assess clinical outcomes and complications,
automatic tabulation of performance through electronic medical
records, and public release of traditionally hidden records of
performance, such as accreditation reports.
Include data on all providers Americans entrust
their lives to. There is a long list of types of providers
exempt from reporting to CMS or CDC. These include (to varying
extents) military hospitals, VA hospitals, children's
hospitals, critical access hospitals, specialty hospitals, and
facilities in US territories such as Guam and Puerto Rico.
Exemptions should be rare, but they are commonplace.
The Leapfrog Group applauds and supports the Senate HELP Committee
for your bipartisan leadership on health care. Employers and other
purchasers are ready and willing to work with you.
______
[summary statement of leah f. binder]
Chairman Alexander, Ranking Member Murray, and Members of the
Senate HELP Committee:
Thank you for the opportunity to share the perspective of employers
and other large purchasers of health care on the importance of
transparency to improve American health care. The Leapfrog Group is an
independent national nonprofit movement founded in 2000 with support
from the Business Roundtable, representing hundreds of the leading
purchaser and employer organizations across the country calling for
transparency of the safety, quality and affordability of care
We are one of the few organizations that both collects and publicly
reports by hospital on safety and quality on a national level, thereby
bringing a unique perspective to the importance of transparency. In
conjunction with 40 business groups on health that serve as regional
Leapfrog leaders across the country, we advocate for transparency, and
``leaps forward'' in safety and quality of care. We grade hospitals
with an A, B, C, D, or F on how safe they are for their patients.
A stakeholder consensus report by the Lucian Leape Institute of the
National Patient Safety Foundation concluded ``If transparency were a
drug, it would be a blockbuster.'' We find that true in our experience,
as our public reporting by hospital galvanized dramatic improvements in
quality and cost-efficiency, from maternity care quality to hospital
acquired infections. Today we see rapid growth in consumer interest in
our ratings, as well as unprecedented responsiveness from hospitals
aiming to improve their Hospital Safety Grade.
With the dramatic growth in High Deductible Health Plans, which
have helped slow the growth in health costs, people need information to
make decisions about health care as never before. Transparency relies
on government to release good data that shows variation among
providers. But government does not need to motivate consumers to use
it--that is a separate role and private sector enterprises will compete
for consumer interest.
We recommend three main policy principles:
1. Put Safety First. Patient safety problems are third leading
cause of death and a major, if often hidden cost driver. It
nullifies equations of value and quality or good pricing, and
concerns consumers deeply. CDC should make its data on
infections and other safety issues public.
2. Price Transparency Alone Can Backfire: Couple it with
quality ratings, because quality determines spending. A
procedure may be offered at a good price, but it is no bargain
if 1) the patient suffers from an infection or medical error,
2) the procedure wasn't needed in the first place, or 3) the
procedure is poorly performed and has to be corrected. The
National Academy of Medicine estimates that one-third of health
spending is wasted, mostly on one of those three issues.
3. Don't Kill the Measurement. The movement to create and
endorse good measures is relatively young and fragile, yet
already there are efforts to cut it in the name of
``parsimony''--frugality not applied to the actual excess
measures are designed to root out. We need a framework for
measurement that pivots on consumer needs, not industry
preference. And we need more public-private alignment to get
and use the right measures, including more federal engagement
with Leapfrog and efforts like ours.
The Leapfrog Group applauds and supports the Senate HELP Committee
for your bipartisan leadership on health care. Employers and other
purchasers are ready and willing to work with you.
______
The Chairman. Thank you, Ms. Binder.
Mr. Kampine.
STATEMENT OF BILL KAMPINE, CO-FOUNDER, SENIOR VICE PRESIDENT,
CLIENT ANALYTICS, HEALTHCARE BLUEBOOK, NASHVILLE, TN
Mr. Kampine. Chairman Alexander, Ranking Member Murray, and
Committee Members, thank you for the opportunity to testify
today. Price and quality transparency is an important topic,
and it's key in order for consumers and employers to get more
value out of our healthcare delivery system.
I'm going to start today with a brief story. It's actually
about the first Bluebook consumer. It's my co-founder, Dr. Jeff
Rice. About 10 years ago, Jeff's young son needed an outpatient
foot surgery. It wasn't a very complex case, but it was sort of
a rare procedure. So Jeff does his homework, finds a specialist
in this area, and he schedules the surgery at a nearby
hospital.
Because Jeff has a high deductible, he calls the hospital
to get an estimate of the price. You can imagine how that
conversation went. The hospital says, ``We don't know,'' and
``Why are you asking?'' So Jeff explains that he's got a high
deductible, and the hospital agrees to do some research and to
get back to him with a price estimate. So about 10 days later,
Jeff gets a call, and while the hospital can't provide an exact
price, they have an in-network estimate for him. So the in-
network estimate is a minimum of $15,000. Jeff thinks to
himself that's a little expensive for a one-hour outpatient
surgery. So he calls his doctor and asks, ``Is there another
facility where we can schedule the surgery?'' The doctor says,
``Absolutely.'' Same quality, more convenient for Jeff and his
family. So Jeff calls the second facility.
Does anybody want to take a guess at what the second price
was? It wasn't $15,000. It was $1,500. Same doctor, same
quality, more convenient for Jeff and his family, over $13,000
difference in price.
I'd like to tell you that this story is an artifact of a
different era, but that's not true. Our data tells us that
every day across the United States, consumers face precisely
this level of price variability. This is why price and quality
transparency are so important, and it's why we created
Healthcare Bluebook. It should be easy for employees and their
family members and our neighbors to understand what they should
reasonably pay for care, compare providers, and get better
value for themselves.
Each year, employers and consumers through out-of-pocket
costs spend about $1.5 trillion. Conservatively, about a third
of that is non-acute shoppable procedures. Based on the work we
do with employers, if consumers were to use more cost-effective
providers within their existing network, both consumers and
employers could save about half of that, and that's $250
billion returned to the economy.
On the consumer side, what is the number one cause of
bankruptcy in the United States? Medical bills. Leah mentioned
it. The number three cause of death is medical errors or poor
quality. In this room, we talk about cost and quality on a
large scale. I can tell you what--the job consumers are trying
to solve is pretty simple. It's safety and savings, and there's
an important role for transparency in helping consumers meet
that need.
From 10 years of working with consumers and employers, what
I know is that when consumers understand that they should shop
for care and they have access to transparency tools, they'll
use those tools to compare cost and quality. What I also know
is that consumers who shop for care before receiving treatment
are two to three times more likely to select cost-effective or
high-quality providers for themselves, and, of course, this has
a tangible impact on the consumer. They can save hundreds of
dollars on common services, like diagnostics and imaging, and
they can save thousands of dollars on surgeries, both inpatient
and outpatient, and employers have a significant impact on
lowering their overall plan costs as well.
As the Committee turns its attention to policy initiatives
that can make transparency more broadly available to U.S.
consumers, I would offer the following considerations. The
first is that independent transparency providers, along with
our employer partners, have led innovation in this area for
over a decade. Independent solutions need to be at the center
of transparency because they are free from conflicts of
interest that can arise with our other industry stakeholders.
Second, we are in need of improved quality measures for
outpatient care. Leah talked a little bit about this. Leapfrog
is doing some great work in this area. I support greater access
to CMS encounter level data for outpatient surgeries in both
the hospital outpatient venue and in the ambulatory surgery
center setting. The reason this is important is so that we can
understand and compare quality for the same surgery performed
in those two settings. Access to this data will further
outpatient quality measurement initiatives and improve overall
transparency for consumers.
Lastly, a growing body of research suggests that when
hospitals buy hospitals or hospitals acquire outpatient centers
or physician practices, the result is higher prices. I
encourage Congress to be vigilant of the impact that
consolidation has on prices and to promote policies that foster
competition, which I believe in the long run are in the
interest of our consumers.
I thank the Committee again for the opportunity to testify
today, and I look forward to questions.
[The prepared statement of Mr. Kampine follows:]
prepared statement of bill kampine
Chairman Alexander, Ranking Member Murray, and Members of the
Committee, thank you for this invitation to speak with you today to
share thoughts on how improved price and quality transparency reduces
cost for employers and consumers, improves the healthcare experience
for patients and fosters a more efficient, competitive healthcare
delivery system.
My testimony is drawn from my experience as Co-Founder and Senior
Vice President of Analytics at Healthcare Bluebook. We established
Healthcare Bluebook in 2007 with a simple purpose: to protect patients
by exposing the truth about prices and empowering consumers to make
better choices.
Bluebook is now one of the largest independent providers of
healthcare price and quality transparency solutions to large self-
insured employers, state and municipal governments, employee benefit
trusts and third-party administrators. Millions of insured members use
Healthcare Bluebook's shopping solution to understand what they should
reasonably pay for care in their area, compare in-network providers on
both cost and quality, and save on their out-of-pocket healthcare
expenses.
Bluebook price and quality transparency tools are accessed by
employers and consumers in all 50 states and every metropolitan area in
the US.
The Impact of Hidden Costs
Hidden price and quality variability have a significant impact on
both patient health and affordability. In the US, medical bills are the
number one cause of bankruptcy, and medical mistakes (i.e. poor-quality
care) are the third leading cause of death. When patients don't
understand what care should cost or lack the ability to compare
providers, they frequently overpay for common healthcare services by as
much as 2X-10X. When patients don't have access to outcomes-based
quality information, they choose poor performing doctors or facilities,
increasing their risk of complications, readmission and death.
Lack of transparency also has a significant cost for employers and
our broader economy. Roughly $1.5 trillion of our annual US healthcare
expenditure is paid for by employers or directly through consumer out-
of-pocket costs (NHE 2016).
Conservatively, shoppable non-acute healthcare services account for
one-third, or $500 billion, of the $1.5 trillion total. Based on our
analysis of commercial healthcare claims data, when consumers have the
tools to shop for care, compare providers on cost and quality, and
choose better value in-network providers, both consumers and employer
plan sponsors can save 50 percent of the costs on these shoppable
services. In the commercial insurance market alone, this would return
$250 billion back to our economy.
Additional savings are also available to the Federal Government.
While there is lower price variability in Medicare rates when compared
to commercial payments, Medicare beneficiaries choosing a lower price
venue for care can reduce cost by as much as 50 percent for some
imaging and outpatient procedures.
Price and Quality Variability
In-network prices for common shoppable outpatient and inpatient
procedures vary by 2-10x, without an accompanying difference in quality
or outcome for the patient. Moreover, high price variability is
extremely consistent. We observe this level of variability in every US
metropolitan area, and across insurance company networks.
Figure 1: Price Variation: South Florida Cataract Surgery Prices
For any given service, the single largest component of cost is the
facility fee or location where care is delivered. Variability in the
facility price, not physician fees, drive overall price variability.
For consumers, where they choose to receive care will have a
significant impact on price.
Inpatient quality demonstrates similar variability both within and
across hospitals. Bluebook uses CMS data to independently evaluate
patient outcomes in 36 clinical areas for over 5,000 US acute care
hospitals. \1\ Our composite quality scores compare a hospital's
outcomes in each clinical area (joint replacement, stroke care, etc.)
benchmarked against all other US hospitals. A similar analysis is used
to evaluate physician-specific outcomes.
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\1\ Bluebook composite quality ratings include individually scored
dimensions for mortality, complications, safety events and
unanticipated readmissions. All metrics are risk and volume adjusted
using peer reviewed, published methodologies.
Based on our analysis of the national quality data, we consistently
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find the following:
Hospital outcomes in most metro areas exhibit a wide
range of performance, from the top 25 percent nationally to the
bottom 25 percent nationally. Patients must be able to
differentiate between high and low performers.
Outcomes for different clinical departments within
the same hospital also exhibit significant variation. Patients
cannot rely on brand to make global quality determinations.
When combining clinical quality and Bluebook price
data, we do not observe any correlation between cost and
quality. Patients cannot rely on price as a proxy for quality.
Selecting a high-quality hospital does not guarantee
a high-quality physician. Patients must be able to
independently evaluate both facility and physician quality.
Figure 2: Quality Ratings: San Francisco Complex Neurological Surgery
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Consumer Experience
While insured consumers in every area of the US face significant
local price and quality variability, most struggle to access the
information they need to obtain better value. The provider and hospital
systems are not designed to provide consumers complete and accurate in-
network price estimates. \2\. \3\ Carrier tools are generally not
promoted for their transparency features and experience low
utilization.
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\2\ James, Steve. ``How Much Will Surgery Cost? Good Luck Finding
Out.'' NBC News, 2 Nov 2013.
\3\ Jegtvig, Shereen. ``Hospitals will quote prices for parking,
not procedures.'' Reuters Health, 2 Dec 2013.
Nonetheless, consumer surveys express demand for price and quality
information and confirm the value to consumers when data are available.
\4\
---------------------------------------------------------------------------
\4\ June 2017 report by Public Agenda, with support from the
Robert Wood Johnson Foundation
57 percent of Americans would like to know healthcare
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prices in advance
74 percent with deductibles of $3,000 or more have
sought price information
53 percent who searched for price information saved
money on care
82 percent who used a transparency website would use
it again
Bluebook Results
As an independent transparency company, Healthcare Bluebook has
been at the forefront of protecting patients by creating tools that
make it easy for consumers to compare providers on cost and quality,
shop for care and obtain better value. Over ten years, we have learned
a great deal about healthcare shopping behavior.
After my doctor scheduled me for a brain MRI at a facility he
always used, I checked Healthcare Bluebook for the procedure
and realized that my doctor was sending me to one of the most
expensive places in my area. I worked with my doctor and went
to a green provider instead, saving me almost $2,000.--Bluebook
Member
We know that when consumers have access to an intuitive, easy to
use solution like Bluebook they will utilize the solution to compare
providers and shop for care. When consumers shop for care, they
consistently make better choices on cost and quality. In our
experience, consumers who shop for care are 2 to 3 times more likely to
select a cost-effective provider than those who do not shop.
We also understand that when consumers with high deductibles and
co-insurance utilize cost effective providers they realize significant
out-of-pocket savings. Consumers can typically save an average of
$1,500 on imaging and diagnostics, $2,000-$5,000 on outpatient
procedures and as much as $8,000 or more on inpatient procedures.
Increasing the use of cost effective providers also has an impact
on overall employer plan costs. Over a ten-year period, Bluebook
clients have saved in excess of $240 million through better
transparency.
Keys to Success
There are a myriad of design and other factors that contribute to a
successful consumer transparency program. For the Committee's
consideration, I will focus on the four most critical:
1. Payor Independence: Independent solution providers have
driven innovation in transparency for over a decade.
Independent providers are free from any conflict of interest
that can arise for intermediaries between the provider network
and the employer. We uniquely serve the interest of the
employer and the consumer and are free to present data, utilize
independent quality metrics and create benefit designs that
incent utilization of high-quality, cost-effective providers.
2. Ease of Use: Healthcare navigation and pricing are
complex. Intuitive design and actionable information are
critical for making healthcare consumerism as easy as other
daily transactions.
3. Education and Engagement: Most patients don't consume care
weekly or even monthly. Many don't fully understand their
benefit design or the magnitude of price differences.
Successful transparency is not passive. It requires
communication of timely, relevant information when patients
have a need and the use of mobile apps, messaging and social
media.
4. Incentives: Value-based rewards, like cash incentives,
share a portion of savings back with patients when they make
cost-effective decisions. Rewards create additional incentive
for a patient to engage in consumerism, even if the patient has
met their deductible or out-of-pocket maximum.
Policy Considerations
As the Committee turns its attention to policy and initiatives that
can further price and quality transparency, I offer the following
thoughts for the Committee's consideration:
Employer Data Access: The transparency movement began
in earnest a decade ago when self-insured employers, via their
transparency partners, began to closely examine the price
variability in historic claims. Data maintains the balance in
the scale between employers and providers. Congress must ensure
that self-insured employers have full access to unredacted
historic claims and the right to provide their data to any
partner covered by a Business Associate Agreement, without
limitation.
Provider Consolidation: When hospitals acquire other
hospitals or outpatient facilities, local prices increase. When
hospitals acquire physician practices, referral patterns
reflect a proportional increase in the use of higher cost
hospital-based outpatient care. A 2018 study using a national
sample of commercial claims data shows that while consumption
of services over the past few years is flat, and in some cases
declining, employers are still experiencing high single-digit
increases in healthcare expenditures. \5\ The study concludes
that the largest factor influencing employer medical trend is
increased prices. I encourage Congress to be vigilant of the
impact that consolidation has on healthcare prices and
encourage policies that foster competition, an innovation that
benefits consumers and plan sponsors.
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\5\ Health Care Cost Institute, 2016 Health Care Cost and
Utilization Report
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Waiver of Out-of-Pocket Costs for HSA Eligible Plans:
Waiving out of pocket cost is an effective incentive to
encourage consumers to use high-quality, cost effective
providers. HSA plans currently require the full deductible to
be met before the plan can cover any additional portion of out-
of-pocket costs. Congress should consider easing this
restriction within the context of transparency and value-based
benefit design.
Access to CMS Data: The past few years have seen
increased access to detailed Medicare data. Improved access has
spurred innovation in quality measurement initiatives,
particularly in the inpatient setting and physician-specific
outcomes. However, broad access to detailed encounter level
data for physician office and outpatient surgeries, in both the
HOPD and ASC settings, is deficient. Greater access to detailed
data that allows comparison of quality outcomes for outpatient
services, specifically the HOPD and ASC settings, would improve
transparency of provider cost and quality for consumers.
Summary
Today, employers and their employees are the largest consumers of
healthcare and account for $1.5 trillion of our annual US healthcare
expenditure. In our experience over the past decade, when consumers
shop for care they consistently make better choices on cost and
quality.
We believe that policy can play a positive role to advance
transparency within our US healthcare system. Employer data access,
provider consolidation, waiver of out-of-pocket costs for HSA eligible
plans and access to CMS data are all initiatives the Committee should
consider for improving the future of healthcare for all Americans.
______
[summary statement of bill kampine]
Hidden price and quality variability have a significant impact on
both patient health and affordability. In the US, medical bills are the
number one cause of bankruptcy, and medical mistakes (i.e. poor-quality
care) are the third leading cause of death. When patients don't
understand what care should cost or lack the ability to compare
providers, they frequently overpay for common healthcare services by as
much as 2X--10X. When patients don't have access to outcomes-based
quality information, they choose poor performing doctors or facilities,
increasing their risk of complications, readmission and death.
Lack of transparency also has a significant cost for employers and
our broader economy. Each year employers and consumers spend
approximately $1.5 trillion on healthcare. Conservatively, non-acute
shoppable procedures account for on-third, or $500 billion. Based on
our data, employers and consumers could save half that spend by using
more cost effective in-network care--returning $250 billion to the
economy.
We know that when consumers have access to easy-to-use price and
quality transparency tools, they will use those tools to shop for care.
In our experience, consumers who shop for care are 2X--3X more likely
to select a cost-effective provider than those who do not shop.
When patients shop, both consumers and the employer save money.
Consumers can save roughly $1,500 per episode on common imaging and
diagnostics tests, and thousands on outpatient and inpatient care.
Better consumerism also translates into overall savings for the
employer. Over a ten-year period, Bluebook clients have saved in excess
of $240 million.
Some critical factors for successful transparency include:
Payor Independence: Independent solution providers
are free of network conflicts.
Ease-of-use: Intuitive design makes healthcare
consumerism as easy as other daily transactions
Incentives: Value-based rewards create additional
incentive for a patient to engage in consumerism, even if the
patient has met their deductible or out-of-pocket maximum.
As the Committee turns its attention to policy initiatives that
make price and quality transparency information more widely available,
we offer the following considerations:
Employer Data Access: Data balances in the scale
between employers and providers. Congress must ensure that
self-insured employers have full access to unredacted historic
claims and the right to provide their data to any partner
covered by a Business Associate Agreement, without limitation.
Provider Consolidation: When hospitals acquire other
hospitals, outpatient facilities and physician practices, local
prices increase. Congress should be vigilant of the impact that
consolidation has on prices and encourage policies that foster
competition, which benefits employers and consumers.
Waiver of Out-of-Pocket Costs for HSA Eligible Plans:
Waiving out of pocket cost is an effective incentive to
encourage consumers to use high-quality, cost effective
providers. HAS eligible plans currently require the full
deductible to be met before the plan can cover any additional
portion of out-of-pocket costs. Congress might consider
flexibility to promote value-based benefit design.
CMS Data: Greater access to detailed data allowing
comparison of quality outcomes for outpatient services,
specifically the HOPD and ASC settings, would improve
transparency for consumers.
______
The Chairman. Thank you, Mr. Kampine.
Ms. Giunto.
STATEMENT OF NANCY A. GIUNTO, EXECUTIVE DIRECTOR, WASHINGTON
HEALTH ALLIANCE, SEATTLE, WA
Ms. Giunto. Chairman Alexander, Ranking Member Murray, and
Members of the Committee, thank you for the opportunity to
appear as a witness today.
Since our hearing is focused on reducing healthcare costs
through increased transparency and more empowered patients,
let's test the current system. Let's imagine a patient I'll
call Annika. Annika has just moved to a new city. She has a new
job and health insurance through her employer. At the top of
her to-do list is to find a primary care physician for herself,
her husband, and her son. Annika's son has diabetes, and he has
been closely monitored for several years. Her husband has been
taking pain medication for some time as a result of a back
injury, and he's having trouble getting off his medication.
Annika knows that one physician will not meet the needs of
everyone in her family. She wants the best quality care at an
affordable price and a great patient experience, and she needs
to choose the providers that are in her health plan's network.
But where in the world does she start? Is there one place
where she can find the trusted information she needs that is
easily understandable in a format in which she can compare
providers? The challenge for patients in our country is that
the answer to this question is for the most part an emphatic
and resounding no. Trusted and objective information on value,
that is, cost, quality, and patient experience, is not readily
available, and if parts of it exist, it's unlikely that it's
all in one place.
Fortunately, there are organizations like mine, the
Washington Health Alliance, that has been making headway on the
issues Annika cares about. Since 2005, the Alliance is a place
where stakeholders have come together to work collaboratively
to transform Washington state's healthcare for the better. One
hundred and eighty-five member organizations from across the
state belong to empower the work of the Alliance, and we
represent every stakeholder group in healthcare.
We have two core competencies. First, we're a trusted
convener, convening a collective conversation on how to improve
healthcare delivery and financing, and, second, our competency
is data aggregation analysis for performance measurement and
public reporting. Much of the data for our work comes from an
All Payer Claims Database that is voluntary in our state. We
have 500,000 lives that are covered by ERISA in our database on
a voluntary basis.
We know that data alone does not change behavior.
Transforming data to action requires stakeholder involvement
and commitment and accountability. Senator Murray in her
opening comments mentioned a report that we recently issued
called First, Do No Harm, where she mentioned the data across
47 clinical areas. To begin with, we identified $282 million
worth of savings. I'd like to tell you how we're putting that
to work in the State of Washington.
The Boeing Company is using that work to identify
unnecessary services in their Accountable Care Organizations.
We're also working on an initiative called Drop the Pre-Op, in
which we're seeking physician engagement to eliminate routine
pre-operative lab studies and other imaging tests on healthy
people who are having a low-risk procedure. We estimate that
through this work, we can conservatively save unnecessary care
of about $92 million a year in our state. Fortunately, the
Alliance is not alone in its efforts. Regional health
improvement collaboratives, or RHICs, including Alliance, are
hard at work in 32 states, including 14 states represented by
Senators on this Committee.
I would say that, ideally, health transparency must include
all aspects of value, cost, quality, and patient experience,
not just cost. I agree with my fellow panelist. Cost
transparency is very important, but it's not enough. We must be
able to look at cost and understand what we get for it. Do the
services I am paying for improve my health, and are they
clinically appropriate? Measuring this is very challenging, and
reporting in a comprehensive way is even more challenging, and
I think we would all agree we have much work to do in our
country.
Empowering patients to choose high-value care is very
challenging as well. Here are four ways to equip patients to be
better--to make better decisions about their healthcare.
First, significantly expand efforts to teach consumers that
cost and quality of healthcare are highly variable, that they
are measurable. They should use that information to become more
informed consumers of care. Secondly, focus on prioritizing
health literacy. Eliminate medical jargon. Don't assume
consumers or employers understand our very complex system.
Third, deliver objective, easy to understand information
that is available on demand to consumers at the point of care
or when they are seeking care. And, finally, enlist physicians
and other clinicians to promote transparency. In a recent study
that we did, we found that there were only 23 percent of
respondents answering yes to a survey about whether office
staff or physicians could help them identify the cost of care
prior to a procedure or a prescription.
Let me thank you for the opportunity to testify today.
Thank you.
[The prepared statement of Ms. Giunto follows:]
prepared statement of nancy a. giunto
Committee Chairman Alexander, Ranking Member Murray and Members of
the Health, Education and Pensions Committee, I very much appreciate
the opportunity to testify on the topic, ``Reducing Health Care Costs:
Examining How Transparency Can Lower Spending and Empower Patients.''
My organization, the Washington Health Alliance, or the Alliance
for short, is a place where for the last thirteen years, stakeholders
have come together to work collaboratively to transform Washington
State's health care system for the better. The Alliance brings together
organizations that share a common commitment to drive change in our
health care system by offering a forum for critical conversation and
aligned efforts by key stakeholders: purchasers (i.e. employers and
union trusts), providers, health plans, consumers and other health care
partners. 185 member organizations from across our state belong to and
power the work of the Washington Health Alliance.
The Alliance Board of Directors is comprised of 24 very senior
health care and business leaders from across our state (Appendix A).
This level of leadership is essential to leverage initiatives and to
implement them.
The Washington Health Alliance has two core competencies. First, we
are a trusted convener for stakeholders, promoting a collective
conversation to transform health care delivery and financing. Our
second core competency is data aggregation for the purpose of
performance measurement and public reporting.
Much of the data for our work on public reporting and measurement
comes from a voluntary All Payer Claims Database--or APCD--that the
Washington Health Alliance started in 2007 and continues to maintain
today. The Alliance's APCD is supported by 35 data submitters,
including commercial and Medicaid insurers in our state plus self-
funded ERISA employers. As you are aware, ERISA preempts any state law
requiring self-insured employers to submit health care claims data to a
state-mandated APCD. Our voluntary APCD contains 550,000 ERISA lives
and information on a total of 4 million Washingtonians.
Transforming Data to Action Requires Multi-Stakeholder Engagement and a
Commitment to Value-Based Purchasing
Accurate data that is transparent to all key stakeholders is
essential, but insufficient to drive improvement and better value in
health care. Data alone does not change behavior; it also takes trust,
dialogue and communication from respected leaders. All stakeholders
must be actively engaged in the effort to prompt action as shown on the
diagram on page 3. This starts by turning data into understandable
information, which requires translating technical information for
multiple audiences through the use of compelling stories. Information
that is well understood by all key parties can then be used to promote
engagement, target specific areas and tools for action, and ultimately
produce outcomes such as better health, lower cost and less waste for
patients.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Engaging each stakeholder group requires answering two key questions,
``how do we hold one another accountable for our collective
commitments?'' and, ``what's in it for me?''
Health care is an industry characterized by many silos with too few
aligned financial incentives. There is not enough interaction or
alignment between those paying for care (purchasers), those receiving
care, and those providing the care. Each stakeholder group must be
invested and have a collective commitment to move transparent data to
action to improve health care for individuals in our communities.
Managing stakeholder accountability requires a careful balance--
creating a vision for collaboration while also bringing tension to bear
so all organizations stay at the table to accomplish goals that support
patients. It is extremely challenging (and some would say impossible)
for an individual patient to effectively navigate the health care
system alone. They need the synergy and mutual accountability amongst
and between all health care stakeholders to create a system of care
that works for their benefit.
The balancing act to drive mutual accountability among diverse
stakeholders demands effective relationships, candor, trust and
tenacity. It requires a clear understanding and an ability to
demonstrate how involvement in the collective benefits each individual
stakeholder group and ultimately benefits the patient. And finally, it
requires a neutral, objective and third-party facilitator that has a
``table'' big enough to include all and a reputation that engenders
trust when discussions are strained. This is the role of the Washington
Health Alliance and other organizations like us.
Here are a few concrete examples of the critical role each key
stakeholder group needs to play in order to achieve the desired
outcomes of improved health, reduced cost and less waste for patients.
Providers: A frequent axiom in health care (and other
industries) is that you cannot improve what you don't measure.
To date, health care improvement has centered primarily on
measuring quality, patient experience, and to a lesser extent,
cost. Providers (i.e. physicians and other clinicians,
hospitals, etc.) are at the epicenter of much of these efforts
and are affected by the results of measurement through both
incentives and penalties. Since they have tremendous impact on
results, their buy-in is instrumental to progress. In other
words, to create an action-focused data base, providers who are
reported on must have a genuine and active role in creating the
methods used to produce results. For example, providers must
agree to an attribution policy so patients they have cared for
are correctly assigned to them. In addition, providers must
have the opportunity to validate results and to have a say in
the way evidence-based clinical measures are included in a
report. Action will only happen if providers are an integral
part of the process and when they generally support the
evidence-based conclusions and rankings that are drawn. By
participating in this process, they are ensuring that the
information the public sees is a reasonably accurate reflection
of the quality of care they provide. We know from experience
that they don't always like what they see, but they will accept
the results and move forward to drive improvement IF they have
been a part of the process. We are so fortunate in Washington
to have providers who are willing to stand up and be counted,
to be publicly ranked on the care that they deliver, and to
look for opportunities to learn from the results and improve
practice.
Purchasers: Employers and union trusts can have tremendous
leverage in driving better value in health care for their
employees, particularly if they use their buying power and
collaborate with other purchasers on ways to buy health
benefits for value together. Purchasers write big checks for
health care and they should expect more of providers, pushing
them to adopt best practice protocols and prompting them to
improve performance if they are below the state average or the
results of competitors. Purchasers should press health plans to
develop products that include measures of value and, once
developed, they should actually buy them. In the end, the
purchaser benefits by having more productive, healthier
employees and lower health care expenses overall.
The Washington Health Care Authority is the largest health care
purchaser in our state, covering state employees and the
Medicaid insured population, and accounting for 25 percent of
the total spend. We benefit tremendously from the example they
set by leading the way in purchasing for value through
accountable care programs and procedure-based bundled payments
(knee and hip replacements, spine surgery) that are already in
place, and through rural health care payment initiatives under
development. The Boeing Company, also a very large purchaser in
our state, is leading by example as well, by also purchasing
for value through accountable care programs and implementing
innovative tools to encourage consumer engagement in smart
health care choices.
Insurers: Health plan leaders need to continue to advocate for
value-based purchasing through active engagement with
purchasers and through physician contracting that embeds
elements of value directly in payment terms. Transparency of
information is dependent on the commitment of health plan
leaders to engage and trust others with their data. Washington
health plan leaders have trusted the Washington Health Alliance
with claims-level quality data since 2007. In addition, most
commercial plans have also entrusted us with ``billed, paid,
and allowed'' charge information at the claims line level on a
voluntary basis beginning in 2017. These leaders understand
that transparency is paramount to building trust with
purchasers and to aligning efforts to transform health care for
the patients we all serve.
Specific examples in Washington State of moving data to action
The Washington Health Alliance produces several reports each year
that address the persisting obstacles to the best care and patient
experience. Our members and stakeholders use these reports to make
impactful changes, as described below in several examples.
King County, the largest county in the State of
Washington and a founding member of the Washington Health
Alliance, employs 14,000 individuals in professional, technical
and service positions. County leaders regularly invite Alliance
staff to their joint labor management insurance committee to
engage in conversations about the Community Checkup and other
Alliance reports about the quality of health care in Washington
State. King County is actively designing health benefit plans
and employee engagement programs that help guide employees in
making thoughtful choices about health and healthcare options.
They utilize Alliance materials extensively in the creation of
these employee engagement programs.
SEIU 775 Benefits Group provides health care benefits
for approximately 18,000 home health caregivers. They are
addressing the issue of behavioral health risks in the
caregivers they support by partnering with Kaiser Permanente
Washington (a primary insurer for the SEIU 775 members) as well
as other community organizations to offer a range of behavioral
health services including: a mobile coaching app, video chat
services to Kaiser Permanente members needing behavioral health
services, depression and anxiety screening, and in-person and
on-line mindfulness classes. This effort grew, in part, from
conversations at the Alliance's Purchaser Affinity Group about
ways purchasers can engage more deeply in employee behavioral
health issues.
The Washington Health Alliance's ``First, Do No
Harm'' report, released in February 2018, received national
attention for its ground-breaking work on overuse and waste in
health care. \1\ In this report, we identified an estimated
$282 million in unnecessary services in one year in our state
exploring only 47 such services initially. We used the Health
Waste Calculator developed by Milliman to perform this analysis
on 2.4 million commercially-insured lives in our voluntary
APCD.
---------------------------------------------------------------------------
\1\ First Do No Harm: Calculating Health Care Waste in Washington
State. Washington Health Alliance, February 2018
The Boeing Company, a strong supporter of the Alliance and a
data submitter, retained us to use the health waste calculator
to analyze their data and identify unnecessary services in
their Accountable Care Organizations. Activities are now
underway to improve processes of care and eliminate waste based
---------------------------------------------------------------------------
on our work together.
The Alliance is taking further action with this report by
working with our state-wide Choosing Wisely Task Force,
comprised of physician leaders as well as representatives from
the Washington State Hospital Association and the Washington
State Medical Association. This group is working on an
initiative called ``Drop the Pre-op!'' (Appendix B) in which we
are seeking physician engagement to eliminate routine
preoperative lab studies, pulmonary function tests, chest X-
rays and EKGs on healthy people before low-risk surgical
procedures. We conservatively estimate the cost of this
unnecessary care to be approximately $92 million a year.
The Everett Clinic, a nationally known and
progressive delivery system located north of Seattle, used the
Alliance's Hospital Value Report to have a conversation with
its major referring hospital to understand why the hospital was
performing below average in some areas and how they could work
collaboratively to improve. \2\ The Hospital Value report looks
at the three key elements of value: quality, patient experience
and price, and combines these factors to view performance
variation of hospitals in Washington. Importantly, the results
refute the common belief that higher prices always correlate
with better care and improved outcomes for patients.
---------------------------------------------------------------------------
\2\ Hospital Value in Washington State. May, 2018
The Alliance was instrumental in leading the work in
Washington to develop a statewide Common Measure Set on
Healthcare Quality and Cost, with the starter measure set
agreed upon in late 2014. \3\ The Washington Health Alliance
has reported results on its Community Checkup website for all
measures and all units of analysis since 2015. \4\ To date,
Washington is one of only a handful of states nationwide to
accomplish agreement on a common measure set and we receive
inquiries on a regular basis about our strategies and
processes. Numerous purchasers and health plans use a subset of
these measures as the basis for monitoring and paying for
health care quality in their contracts. Providers incorporate
measures and results into quality improvement efforts.
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\3\ Common Measure Set on Healthcare Quality and Cost. Health Care
Authority Performance Measures Coordinating Committee, 2018
\4\ Washington Health Alliance. ``Community Checkup.''
wahealthalliance.org/alliance-reports-websites/community-checkup/
Fortunately, the Alliance is not alone in its efforts as a regional
health improvement collaborative (RHIC). The Network for Regional
Health Improvement (NRHI) represents more than 30 RHICs and state-
affiliated partners (including the Washington Health Alliance), all
working toward the common goals of better health, better care, and
lower costs. NRHI members are hard at work in 32 states, including 14
states represented by Senators on this Committee. Although each NRHI
member does things a little differently due to differences in
demographics, market forces, skills and expertise, we are all deeply
committed to the fact that the health care system is broken, that a
multi-stakeholder approach is essential to affecting change, and that
solutions must be data-driven.
Examples of moving data to action from other states and NRHI members
Under NRHI's leadership, five RHICs from Colorado,
Maine, Missouri, Minnesota and Oregon standardized measurement
and reporting of the total cost of care to understand relative
differences in the underlying drivers of cost. Bringing states
with higher than average costs down to the average of the
participating states could potentially save over $1 billion
annually. This report is being used by legislators, state
agencies, employers, providers and payers to develop strategies
to reduce overall costs.
The Kentuckiana Health Collaborative (KHC) worked on
an initiative to improve health while minimizing administrative
burden. The Kentucky Core Healthcare Measures Set (KCHMS) was
developed by over 70 experts from 40 organizations to align
payers and purchasers around a shared set of priority measures
that drive improved health, quality of care and value, and
reduce administrative complexity and waste. Kentucky's new set
contains 32 measures, less than half of the 89 currently
incented measures.
Maryland Health Care Commission (MHCC) created a
``Wear the Cost'' campaign. A campaign website was launched to
empower consumers to get involved in their own health care,
with numerous ways to take action. The campaign provides cost
and quality information for consumers and providers to raise
awareness of variation among hospitals statewide, helping
patients make high-value choices to reduce overall costs.
Additionally, consumers can sign an appeal asking doctors,
hospitals, and insurance companies to work together to make
costs public and provide high-quality care. Consumers also can
order a Wear the Cost t-shirt to build awareness in their
community.
Integrated Healthcare Association (IHA) created the
California Regional Health Care Cost & Quality Atlas. This
atlas is a state-wide publicly available improvement
measurement tool that reports on over 29 million insured
Californians providing a roadmap for reducing cost and quality
variation. Regional and insurance product line information
shows where quality and cost are trending in the right
direction and where there is room for more improvement in
specific areas within the state.
The Health Collaborative in Cincinnati, Ohio works
with over 560 physician's groups across the State of Ohio to
aggregate payer data and measure performance in one of the
largest payment demonstration models in the country. The
outcome of this effort has created significant data-driven cost
and quality improvements, in addition to better health outcomes
for the patient populations these providers serve--including a
33 percent reduction in hospital visits, an 11 percent
reduction in emergency department visits, and $112M in lowered
cost.
One RHIC leading the way in reporting on value is
HealthInsight Oregon. This organization creates multi-payer,
comprehensive reports at the medical clinic level including
price, resource use, utilization and quality data for patients
attributed to the clinic across inpatient, outpatient, and
professional settings. These reports allow providers to
understand how they are performing in categories such as
medication management, avoidable emergency department visits,
and imaging services in comparison to their peers, and identify
areas for improvement. In 2018, Oregon will be publicly
releasing cost data paired with quality data, allowing
consumers to make informed choices about where to seek high-
value primary care.
Transparency Must Include All Aspects of Value--Cost, Quality and
Patient Experience- Not Just Cost Alone
The Alliance believes strongly in transparency and is working
diligently to offer trustworthy and credible reporting of progress on
all measures of health care value (cost, quality and patient
experience) as shown on the next page.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Measuring health care value is challenging. Those who are most
engaged in this work across the country would acknowledge that critical
capabilities are in different stages of development. For example, more
states/regions are aggregating and using health insurance claims data
to measure very important health care processes, as we do at the
Washington Health Alliance; however, the infrastructure to access
hundreds of millions of medical records and/or patient surveys to
effectively measure clinician and patient-reported outcomes is in a
more nascent stage. Similarly, state-wide measurement of patient
experience with physicians in a standardized manner (i.e., using a
nationally-vetted survey instrument) to support transparency/public
reporting is only available in Washington State and a small handful of
other states. \5\ And price transparency--sharing accurate detail on
pricing variation (including total cost and consumer out-of-pocket
liability) for treatments, procedures and medications--is largely
unavailable in most states apart from the ``cost calculators'' offered
by several health plans, some of which are quite limited. Moreover, a
majority of patients are often unaware of the existence of these
reports and tools, or may be unclear on how to interpret the available
information.
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\5\ Patient experience is different than patient satisfaction.
Patient experience asks patients whether or not, or how often, certain
behaviors occur during the course of their care. For example, how well
does my provider communicate with me? Or how well do providers work
together to coordinate my care? Conversely, patient satisfaction is
more of a business loyalty measure and addresses how patients feel
about their provider, generally acknowledged to be a highly subjective
measure. Higher patient experience correlates with better health care
outcomes, whereas there is little or no correlation between patient
satisfaction and outcomes.
Ideally, all elements of value would be reported on together in a
single, comprehensive and understandable way, i.e., a summary of value.
The Alliance Board of Directors encourages us to report on all aspects
of value and we are having some modest initial success, such as in the
Hospital Value Report mentioned earlier. That said, summarizing value
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into a single score is challenging for multiple reasons:
First it is technically challenging to create a
summary of value across thousands of provider organizations
within any given region or state. It involves aggregating and
integrating data from multiple and disparate data sources, like
insurance claims, electronic medical records and patient-
reported outcome surveys.
Second, we know from our work in measuring health
care quality that provider organizations may excel in some
areas of care, while demonstrating significant deficiencies in
other areas of care. It is generally true that most health care
provider organizations are not good at everything, even
including those with national reputations--all have room for
improvement.
Third, this type of reporting is very difficult to
achieve because the importance given to each element of value
depends to some degree on the user. In other words, it is
preference-based and preferences are not static. For example,
one person may place more value on how well a provider treats a
disease like diabetes than on the cost of that care, perhaps
because they have excellent health care coverage through their
employer with minimal out-of-pocket requirements. Conversely,
another person may be a generally healthy patient with very
little current need for health care but may be in a financially
precarious situation (uninsured or underinsured); this person
will likely place greater value on the cost part of the
equation. Moreover, preferences can change quickly with an
individual's circumstances, such as diagnosis of an illness or
change in employment status. Thus, the health care ecosystem
does not lend itself to simple star rating systems or other
common rating tools. The complexity and variability of health
care resists simplistic methods for aggregating variables into
a single ``Amazon-like'' rating system because it may not
reflect the user's dynamic preferences.
Purchasers in particular are interested in linking each of the
elements of value together when they design benefit plans for
employees. Although it is true that most purchasers have focused their
health benefit strategies more heavily on managing health care costs,
they also care that employees have a high quality, patient-centered
experience at a fair price. In today's tight labor market, this is more
salient than ever; productivity and recruitment/retention are high
priorities. Purchasers are seeking value. ``Cost calculators'' are not
enough. Ideally, future reporting will include and combine all aspects
of value--cost, quality and patient experience. We must be able to look
at health care cost and understand what we get for it. Health care
decision-makers deserve answers to basic questions: Does the expense
improve the outcome of care? Is the expense for services that are
clinically necessary and appropriate or, is it simply a wasteful,
overuse of care? It is not all about the lowest price per service.
Instead, it is about a favorable total cost of care for an episode of
care (such as a maternity stay, total hip replacement, or the care of a
patient with diabetes over the course of a year) that has positive
health outcomes and provides a good patient experience.
How to Empower Patients to Choose High-Value Care
Empowering patients is a tremendous challenge in health care, and
yet absolutely essential. Health care-related topics (diseases,
medications, procedures) are complicated and the language typically
used to describe them is not easy to understanding by those not trained
in health care professions. Patients are often daunted by the
complexity of the system we have created and perpetuate. Many of the
consumer-facing tools that have been developed, like health plan cost
calculators and price comparison tools available through APCDs, have
not had enough uptake.
There are essentially four ways to reach consumers: 1) through
their physician and health care team; 2) through their employer; 3)
through their health plan or 4) through direct-to-consumer mass media
(e.g. advertising). Evidence has shown that the general public does not
fully understand basic information about health care and health
insurance, and many employers view it as their responsibility to design
benefit packages that incentivize use of higher-value providers. Others
are educating and incentivizing their employees to engage more directly
in care decisions by investing in tools that combine cost and quality
information for a specific benefit plan or by offering concierge
navigators to assist individual patients to move through the health
care system for their specific needs.
Education and navigation resources are a critical unmet need,
especially for consumers who may not have assistance from their
employers. Dr. Jamie S. King's testimony to the Subcommittee on
Oversight and Investigations to the Committee on Energy and Commerce in
the U.S. House of Representatives does an excellent job of discussing
the challenges and the empirical evidence regarding consumer engagement
in various tools. \6\ Research shows us that it is very difficult for a
patient to make choices, particularly when faced with complex research
sets \7\. We also know that the way health care information is
presented to a consumer matters. One study from the journal Health
Services Research suggests that using actual dollar amounts for cost,
and evaluative symbols (like better, average and below average), aid
decision making. \8\
---------------------------------------------------------------------------
\6\ United States. Cong. House. Committee on Oversight and
Investigation. Hearing on Examining State Efforts to Improve
Transparency of Health Costs for Consumers. July 17, 2018. 115th Cong.
2nd Sess. Washington: GPO, 2018. Statement of Jamie King, PhD,
Professor, UC Hastings College of Law.
\7\ Schlesinger, M., D. E. Kanouse, S. C. Martino, D. Shaller, and
L. Rybowski. 2014. ``Complexity, Public Reporting, and Choice of
Doctors: A Look Inside the Blackest Box of Consumer Behavior.'' Medical
Care Research and Review: MCRR 71 (5 Suppl): 38S-64S.
\8\ Greene, J. and R. M. Sacks. ``Presenting Cost and Efficiency
Measures that Support Consumers to Make High-Value Health Care
Choices.'' Health Services Research: Health Research and Educational
Trust, DOI: 10.1111/1475-6773.12839. RESEARCH ARTICLE
Regardless of the communication channel, there are universal
considerations that would enhance consumer engagement. We need to
deploy all of these to further empower health care consumers to make
---------------------------------------------------------------------------
well-informed decisions about their health care.
1. Teach consumers that the quality of health care is
measurable and highly variable and that they can be better
consumers of care
All consumers need to learn that health care value is highly
variable and that they can be better consumers of care. While
it may be unrealistic to expect the average person to become an
expert on health care value, simple tools and resources can
illustrate the variation, helping a person make more informed
choices about their care, especially at key moments, e.g.,
selecting an insurance plan, finding a primary care provider,
selecting a hospital for an elective procedure, or managing a
chronic illness.
The Alliance and the Washington State Health Care Authority
partnered together to create the Savvy Shopper series to
support this educational need (Appendices C- G). There are
three personas around which the Savvy Shopper series is built:
Olivia, who is shopping for quality; Michael, who is interested
in his patient experience with a provider; and Ann, who is
interested in using health care dollars wisely. Choices faced
by each of these consumers are portrayed in graphical format
for ease of comprehension. The infographics prompt consumers to
take simple action steps to address their specific situation
and make informed choices. A summary infographic educates
consumers on what actions to take during open enrollment, and
before, during and after a visit.
2. Focus on health literacy
Considerable literature has illuminated the epidemic of low
health literacy, defined as the ability to obtain, process, and
understand basic health information and services needed to make
appropriate health decisions. \9\ To counter this formidable
challenge, health systems and clinicians are advised to
communicate (verbally and in writing) in plain language,
eliminate medical jargon and use tools such as ``teach back''
to ensure understanding. Unfortunately, because they are
steeped in the language of health care, clinicians and insurers
often overlook the fact that most consumers and employers don't
understand health conditions and what is required to manage
them, much less the complexity of the health care system.
Adding to this complexity, but no less important, is that
communication must be tailored based on important demographics
such as race and ethnicity, language and cultural
considerations.
---------------------------------------------------------------------------
\9\ https://health.gov/communication/literacy/quickguide/
factsbasic.htm
Purchaser members of the Alliance Board often remind us that health
care is not their core business--they make airplanes or coffee, or run
large union trusts. They encourage us to communicate directly and
simply. The Consumer Education Committee of the Washington Health
Alliance coaches us in the same way. A great example of the notion of
``don't assume anything'' is the advice we received from this committee
as we engaged them in developing an infographic for consumers on the
opioid epidemic. Their strong advice was that many people who are
taking Percocet or Hydrocodone don't equate these brand-named drugs
with the fact that they are taking an opioid. The infographic we
---------------------------------------------------------------------------
developed (Appendix H) highlights frequently prescribed opioids.
In general, simple one-page infographics are a very effective way
to communicate the substance of an idea. Appendices I and J contain
examples of effective infographics we have developed over the years,
focused on consumers.
3. Deliver meaningful information, ideally at the time that
care is being sought or delivered
Health care encounters are typically brief and episodic. In the
absence of a chronic or acute need, most individuals do not
spend the majority of their waking hours thinking about health
care or making choices about finding high quality care. Rather,
consumers want information as close to the time of care as
possible and they need it in an easily digestible way from a
trusted source. Education about health care (e.g. information
about health insurance and navigating the health system) should
be embedded into primary and secondary education. This area is
also ripe for entrepreneurs to develop and continue to refine
mobile applications that are accessible by smart phone or other
communications channels at the point of service and/or the
point of need.
The Alliance's Community Checkup website is a resource for
unbiased, trustworthy data and analysis of the quality of
health care in Washington State. \10\ It incorporates Tableau
functionality to allow a user to compare results across
hospitals, medical groups, clinics, health plans, Accountable
Communities of Health, counties and the state in an interactive
and intuitive way. Consumers are also drawn to our ``Own Your
Health'' website to become better educated on the complex
nuances of health care, through articles and other resources,
to learn how to become better shoppers of health care value.
\11\ Additionally, the Alliance partners with our members to
deliver customized content through the Own Your Health website,
reinforcing our earlier point that employers are a vital
channel for reaching individuals with credible information
about health and health care decision-making.
---------------------------------------------------------------------------
\10\ Washington Health Alliance. ``Community Checkup.''
wahealthalliance.org/alliance-reports-websites/community-checkup/
\11\ Washington Health Alliance. ``Own Your Health.''
wahealthalliance.org/alliance-reports-websites/own-your-health/
wahealthalliance.org/alliance-reports-websites/community-checkup/
4. Enlist physicians and other clinicians to help promote
---------------------------------------------------------------------------
transparency
Consumers, who have a trusted relationship with their physician
and other care givers, depend on them for advice and guidance.
As the clinicians on the HELP Committee know, a strong patient-
physician relationship and patient engagement are essential to
how well a patient will follow through on medical advice.
Following through on medical advice, in turn, leads to better
health outcomes.
This means we must involve health care teams directly in the
work of consumer empowerment and continue to enlist their
advocacy for greater transparency. In particular, we need to
find ways to make it easy for health care teams to talk about
the cost of care they are delivering and/or be able to direct
patients to specific resources that offer accurate information
to support decisions. Discussion of money ``inside the exam
room'' has always been considered off-limits or distasteful.
But we must get past this cultural barrier and utilize the
trusted relationship between provider and patient to educate
patients about health care costs and to help them avoid
financial harm.
``Your Voice Matters,'' our patient experience survey sent to
250,000 people across the state, is the only report of its kind
to produce comparable, publicly available patient experience
results for primary care providers in Washington State. \12\
Patients who have seen their doctor in the past year are asked
to report their experiences with their health care provider and
the provider's office staff. In one section, patients were
asked if before receiving a recommended test, procedure or
medication, the provider or office staff helped them find out
how much it would cost. Only 23 percent of the respondents
answered yes to this question. The majority of patients are not
getting information on the cost of their health care before
they receive services. Lack of cost information may result in
large, unexpected out-of-pocket costs, a phenomenon well
documented in the literature.
---------------------------------------------------------------------------
\12\ Your Voice Matters: Patient Experience with Primary Care
Providers in Washington State. Washington Health Alliance. February,
2018
---------------------------------------------------------------------------
What Actions Should Congress Take?
1. Create incentives across stakeholder groups to align on
transparency initiatives and purchasing for value.
Unfortunately, most transparency efforts in health care are
currently not aligned and can greatly vary across stakeholders
and different payers. This creates confusion for patients who
want to be able to evaluate costs and qualities across
different entities. Congress should address this issue in a
collaborative way, working to align different efforts. This
requires the involvement of multiple stakeholders and
coordination across public and private programs; otherwise,
patients may be overwhelmed by competing information or lack
key data points they need to appropriately compare different
choices. Mandates that address only one sector or create
greater fragmentation due to disparate transparency
requirements will likely complicate the problem.
As a predominant purchaser of health care in the United States,
federal health insurance programs have a duty to remain
committed to advancing smarter approaches to health care
payment and delivery. CMS has shown some success in shifting
Medicare's delivery system into value-based care. The agency
has met its initial goal of tying at least 30 percent of
Medicare payments to quality performance or value-based
arrangements by 2016 and remains on track to achieve 50 percent
by 2018. By propelling transformative changes in the way
federal programs pay for health care, CMS can improve care
quality and better control care costs in its own programs,
while also sending a strong signal to participants in the
private health insurance market to do the same.
To continue to improve, CMS should draw on lessons from payment
innovations supported by regional healthcare improvement
collaboratives who play an essential role in working to
implement transparency tools that are supported across a broad
and diverse group of healthcare stakeholders.
2. Support Federal agency initiatives that make health care
value data more transparent and focus on value.
The announcement by CMS Administrator Seema Verma to require
hospitals to post prices on the Internet by January 1, 2019 is a step
in the right direction, and is a good example of the government's role
in pushing for price transparency. We encourage promotion of agency
initiatives that tie cost, quality and patient experience as tightly
together as possible.
The Qualified Entity Program put in place to make Medicare data
more transparent should be modified to make the process to
access data less burdensome, while still having a very tight
data security and data use system in place. In addition, use
cases should be loosened to allow more public reporting.
Current requirements make the data very expensive to obtain.
Public reporting restrictions do not maximize transparency
given who can obtain results and how data sets must be combined
in reports.
3. Strengthen the role of regional health improvement
collaboratives (RHICs) in developing data sets and
communicating health information
Rather than starting from scratch, Congress should leverage
existing networks that already have the trust and support of
local stakeholders and who are already working to make care
improvements. RHICs play an important role in working to
implement transparency tools that are supported across a broad
and diverse group of healthcare stakeholders.
Congress should highlight and support the work of RHICs to
bring greater awareness to these activities and help the work
of RHICs expand those efforts that are working to improve
quality and reduce costs for the benefit of patients.
Closing
I would like to thank the Members of the Health Education Labor and
Pension Committee for holding this important hearing on patient
empowerment and health data transparency. Thank you also for devoting
time to four other important health care topics in the preceding three
hearings and the fifth hearing to follow. I applaud your efforts to
address the unaffordability of health care in a bipartisan way and urge
you to be bold as you make decisions to benefit the citizens of our
country.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[summary statement of nancy a. giunto]
For the past 13 years, the Washington Health Alliance, (Alliance)
has been bringing together organizations that share a common commitment
to drive change in our health care system. As well as being a trusted
convener for purchasers, providers, health plans, consumers and other
health care partners in our state, the Alliance aggregates data for
performance measurement and public reporting through its voluntary All
Payer Claims Database (APCD).
Summary of Key Points
Transforming data into action requires multi-stakeholder
engagement, a shared commitment to value-based purchasing and an
environment that fosters trust, dialogue and communication from
respected sources. To create the tools and action steps that ultimately
result in better health, lower cost and less waste, we must first turn
the data into information that is understandable and useable by
multiple audiences--consumers, providers, payers and purchasers.
It is nearly impossible for consumers to navigate the current
health care system alone. But providing tools and information that can
empower them to choose high-value care requires that all health care
stakeholders work together to create an improved system of care that
benefits consumers. To engage stakeholders in this process, we must
answer the questions, ``how do we hold one another accountable for our
collective commitments?'' and ``What's in it for me?'' Our written
testimony gives concrete examples of how to accomplish this balancing
act and addresses how our reports were used by Alliance members and
stakeholders to make impactful changes. We give examples of
accomplishments from other regional health improvement collaboratives
(RHICs) across the nation that are having positive impacts in the
communities they serve as well.
Cost transparency is very important, but it is not enough. Ideally,
reporting would include all aspects of value--cost, quality and patient
experience. We must be able to look at cost and understand what we get
for it. Does the expense improve the outcome of care? Is the expense
clinically appropriate or is it simply a wasteful, overuse of care?
In addition, we offer four ways to further empower consumers to
choose high-value health care:
1. Teach consumers that health care is measurable and highly
variable and that they can be better consumers of care.
2. Focus on health literacy.
3. Deliver meaningful information, ideally at the time care is
being sought or delivered.
4. Enlist physicians and other clinicians to help promote
transparency.
What Actions Should Congress Take?
1. Create incentives across stakeholder groups to align on
transparency initiatives and purchasing for value.
2. Support Federal agency initiatives that make health care
data more transparent and focus on value.
3. Strengthen the role of RHICs in developing data sets and
communicating health information.
______
The Chairman. Thanks, Ms. Giunto, and thanks for traveling
across the country to testify.
Ms. Giunto. You're very welcome, Senator. My pleasure.
The Chairman. Mr. Tippets. You've come a long way, too, I
guess.
STATEMENT OF TY TIPPETS, ADMINISTRATOR, ST. GEORGE SURGICAL
CENTER, ST. GEORGE, UT
Mr. Tippets. Good morning. I'm honored to testify today,
and thank you for the opportunity to represent my ambulatory
surgical center, as well as 5,600 other Medicare certified ASCs
that perform 15 million procedures each year.
I am the administrator of St. George Surgical Center in St.
George, Utah. We perform approximately 4,500 procedures on
2,600 patients each year, not only for patients living in Utah,
but from 36 states and Canadian provinces as well. Our
commitment to patient safety has resulted in an extremely low
.37 percent infection rate and an exceptional 99.6 percent
satisfaction rate.
Since 2013, St. George Surgical has offered up front
pricing on our website for over 220 procedures. We believe that
by offering this information, we empower patients with the
critical information they need to make the right choices about
the healthcare they need.
Since posting prices online, our patient base has expanded.
For example, we recently served a patient from Montana who
needed a knee ACL reconstruction. After finding our price
online, he called to make sure we did not have a typo. The best
price he found in Montana was $30,000 just for the hospital.
Our listed price, which is fully bundled and includes doctor
fees, facility fees, and anesthesia, is $6,335.
We routinely see 60 percent to 80 percent in savings,
sometimes higher, over other settings for the same procedures.
Nationally, ASCs save Medicare approximately $2.5 billion each
year; Medicare beneficiaries, $1.5 billion; and private payers,
almost $40 billion every single year. Price, however, is only
one factor in determining value. Lower prices must be combined
with high-quality care and a safe patient environment.
In addition, patients must understand that higher costs do
not always indicate higher quality. To that point, across the
roughly 23,000 procedures on 13,000 patients performed in St.
George Surgical Center since 2013, only five cases have
reported infection. Our quality and patient safety rates are so
good, in fact, that a prominent physician from Salt Lake City
recently asked to have his staff visit our center to study best
practices.
The ASC community is concerned that in terms of measuring
quality to determine value, there is little uniformity across
settings. If a patient can choose to get their care from either
an ASC or a hospital, shouldn't it be easy for them to compare
price, safety, and quality measures in both settings? Right
now, they cannot.
As an example, in the Centers for Medicare and Medicaid
Services Quality Reporting Program, only ASCs report on such
adverse event measures as patient burns, patient falls, wrong-
site surgeries, and hospital transfers. Since 2012, ASCs have
been so consistent on these measures that CMS has proposed to
eliminate them, citing, quote, ``Measured performance among
ASCs is so high and unvarying that meaningful distinctions in
improvements in performance can no longer be made,'' unquote.
That conclusion usually leads a group like the Ambulatory
Surgery Center Association, which advocates for ASCs, to
declare victory and to move on. However, we believe these
metrics are so elemental in terms of highlighting patient
safety, we will ask CMS to keep them. In fact, we want the
reporting to expand and to require us to report on adverse
events for all patients and that other sites of service do the
same.
As you will find in my written testimony, a growing body of
academic research shows that ASCs are achieving equal or better
outcomes than other outpatient surgical facilities while saving
billions of dollars for both patients in the public and private
sector. If we are to truly empower patients to get the best
value for their healthcare dollars, both price and quality data
must be transparent, meaningful, and comparable across all
settings.
Thank you again for inviting me to participate in today's
hearing, and I look forward to answering questions from the
Committee.
[The prepared statement of Mr. Tippets follows:]
prepared statement of ty tippets
I am honored to testify on the critical issues of price
transparency and reducing health care costs. Thank you for the
opportunity to represent my ambulatory surgery center (ASC) as well as
the Ambulatory Surgery Center Association (ASCA), which represents the
interests of the 5,600 Medicare-certified ASCs that provide 15 million
outpatient procedures to patients across the country each year.
ASCs like mine are health care facilities that specialize in
providing essential surgical and preventive services in an outpatient
setting. ASCs have transformed the outpatient experience by offering a
convenient, personalized and lower-priced alternative to hospitals.
I am the chief executive office and administrator for the St.
George Surgical Center in St. George, Utah. We perform approximately
4,500 procedures on 2,600 patients each year--not only from Utah, but
from 36 states and Canadian provinces as well. Our board-certified
surgeons specialize in everything from general surgery to total joint
replacements. Our commitment to patient safety has resulted in an
extremely low 0.037 percent infection rate, and an exceptional 99.6
percent patient satisfaction rate.
Since 2013, St. George has offered up-front procedure pricing on
its website for more than 220 procedures. We believe that by offering
this information, we empower patients with the critical information
they need to make the right choices about the care they require.
The demand for price transparency is real. Since posting prices
online, our patient base has expanded. For example, we recently served
a patient from Montana for a knee ACL reconstruction. After finding our
price online, he called to make sure we did not have a typo in the
price. The best price he found in Montana was $30,000, just for the
hospital fee. Our listed price, which is fully bundled and includes
doctor fees, facility fees, and anesthesia is $6,335. We routinely see
60 percent-80 percent savings--sometimes higher--over other settings
for the same procedures.
ASC Cost Savings and Value
St. George is not an outlier in reducing costs. Nationally, ASCs
save Medicare approximately $2.5 billion each year, Medicare
beneficiaries $1.5 billion each year \1\ and private patients and
payers almost $40 billion every single year. \2\ These savings are
generated by procedures performed in the ASC instead of a hospital
outpatient department (HOPD). For example, in 2018, the Medicare
payment rate for cataract removal in a hospital outpatient department
is $1,926.09. In an ASC, the same procedure is reimbursed at $991.95.
---------------------------------------------------------------------------
\1\ Medicare Cost Savings Tied to Ambulatory Surgery Centers,
University of California-Berkeley Nicholas C. Petris Center on Health
Care Markets and Consumer Welfare, September 2013 available at https://
www.advancingsurgicalcare.com/reducinghealthcarecosts/costsavings/
medicarecostsavingstiedtoascs
\2\ Healthcare Bluebook and Health Smart, Commercial Insurance
Cost Savings in Ambulatory Surgery Centers (2016) available at https://
www.ascassociation.org/HigherLogic/System/
DownloadDocumentFile.ashx?DocumentFileKey=829b1dd6--0b5d-9686-e57c-
3e2ed4ab42ca&forceDialog=0.
Price, however, is only one factor in determining value. Lower
prices must be combined with high quality care and a safe patient
environment. In addition, patients must be disabused of the notion that
higher costs indicate higher quality. As health policy experts will
tell you, there is no correlation between cost and quality in terms of
---------------------------------------------------------------------------
health care outcomes.
To that point, across the roughly 23,600 procedures on 13,500
patients performed in St. George Surgical Center since 2013, only five
cases have reported infection. Our quality and patient safety rates are
so good, in fact, a prominent physician from Salt Lake City recently
asked to have staff visit our center to study best practices.
From the national perspective, ASCA was a strong proponent for the
requirement enacted in 2014 \3\ that CMS develop a web portal for
Medicare beneficiaries that would allow them to compare their costs for
a procedure based upon the sites of service available to them. Since
ASC fees for most Medicare procedures are roughly half of HOPDs, this
could lead to patient decision-making that would produce significant
savings for both them and the Medicare program. Unfortunately, that web
portal has not yet been developed.
---------------------------------------------------------------------------
\3\ Sec 4011 of the 21st Century Cures Act. Pub. L. 114-255. 130
Stat. 1033. 13 Dec 2016.
---------------------------------------------------------------------------
Quality and Reporting
The ASC community is concerned that, in terms of measuring quality
to determine value, there is little uniformity across settings--if
patients can choose to get their care from either an ASC or a hospital,
shouldn't it be easy for them to compare price, safety and quality
metrics in both settings? That is not the way things work now, and we
need to address that.
At the federal level, differences between ASC and HOPD reporting
systems make it impossible to compare quality and outcomes between the
two settings. In fact, only ASCs report on such adverse event measures
as patient burns, patient falls, wrong site surgeries and hospital
transfers in the Centers for Medicare and Medicaid Services (CMS)
Quality Reporting Program. The ASC industry actively lobbied both
Congress and CMS to implement this reporting program and works
cooperatively with regulators to ensure that meaningful information is
collected.
Since the quality reporting program started in 2012, ASCs have been
so consistent on these adverse event measures that CMS recently
proposed to eliminate them from our reporting system, citing ``measure
performance among ASCs is so high and unvarying that meaningful
distinctions and improvements in performance can no longer be made.''
\4\
---------------------------------------------------------------------------
\4\ 83FR 37046. CY 2019 Hospital Outpatient Prospective Payment
System/Ambulatory Surgical Center Payment System Proposed Rule
available at https://www.federalregister.gov/documents/2018/07/31/2018-
15958/medicare--program-proposed-changes-to-hospital-outpatient-
prospective-payment-and-ambulatory-surgical
That is usually a conclusion that leads a group like ASCA to
declare victory and move on. However, we believe these metrics are so
elemental in terms of highlighting patient safety, we will ask CMS to
keep them. In fact, we want the reporting to be expanded, requiring us
to report on adverse events for all patients--not just Medicare
---------------------------------------------------------------------------
patients--and that other sites of service do the same.
Disparities in reporting also exist at the state level. In my home
State of Utah, health care facilities are required to report a number
of adverse events within 72 hours to the state. Utah is required by
regulation to compile the aggregate data and publish a report in March
of each year to the Patient Safety Surveillance and Improvement Program
Advisory Panel. In comparison, 13 states do not require any adverse
event reporting, and some states that collect data do not make it
publicly available.
Patient Safety and Outcomes
A growing body of academic research shows that ASCs are achieving
equal or better outcomes than other outpatient surgical facilities
while saving billions of dollars for both public and private patients
and payors. \5\
---------------------------------------------------------------------------
\5\ https://www.advancingsurgicalcare.com/safetyquality/research
One recent study, \6\ published in the Journal of Health Economics,
concludes that ``ASCs on average provide higher quality care for
outpatient procedures than hospitals, and other research indicates that
they do so at lower costs than hospitals.'' The data outlined in this
study are risk-adjusted, as the authors state ``results indicate that
the positive impact of ASCs on patient outcomes accrues even to the
highest risk group of patients.''
---------------------------------------------------------------------------
\6\ Munnich, Elizabeth L. and Parente, Stephen T. Return to
specialization: Evidence from outpatient surgery market. (2018) Journal
of Health Economics, (57):147-167 available at https://
www.sciencedirect.com/science/article/pii/S0167629617310743
Another study \7\, published last year in the Journal of Shoulder
and Elbow Surgery, showed that for total shoulder replacements, ``no
significant differences were found between the ASC and hospital cohorts
regarding average age, preoperative American Society of
Anesthesiologists score, operative indications or body mass index. No
patient required reoperation. There were no hospital admissions from
the ASC cohort.''
---------------------------------------------------------------------------
\7\ Brolin TJ, etal. Outpatient total shoulder arthroplasty in an
ambulatory surgery center is a safe alternative to inpatient total
shoulder arthroplasty in a hospital: a matched cohort study. (2017) The
Journal of Shoulder and Elbow Surgery, 26(2):204-208 available at
https://www.ncbi.nlm.nih.gov/pubmed/27592373
---------------------------------------------------------------------------
Conclusion
If we are to truly empower patients to get the best value for their
health care dollars, both price and quality data must be transparent,
meaningful and comparable across all settings where care is available.
Specifically, the ASC community supports the following initiatives
to create a more transparent and efficient health care system:
Medicare and insurers should publicly post
information about prices paid or the beneficiaries' out-of-
pocket liability for procedures across settings, rather than in
the traditional silos of facility type;
Patients should be given information on providers in
their area, including health outcomes, patient satisfaction,
beneficiary cost-sharing and reimbursement to those facilities,
in an easy-to-understand manner;
Disclosed pricing information must be accurate and
present the most meaningful comparison for consumer choice.
Providers should have the right to appeal and correct any
inaccuracies of posted information;
All health care providers and facilities should
publicly disclose, in a user-friendly format, all relevant
information about the relative price, quality, safety and
efficiency of health care as well as any other information that
may impact care decisions, such as financial arrangements and
clinical guidelines for treatment;
Medicare, insurers and other payers should encourage
beneficiaries and the physicians who refer patients to use
lower-cost settings; and . Payers should seek innovative
methods, such as tiered co-payments, to incentivize patients to
seek care in the least costly setting that is appropriate for
their treatment.
Thank you again for inviting me to participate in today's hearing,
and I look forward to answering the Committee's questions.
______
[summary statement of ty tippets]
Price Transparency and Health Care Value
SGSC provides up-front pricing on its website for over 220
procedures, including eye surgery, orthopedics, spine surgery,
gynecology surgery, colonoscopies and endoscopies, foot surgery and
various general surgeries. SGSC typically offers 60-90 percent savings
for the same procedure in similar sites of service. Nationally, ASCs
save Medicare $2.5 billion dollars (and private insurers $40 billion)
annually, as they are reimbursed roughly 50 percent as hospital
outpatient departments for the same procedures.
Price, however, is only one factor in determining value. Lower
prices must be combined with high quality care and a safe patient
environment. In addition, patients must understand that higher costs do
not indicate higher quality. A commitment to patient safety at SGSC has
resulted in an extremely low 0.037 percent infection rate, and an
exceptional 99.6 percent patient satisfaction rate. A growing body of
academic research shows ASCs achieve equal or better outcomes than
other outpatient surgical facilities while saving billions of dollars
for public and private patients and insurers.
To empower patients to the get the best value for their health care
dollars, both price and quality data must be transparent, meaningful
and comparable across all settings where care is available.
Quality Reporting and Transparency
As part of the Centers for Medicare and Medicaid Services (CMS)
Quality Reporting Program, only ASCs report on such adverse event
measures as patient burns, patient falls, wrong site surgeries and
hospital transfers. Since 2012, ASCs have been so consistent on these
measures that CMS has proposed to eliminate them, citing ``measure
performance among ASCs is so high and unvarying that meaningful
distinctions and improvements in performance can no longer be made.''
As an industry, however, we believe these metrics are so elemental
in terms of highlighting patient safety, we will ask CMS to keep them.
In fact, we want the reporting to expand and require us to report on
adverse events for all patients and that other sites of service do the
same.
About Ambulatory Surgery Centers
ASCs are modern health care facilities that provide same-day
surgical care, including diagnostic and preventive procedures. There
are more than 5,600 Medicare-certified ASCs across the country. ASCs
perform approximately 15 million procedures a year, including 6.4
million Medicare procedures. Roughly 55 percent of ASCs have one or two
operating rooms. The five states with the most ASCs are California
(800), Florida (425), Texas (375), Georgia (350) and Maryland (350).
Tennessee has 138 ASCs and Washington has 200.
ASCs are represented by the Ambulatory Surgery Center Association
(ASCA). ASCA provides advocacy and resources to assist members as they
deliver ethical, high quality and cost-effective care within the
community. Contact Heather Falen Ashby, Director of Government Affairs
at 703-345--0286 or [email protected].
______
The Chairman. Thank you, Mr. Tippets, and thanks to each of
the four of you for very interesting testimony. We'll now go to
rounds of questions.
Senator Murray.
Senator Murray. Thank you very much, Mr. Chairman, and I
just have a few before I have to get to the floor.
Ms. Giunto, let me start with you. A number of our
witnesses talked about the need to make sure transparency
policies are implemented in the right way, that transparency on
its own can sometimes be confusing for patients, or worse,
actually lead to higher healthcare--if you think, ``I don't
want a cheap product,'' and you go for the higher care.
So you said to get transparency policies right, information
has to be translated to the audience and used to promote
engagement and targeted--achieve specific outcomes. Tell us a
little bit more about how Washington Health Alliance works with
your stakeholders to make those reports effective and helpful
for everyone.
Ms. Giunto. Thank you, Senator. We work with about 90
stakeholders a month, including our board of directors and four
standing committees. The four standing committees represent
clinicians, consumers, a health economics committee that's a
multidisciplinary committee, and purchasers. All of our work
happens through those committees, both what we study, the
methodology that we use, as well as how we communicate to the
consumer.
Oftentimes, we're making available two different reports,
one for more--the public that is a health economist kind of
public, and one for the consumer. I'll mention one, in
particular, where we were coached by our consumer education
committee on an opioid report where they told us that patients
don't understand if they're on a brand name that they might
actually be taking an opioid, and they said, ``Please, when you
develop this one-page infographic, put that front and center.''
So we look for multi-stakeholder input for the work that do
and work through the committee structure and our board.
Senator Murray. Okay. Thank you very much.
Ms. Binder, you talked about the importance of the Federal
Government and employers working together to improve
transparency, and you noted Medicare, the Centers for Disease
Control and Prevention, and other federal agencies and programs
are increasingly requiring providers to expand the measures
that they actually report on, and those measures are in turn
reported to the public.
Talk to us a little bit about why these policies are so
important to employers that make up the Leapfrog Group.
Ms. Binder. The example I'll use is infection measures. It
took us decades, literally, to achieve the public reporting of
five of the most common and deadly infections, such as MRSA,
C.diff. These are infections often associated with and caused
by being in the hospital, and they are extremely dangerous, and
they kill a lot of Americans every year.
They are also costly. So employers--we have started to
track an estimate of the cost to employers. On average, it's
about $9,000 per inpatient stay for every inpatient stay that
is paid for the excess cost of errors and accidents in
hospitals, including infections. So it is a very expensive
problem for employers and also hard to track, hard to find it
in the claims. So we really depend on CMS and CDC, in
particular, to help us identify the rates of these infections
so that employers can steer employees toward the higher
performing hospitals.
There's been some effort to pull us backward in that
direction. I think that CMS has recommitted recently to public
reporting of infection rates, but we remain concerned. There
was a proposed rule that came out from CMS last spring that
suggested that they would stop public reporting of those five
measures. We were very concerned. A lot of purchasers came
forward as well as consumer advocates to ask that they not do
that. They have recommitted to transparency. But, again, we are
continuing to worry about that.
Yesterday, there was another proposed rule issued by CMS
suggesting that CMS is placing a high priority on provider
burden in collecting infection measures. Again, we believe that
there's also a burden on our entire economy by having so many
infections, and that we ought to also put a priority on the
American public and what they need to know and deserve to know
about how their hospitals are doing.
So I would ask this Committee, especially in your
jurisdiction over CDC, that we would love to see CDC publicly
report the measures they're collecting. They're doing a great
job through NHSN, and we would like to see that publicly
reported, which would enable us to have, I think, peace of mind
and also help employers and purchasers in their efforts to
ensure their employees are getting the safest care.
Senator Murray. Thank you. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Murray.
Senator Cassidy.
Senator Cassidy. Thank you, Senators Alexander and Murray,
for holding this meeting.
I'm a doc, a physician, and so I always think if you give
the patient the power, including the power of knowledge and
price, it makes a huge difference, both in terms of our health
and our pocketbook. I would add the power of quality outcomes,
the power of many other kinds of transparent information you
all advocated. In fact, I agree with each of you so much, I
can't really challenge you. I almost have to ask you to amplify
where we're going together.
I'll also point out that you have bipartisan support. We
have been working with Senators Bennet, Young, Grassley,
Carper, and McCaskill to do a price transparency working group,
and if I have time, I'll refer to something that Senator Smith
and others are working on as it regards administrative
overhead. I could go on.
Let me first, though, speak about surprise medical billing.
This is something I'm concerned about.
[Chart shown.]
Senator Cassidy. The darker the color, the more likely that
somebody is going to an in-network facility with an out-of-
network provider, and they think they're doing the right thing,
because they go to their hospital that they know is in-network.
But the ER group, for example, or the anesthesiologist--Mr.
Tippets, you mentioned specifically that anesthesiology is
looped in. Their anesthesiologist when they go to surgery is
not in.
So as much as 25 percent of inpatient bills--I think it's
50 percent--is it 50 percent for ER use? In these areas,
including Alaska, Senator Murkowski, 50 percent of the time
when somebody goes to an in-network hospital, they have an out-
of-network ER charge, which can be dramatically high.
Seeing your concerned look, Senator Murkowski, I know I
have a co-sponsor.
[Laughter.]
Senator Cassidy. But we see it's all over, including
Oregon. So I didn't expect that. Tennessee looks okay, Mr.
Chairman. No, Tennessee is up there as well.
So that said, we are introducing a bill today which would
attempt to address surprise medical billings in all its
permutations to protect the provider in this setting. And, by
the way, this is independent of the sophistication. I will say
that once I went to Central Park in New York with my daughter.
In full confession, I wasn't watching her. She falls off Alice
in Wonderland, and then we have a trip to the ER with a
surprise medical bill. My wife and I, a general surgeon and a
gastroenterologist--we did not pick up on that.
So that said, Mr. Kampine, any thoughts you have about
surprise medical billing and what we can do to address that?
Mr. Kampine. Thank you, Senator, for taking a look at this
issue. It is a huge issue. You know, patients have a fighting
chance if it's non-emergency care. We can help educate them and
instruct them to speak with their doctor, call the hospital,
ensure that the anesthesiologist--and that's a great example,
right, because in an emergency case, your anesthesiologist
might be working local times and is out-of-network, and, as a
patient, you have no idea this is going on.
So if it's scheduled care, at least the patient has an
opportunity, if they're educated, to talk to their doctor and
talk to the hospital and make sure that everything is in-
network. Something does have to be done about it. I'm actually
a little surprised by your chart. My understanding is the State
of Texas does have--and some states are handling this on a
state level--the State of Texas does have some protections, I
believe, for patients that are in HMOs, not PPOs, and I was a
little shocked to see how red that was in your graph.
It's absolutely something that needs to be addressed. I
think if it can be addressed with legislation so that if you,
for example, use an in-network hospital, and if there is a--end
up with a balance bill for an out-of-network anesthesiologist
or pathology, that you are limited to what your network rate
would be, and you'd be limited on the out-of-pocket, and I
think that is well worthwhile, exploring that legislation.
Senator Cassidy. Let me stay with you on my next chart.
[Chart shown.]
Senator Cassidy. I pulled this from your testimony. The
price variation for south Florida cataract surgery fees--
tenfold difference between the low and the high.
Mr. Kampine. Correct.
Senator Cassidy. It seems principally facility fees.
Mr. Kampine. Correct.
Senator Cassidy. It is just amazing that from less than
$2,000 all the way to $12,000--it is quite remarkable.
Now, one thing that--I had a conversation this morning with
somebody, and although Medicare is beyond the scope of this
Committee, still, it's worthwhile considering. What if we made
it possible for MA plans to share savings with beneficiaries
who signed up for Medicare, if the beneficiary chooses a lower-
cost facility, making sure that she has the information on
infections and quality and everything else that everyone else
spoke to--your example of the hip replacement--quite
remarkable, Mr. Tippets. What are your thoughts about that, Mr.
Kampine?
Mr. Kampine. Excuse me. I think that Medicare Advantage
plans would embrace that, and I can tell you, just very
quickly, my wife runs primary care medical home models for
Medicare Advantage plans. Because they are at risk for this,
they use tools like Healthcare Bluebook to make sure that
they're guiding their patient to cost-effective--even in the
Medicare environment, because there's a difference in the
price, for example, for imaging.
I do think that there is absolutely promise. We know in the
commercial environment that value-based incentives are
incredibly important. There's been a lot of state legislation
in terms of right-to-shop laws. We do it with--over 50 percent
of our clients use incentives to reward patients when they make
more cost-effective choices. It works. It's very successful,
and I believe, absolutely, there's an application for it in the
Medicare Advantage environment.
Senator Cassidy. So this would be a win-win. Both the
beneficiary would win, but also Medicare trust fund would pay
far less, potentially.
Mr. Kampine. Absolutely, and the plans that sponsor MA.
Senator Cassidy. The plans. I yield back, and I assume
there'll be a second round, so I'll hang around.
The Chairman. Thank you, Senator Cassidy.
Senator Warren.
Senator Warren. Thank you, Mr. Chairman.
So transparency is part of any competitive market. If a
consumer doesn't have good information, like price or quality,
then let's just be frank. It's impossible to shop around at
that point. Without transparency, we know that businesses can
jack up prices, they can cheat customers, and they never face
the discipline of a competitive market.
It's clear that the healthcare market could benefit a lot
from transparency. Transparency lets patients shop for a doctor
that's right for them, compare prices across hospitals, know
which providers have the best outcomes. But transparency can't
solve every market failure, and there are a lot of features of
our healthcare system that need to work if we're going to
improve care. So I want to talk about where transparency can
help and where it can't.
Mr. Kampine, your company, the Healthcare Bluebook,
estimates fair prices for various healthcare procedures to help
consumers benchmark what they should be paying, and you do this
for hundreds of procedures, and I want to look at just one.
Mr. Kampine. Sure.
Senator Warren. Total hip replacement. What's the fair
price for a total hip replacement?
Mr. Kampine. So the fair price--the way we do our analysis
of prices is we look market by market, and----
Senator Warren. Sure.
Mr. Kampine.----and, typically, we look at a metropolitan
area. So the fair price is going to vary by market, as you
pointed out. The competition in that local market will have an
impact on where the prices fall.
Senator Warren. So about what's the price?
Mr. Kampine. So, roughly, if you were to look across the
United States, a very common fair price for a hip replacement
would be about $30,000.
Senator Warren. Okay. About $30,000.
Now, Mr. Tippets, you run a surgical center in Utah that
has been increasing transparency by actually posting the prices
of procedures on your website. What's the expected cost of a
total hip replacement at St. George?
Mr. Tippets. For that total hip replacement, it would be
$17,985, including the doctor, the facility, anesthesia,
implants, and overnight stay.
Senator Warren. So $30,000 is fair. That's just the
average, and you're down by posting at $17,985. I don't want to
leave the $85 out. Okay. So that's pretty impressive, obviously
well below the fair price, a good deal for patients who can pay
out of pocket. Because St. George's website includes a
disclaimer that if you aren't paying cash for a procedure,
meaning if you have to use insurance to help pay for the hip
replacement, the price may actually be different.
So let me ask another question. How many of your patients
are actually able to pay out of pocket for their surgeries?
Mr. Tippets. Right now, about 10 percent of our patients
utilize the cash pay pricing.
Senator Warren. So only about 10 percent. So it's great
that you are able to keep prices low and transparent for
patients who pay out of pocket. But if we want people to be
able to afford a hip replacement, transparency alone is just
not going to get them there. Most Americans don't have enough
money to pay cash out of pocket for a hip replacement or an
expensive--any of these expensive procedures. They need
affordable insurance coverage.
Twenty-eight million people in this country have no health
coverage at all. Forty-three percent of those who do have
coverage struggle just to pay their deductible. So, obviously,
not going to work perfectly here.
Let me ask about one other kind of transparency,
transparency around hospital and provider performance.
Ms. Binder, your agency, the Leapfrog Group, reports
hospital safety and quality information so that individuals and
their families can make the best decision about where to get
their care. What good is this comparison tool if you have only
one provider in your network?
Ms. Binder. Well, I happen to have lived in a community
where there was only one provider. I happen to have worked for
that provider. It was a rural community in Maine, and this is
what's good. You know everyone. When you live in a community
with only one provider, we know everyone, and when our
hospital--when I lived in this rural community, when our
hospital didn't do well on something and it got publicly
reported, which did happen a couple of times, wow, everyone
talked about it, including stopping you in the grocery store
and saying, ``What happened to your hospital?'' And guess what?
That had a big impact.
For anyone who knows healthcare, you'll know this is
dramatic. The physicians called a special meeting in the
morning. Physicians never call meetings. Believe me. They don't
like them. So they called one because they got a poor rating
from Leapfrog, actually. That's how I first learned about
Leapfrog.
So I think that even in the areas where there's not many
choices, having transparency and public reporting can actually
have quite an impact, because people talk to each other.
Senator Warren. So, look, I hope that's the case. I
genuinely do. But we have to be realistic here. When a health
plan has all the power over whether or not you can get quality
care, information on price and transparency alone are not going
to solve the problem. You may get blips where people will pay
attention, but it's not going to solve the problem.
Earlier this year, I introduced the Consumer Health
Insurance Protection Act. There's a lot in this bill to
increase transparency on how insurance companies set rates,
which providers are in a network, and who gets the most
complaints. But the bill also makes health coverage more
affordable and brings health plans to the market. Part of this
is to get more competition in these markets so that these
insurance providers actually have to compete for customers.
If we're going to improve healthcare coverage in this
country, then I think we've got to look at all the pieces
together and try to make them work together. But thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Warren.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. Thank you to
the panel this morning.
There's been a lot of discussion as we have looked to
differing ways that we can help families when it comes to
healthcare costs. I've been working with a colleague of mine on
making sure that we are able to have health savings accounts
that are robust enough to help cover those costs. But in
fairness, if I have a good nest egg of an HSA sitting over
here, but I don't really have an ability to shop wisely and use
those saved dollars wisely, what are we doing? So this
conversation here this morning is so very, very important when
we talk about transparency.
In my hometown of Anchorage, the largest city in the state,
last year, we passed an ordinance that requires our healthcare
professionals and our facilities to provide cost estimates to
patients who request the information. They have to post it.
They have to provide information within a certain number of
days. Granted, it is still very early, but at this point in
time, it doesn't appear that it's had much of an impact. Some
of that is due to those issues that we've already heard, the
difficulty of predicting services during an episode of care,
varying insurance benefit structures, bills from multiple
providers, and the like.
But to Senator Warren's comment, I live in a state in a
place--Anchorage, again, is our biggest population center, but
we just don't have a lot of competition. So if you're looking
to go to the hospital in Bethel, there's no real point in
shopping around because you've got one, and the same is true in
just about every community outside of Anchorage, Alaska. So I
looked with great interest at the chart that Senator Cassidy
showed in terms of the cost, the facility cost, and how those
weigh in.
But the question that I wanted to ask you all this morning
is--we're moving towards greater transparency, whether it's
through Bluebook or through other mechanisms. Maybe it's going
to start out slow, but we are moving in the direction of better
ability to obtain access to the pricing.
But what's the role here for Congress? How does Congress
mandate the education and the engagement parts that are so
critical to this? Because if you've got a situation where,
``Oh, my gosh, I am not well right now, and I feel it, and I
don't know what may happen. Am I going to have a heart attack?
I don't know.'' Does that mean that I start shopping around now
while I'm feeling ill? Do I just--am I one of these people that
is going to look at my health, my family's history, and say,
``I'd better do my own analysis early on, because within the
next 10 years, I'm likely to need some of these services for
cardiology in my community.''
How do we engage people early enough to make a difference?
Because most folks are going to have a hard time engaging on a
topic that they may not need, and that everyone hopes that
they're not going to need? What advice do you have here?
Because it seems that so much of what we're doing is kind of
after the fact or at the very minute that something is
happening. Who can educate me here?
Ms. Binder.
Ms. Binder. Well, I would just say that the role of
government should actually be as narrow as possible in looking
at this issue.
Senator Murkowski. Sure.
Ms. Binder. I think the role of government is to ensure
that the data and information is scientifically sound,
reliable, and available, and then make that available to public
entities like all of us, and then we can--we have an incentive
to reach out to the public and engage them. I think there's a
lot of private sector entities both in the for-profit and not-
for-profit space who have a lot of interest in going out and
reaching consumers.
Senator Murkowski. So you're saying you do the engagement
rather than me, the consumer.
Mr. Binder. Right. But we need the data, and that's what
we're missing. We need more data, much more publicly available
data that we can use, and that's where I think there's a role
for government.
Senator Murkowski. Others? Ms. Giunto.
Ms. Giunto. I would offer two suggestions. First is help us
all teach consumers that healthcare is shoppable. I think that
many consumers still don't understand that, so whatever you can
do to help us teach consumers that healthcare is shoppable.
I would also say there are many organizations, like the
Alliance, called regional health improvement collaboratives
around the country that have all of the stakeholders convened
around the table to try to work on this issue in their local
environment. And when things get solved locally with people who
all have skin in the game, it's an opportunity for improvement.
Mr. Kampine. If it's okay, I'd like to weigh in. This is
probably the biggest learning over the past 10 years. Most
people are healthy most of the time, and so they don't think
about this, and it's key to educate up front. What we know is
that if consumers know they need to shop and they know prices
vary and they know quality varies, then they'll shop, and then
they'll get better value. But you can't do it at a rifle shot.
It has to be continuous. So someone with heart disease has to
know about this issue when they ultimately need to consume, and
people with other conditions as well.
So a steady drumbeat of regular communication--I do think
we do that--that's our responsibility. But we need the data,
obviously, to be able to do that, but that is probably the
biggest key of learning, is making sure that there is a regular
drumbeat of education so that people understand this when they
do need to consume.
Senator Murkowski. Mr. Chairman, I have to wonder how much
of this is generational, because I think in our generation, we
didn't have the ability to shop. We didn't know that we could.
I think young people can look at this and say, ``Yes, you shop
for everything.''
Thank you.
The Chairman. Thanks, Senator Murkowski.
Senator Smith.
Senator Smith. Thank you, Chair Alexander, and I want to
thank you and also Senator Murray for these hearings. They've
been so helpful and interesting.
For me, like I think many of my colleagues, healthcare cost
is the number one issue that I hear about from Minnesotans. So
I really appreciate all of your testimony on this.
In previous hearings, we've had a lot of conversation about
how simplifying our healthcare system and making it more
transparent could help eliminate wasteful spending and lower
costs for families and the healthcare system more broadly. And
with this in mind, my colleague, Senator Cassidy, and I have
introduced a bill that is focused especially on administrative
costs and trying to figure out how to lower the administrative
cost burden, which some estimate could be up to 25 percent of
the total cost of healthcare.
This bill is aimed at streamlining healthcare
administration and cutting cost and easing the burden on
healthcare providers as well as patients. What it does is it
builds on a successful effort in Minnesota to automate these
common, high-volume healthcare transactions, like prior
authorizations, for example, or when--any time a provider
submits a bill to insurers. In Minnesota, this is projected to
save somewhere in the neighborhood of $60 million, which is a
lot for us.
So my question--and maybe I'll start with you, Mr. Tippets.
My question is: Could you--really, I'm interested in
everybody's perspective, though. In what ways could efforts to
streamline and automate administrative and clinical systems
help to improve transparency, in your experience?
Mr. Tippets. You know, as an ASC, we already have to run
very tight ships with low overhead. I don't think that that's
an area of expertise that an ASC--that we would have. But what
we do recognize, especially, even though we encourage
reporting, I think that the overall burden sometimes in
reducing paperwork and reducing burdens would assist with
lowering the cost of administrative healthcare.
Senator Smith. Would others like to comment on this? I
mean, it seems to me that if we have more billing and
administrative costs, transactions automated, that we would be
able to--patients would have better real-time information about
how much things cost. What would others say?
Ms. Giunto. I would say, Senator, that I agree with you,
and I would just stretch a little bit to think about
administrative overhead and the way we think about the clinical
work and effort that goes into measuring and reporting to the
multitude of agencies about measuring on clinical reporting.
Many healthcare deliverers have lots of staff to do this work,
and if we could get to a point that we had closer common
agreement on the measures that really impacted quality and
that's what we focused on, I think we'd be ahead.
Senator Smith. So it could actually help with the data
gathering as well as the transparency of understanding how much
stuff costs.
Ms. Giunto. Just how many staff are dedicated to the effort
within institutions.
Senator Smith. Right. And based on your work, do you think
this could help patients avoid unnecessary out-of-pocket costs,
too?
Ms. Giunto. Yes, I do.
Senator Smith. Let me ask something--it's sort of getting
at something that my colleague, Senator Murkowski, I think, was
getting at as well. So we've traveled all over--as I travel all
over Minnesota, people are talking about how much they want
more transparency in their--in how much things cost. For
example, there was one woman named Leah in Mankato who shared
her frustration that she couldn't get an estimate for how much
it was going to cost her to deliver her baby. This was her
first child. This was a huge source of stress for her and her
family--how much is this going to cost? I talked to another man
who needed to have polyps removed from his nose, and nobody
could tell him how much this was going to cost.
So let me stay with you, Ms. Giunto. Could you talk a
little bit about how increasing this kind of transparency is
going to help patients make better decisions? What I'm getting
at is what I think maybe Senator Murkowski was getting at,
which is it's so hard to know, like, what questions to ask,
even, when you're trying to--it's so complicated. It's so--not
all of us are Senator Cassidy, who knows a lot about this
sector.
Ms. Giunto. So working with our Healthcare Authority in the
State of Washington, Senator, we put together a very simple
series called the Savvy Shopper series--it's a part of my
written testimony--where on a single page, we helped consumers
looking for cost, quality, and patient experience. Think about
the very simple questions to ask of their physicians or their
care providers. And in the end, we put that all together to
talk about getting value in healthcare.
These are things that employers in our state put on their
websites, introducing their wellness programs. Our State of
Washington has this information available for their employees
and Medicaid patients. So I really do think it starts with just
the focus on education. And as we get more sophisticated and
continue to do our work, all of us on the panel, making this
information much more transparent and having individuals speak
up and ask the questions--What does this cost? Is this a high-
quality provider? Have people had great patient experiences
with this provider?--that will put us ahead.
Senator Smith. Thanks very much.
Thank you, Chair.
The Chairman. Thank you, Senator Smith.
Senator Kaine.
Senator Kaine. Thanks, Mr. Chair, and I also agree with
Senator Smith. These hearings have been very helpful.
Mr. Tippets, your testimony in response to Senator Warren's
question really interests me, and I want to ask about your own
St. George Ambulatory Surgery Center. So let's talk about hip
replacements. If the price is $17,985--is that right?
Mr. Tippets. That's correct.
Senator Kaine. For cash. What is--and that is the amount
that the patient pays and that is the amount that the center
receives. What do you receive when you do a hip replacement for
somebody who is a Medicaid patient?
Mr. Tippets. Unfortunately, as an outpatient procedure, an
ASC is not approved for Medicare or Medicaid yet.
Senator Kaine. That is not approved by CMS?
Mr. Tippets. CMS. That's correct.
Senator Kaine. So they will not approve that for an
outpatient facility, either an ambulatory surgery center or a
hospital outpatient?
Mr. Tippets. Right now, I believe the only total joint is
knees that has been approved on an outpatient, but only to
hospital outpatients, not to ASCs yet.
Senator Kaine. So this is an interesting phenomenon,
because you, in your testimony, talked about the quality of hip
replacements performed and other procedures performed in
ambulatory service centers. In your view, should CMS authorize
outpatient hip replacements at ambulatory service centers?
Mr. Tippets. Absolutely. We've got studies attached to
written testimony how in all procedures we are equal to or
superior to hospitals. And I need to address that not all
outpatients should end up in a surgery center----
Senator Kaine. Right.
Mr. Tippets.------because of comorbidities, because they
are maybe too old, or--there's lots of reasons why they need to
go to the hospital. But a healthy individual coming through,
especially if it were going to be Medicare or Medicaid, could
save the taxpayer and the individual thousands of dollars.
Senator Kaine. So while not every hip replacement should be
performed in an ambulatory service center----
Mr. Tippets. That's correct.
Senator Kaine.----you would take the position that CMS
should not bar them from being performed.
Is there any disagreement with that on the panel? Should
CMS allow hip replacements to be done under certain
circumstances in ambulatory service centers?
Ms. Binder. As long as we have data on whether they're
safe. We don't have data right now and----
Senator Kaine. Well, if they're not allowed to be done,
then you're not going to have the data.
Ms. Binder. Well, they are being done, but----
Senator Kaine. But if they are being done, it sounds like
there is data about the quality measures of hip replacements
done in ambulatory service centers.
Ms. Binder. Right, but they need to be monitored by an
independent entity of some sort. Right now--and to the credit
of ASCs, they're asking for this to happen.
Senator Kaine. Right.
Ms. Binder. But they need an independent entity to monitor
what they're doing. So they are doing it for commercially
insured populations, and that's good, and we need to see that
data, and it needs to be verified, and that's when Medicare
should cover--that's what they should be looking at before
they're all in.
Senator Kaine. If the price is $17,985 for somebody paying
cash, and that's what they pay, and that's what you receive,
what do you receive if you perform a hip replacement for
somebody with private insurance, and does it vary by the
insurance company that insures the patient?
Mr. Tippets. Well, we just started our outpatient hip not
too long ago. But, unfortunately, most of the commercial payers
will follow closely the Medicare/Medicaid procedures. So I
think we'll see a rush of--once those are approved and
hopefully approved--the total hips and Medicare and Medicaid--
then I think the major commercial payers will then bring those
in. We would receive----
Senator Kaine. How about this. Let me switch to another
procedure--knee replacements. Have you been doing those longer?
Mr. Tippets. We've been doing those a little bit longer.
Senator Kaine. Do you have private insurance covering some
of your knee replacement patients?
Mr. Tippets. Most of our knee replacements have been cash
pay.
Senator Kaine. Are there procedures that you currently
perform where you have a patient mix that includes cash pay,
private insurance, Medicaid, or Medicare?
Mr. Tippets. We don't bundle those, and so--I mean, for
those three things. One of the reasons----
Senator Kaine. I think I saw in your testimony you have
about 220 procedures where----
Mr. Tippets. We do.
Senator Kaine.----you will post a price.
Mr. Tippets. That's correct.
Senator Kaine. Are any of those procedures where you
provide the procedure both to cash, private pay, Medicaid, and
Medicare?
Mr. Tippets. Yes. We do all those. For example, we just did
a hysterectomy from Virginia Beach--flew across the nation for
$7,445. That's the cash pay.
Senator Kaine. If somebody came, and they were a Medicaid
patient and wanted a hysterectomy, would you receive more or
less than $7,445?
Mr. Tippets. The challenge there is we don't bill for the
doctor. The doctor bills for their own, and often the
anesthesiologist----
Senator Kaine. Do you know whether the total cost is more
or less than $7,445?
Mr. Tippets. I know what our cost would be for a
hysterectomy like that--would be about $4,000 we would receive
from----
Senator Kaine. Then do you have a sense about what the cost
for the other professionals are? Do you know whether the total
cost is more or less than $7,445?
Mr. Tippets. I don't know what the doctors would charge or
bill for that. So I don't have all the information to equate
what a cash pay price would be to a commercial or Medicaid----
Senator Kaine. So even within your own pro-transparency
network, you're not aware when you're treating patients whether
they are being treated equally with respect to the cost that
they are being charged or what the medical professionals are
receiving for a particular procedure.
Mr. Tippets. That's correct. Right. I'm not--I can guess--
--
Senator Kaine. How about in private insurance? Do you
bundle on the private insurance side if you perform a
hysterectomy, and is the bundled cost--the bundled amount that
you receive more or less than $7,445?
Mr. Tippets. We receive less than $7,445 based on--the
doctor is not in the picture. So, essentially, the only thing
that we would bill for is the facility fee only.
Senator Kaine. But I guess the gist of your testimony must
be that the only reason people would pay cash is it's a
discount. So if you're not aware of what the bundled total is,
you nevertheless are setting a bundled payment, cash only, with
the assumption that somebody would make that payment to you
because it would be less than the combined effect of the
payments charged in another manner, correct?
Mr. Tippets. Well, we can equate that to if they go to a
hospital. We know that, historically--we get the information
from there--we're anywhere from 60 percent to 80 percent,
sometimes less, than what a hospital fee--just for the facility
fee.
Senator Kaine. Now, are you talking about an HOP--an
outpatient----
The Chairman. We'll go to a second round.
Senator Kaine. Oh, I'm sorry. Excuse me. Thank you.
The Chairman. Go ahead and finish your answer.
Senator Kaine. Well, actually, I had finished that. I had
finished.
The Chairman. What I'm going to do is I'm going to ask--
I've got a couple of questions, and then I'm going to ask
Senator Cassidy to chair a second round of questions, if that's
all right with him, for any Senator who wishes to stay.
Mr. Tippets, following up on Senator Warren's question, I
think you said that about 10 percent of the procedures were
cash payments. Is that right?
Mr. Tippets. That's correct.
The Chairman. But that doesn't mean that those people had
no insurance. Isn't that correct? It might have been cheaper
for them to pay cash than to pay the deductible for the
insurance they have. Am I correct about that?
Mr. Tippets. That's correct. What we're seeing, especially
with high deductible HSAs, is they don't want to burn through
in a year all of their deductible or co-pays on one hernia, for
example, that would cost $3,000 bundled, where it might cost
$15,000 to $20,000 in a hospital.
The Chairman. So do you have any guess about what percent
of the people who pay cash at your center also have insurance
that they don't use?
Mr. Tippets. I think it would be very low. I don't have the
exact statistics, but individuals paying cash usually do not
have insurance but they have the means to do so or they have
high deductible plans.
The Chairman. Well, let me move to this question. Generally
speaking, 55 percent or 60 percent of Americans--well, most
Americans are insured. More than 90 percent have insurance.
Fifty-five or 60 percent of those who do have insurance have
employer insurance. They get it on the job. Maybe 35 or 40 get
it from Medicare and Medicaid.
So am I correct--we have mandates from Washington about
transparency on cost and quality for Medicare and Medicaid, but
not for employer-sponsored insurance, correct?
Mr. Tippets. Correct.
The Chairman. How useful--I have two questions. One is how
useful are the current federal mandates on government-sponsored
insurance? I mean, can a consumer really figure anything out
from those, or do they need to be re-written or made more
meaningful? And, two, should the Federal Government create
similar mandates for the 55 or 60 percent of the policies that
are employer insurance?
Let's start with you, Mr. Tippets, and anybody else who
wants----
Mr. Tippets. Great question, Senator. What we're seeing,
especially with high deductible plans, is we're seeing more and
more individuals have these excessive burdens on them. So what
we're seeing is a more consumer driven system where they're
becoming more educated, not just on price and quality, to deal
with these issues. Because that's being driven by the
consumers, the insurance companies and many private employers
are going to self-funded plans to where they actually
participate in price transparency and cash pay programs. What
is beneficial in that situation--for example, we're having
employers come in and say----
The Chairman. I'm going to ask you to keep it kind of short
because I want to hear from Mr. Kampine, especially on this,
and I don't want to go over my two minutes. I don't want to
violate my own rule.
Mr. Tippets. Going to the thought that mandates--I
personally believe that a very free market system, that
consumers are educated and driven, is a much stronger system
than mandating that something should be done.
The Chairman. Mr. Kampine, how useful are the current
federal mandates on government insurance, and should there be
federal mandates on the non-government insurance?
Mr. Kampine. So here's what I would say. All of our
clients, all of our employer clients, have insurance. Many of
them have transparency tools. Those transparency tools aren't
used. They choose Bluebook for the ease and the effectiveness
of it and the options that they have, including doing things
like including cash pay bundles that might be outside of their
network, which are for things like joint replacements, by
definition, when I look in the claims data, significantly lower
than what you would pay in the network for that hospital for
that same service.
Now, we have the quality question to solve in the future.
But in terms of effectiveness, I'm not sure exactly which
mandates we're talking about, but in terms of insurance and
access to transparency tools, really, the place where
innovation has been driven here is in the private market.
The Chairman. Thank you very much.
I'm going to now go to Senator Cassidy to chair, and I'll
ask Senator Scott if he'd rather let Senator Cassidy go ahead
with his question or Senator Kaine, or are you ready, Senator
Scott, to ask your questions?
Senator Scott. I'm ready.
The Chairman. Okay. We'll go to Senator--Senator Scott is
always ready. So Senator Scott.
Senator Scott. Thank you all for being here this morning,
and I truly appreciate your investment of time in looking at
ways for us to help the average consumer have a better
experience and, hopefully, a better price for their experience
in healthcare.
In 2016, the U.S. spent about $3.3 trillion on healthcare,
$3.3 trillion on healthcare. About 28 percent of those dollars
came out of households. So if you think about it from a
numerical perspective, that's $930 billion paid by households.
The U.S. is expected to spend about $5.7 trillion on healthcare
by 2026. If the current ratio holds true, that 28 percent would
represent about $1.6 trillion for the average American
household.
I hope I'm pronouncing your name right, Mr. Kampine. Is
that accurate?
Mr. Kampine. Yes.
Senator Scott. You estimate that $1.5 trillion of our
current healthcare spending is paid for by either employers or
directly by consumers, and that about $500 billion of that is
spent on what you refer to as shoppable, non-acute healthcare
services. If what you say is true--and I have no reason to
doubt you--that when people have the tools they need to shop
around for care, both consumers and employers can save 50
percent or $250 billion that they can use for all types of
services----
Mr. Kampine. That's right.
Senator Scott.----expenses or savings, which would be a
remarkable change as well. What steps can we take to improve
the ability of consumers to shop around for such services?
Mr. Kampine. So, again, in our experience, in terms of
working with employers, there are three things that we have
found to be very, very successful. The first is education. We
talked a little bit about it earlier. But when consumers know
that prices vary and when they know that quality varies, they
are much, much more likely, in fact, 11 times more likely to
actually shop and compare providers and get better value for
themselves.
So there has to be education, and it has to be consistent,
because we don't consume healthcare every day. We don't think
about it until later in the year when our son hurts his foot
playing soccer, and then maybe we've forgotten about it. So
that's sort of table stakes.
The second one is simplicity. It has to be easy for people
to shop and understand what they should reasonably pay. So in
my town, in my network, what is the range of prices? Is it $400
to $2,000, and if that's the range, what should I reasonably
pay? And then make it very easy, and the way we do this at
Bluebook is through color coding for cost and quality, but
there are other methodologies for doing this. If you make it
easy for consumers, once they understand, then to find those
providers, they can act on that need.
The last element that I think we do find very, very
effective--and over half of our clients utilize this--are
value-based incentives, so, for example, cash-based incentives
that encourage people to be better consumers and even encourage
people when they've already met their deductible. So once
you've met your deductible, for many people, where's the
incentive to continue to shop for care? So cash pay incentives
play a role there in terms of helping to reinforce that
shopping behavior. There are other elements as well, but I
would those are three.
Senator Scott. So just to follow up on that, if you've met
your deductible, of course, your incentive for shopping goes
down probably precipitously.
Mr. Kampine. Yes.
Senator Scott. However, if you have an out-of-pocket
expense that still has to be met or exhausted as well, perhaps
there's enough incentive for some matrix to play a role in the
desire to shop if we could design it right.
Mr. Kampine. Yes. And, forgive me, I meant deductible and
your co-insurance, or your total out-of-pocket max. But once
you've reached that, it makes absolute sense. So, for example,
we heard the example earlier where Mr. Tippets' ambulatory
surgery center is about $17,000 for a hip replacement, or a
fair price at a hospital is around $30,000. In either event,
most people are going to meet their out-of-pocket max.
Additional incentive on both cost and quality,
incidentally, not only on cost, but understanding which of
these facilities has the best quality. It makes a lot of sense
in order to offer these incentives, and they can be $500,
$1,000, even larger than that, to encourage patients to make
better, high-quality, cost-effective choices on their care.
Senator Scott. It does remind me of Secretary Azar's EKG
that was mentioned earlier, $3,500 in the hospital versus $550
out of the hospital. How do we explain that type of disparity
in the same market? Profit? I mean, is there another answer
than that?
Mr. Kampine. There are a lot of different reasons for that.
A lot of it has to do--and, again, there was a graph that
Senator Cassidy pointed to. The facility and where you go for
care is the single biggest decision. So if your cardiologist is
affiliated tightly with a hospital, you stand a higher
probability or a higher chance of that cardiologist referring
you actually to the hospital facility, and that's how you end
up with a $3,000 EKG.
So, again, this is the role for transparency. Consumers
need to understand what decisions drive the cost, and how to
select a doctor and keep your doctor, but make sure that you're
having care in the most cost-effective venue, and most docs can
do this in more than one place.
Senator Scott. Chairman Cassidy, if you would not mind me
asking a follow-up question--my time is about out.
Senator Cassidy [presiding]. Please.
Senator Scott. In order for price transparency to be
effective, it's also important for us to have more than
simply--as you were just discussing, more than simply the price
points. There's the outcome, the number of times that someone
returns to the hospital based on the same doctor, same
hospital, same care provider.
Can you talk for a minute or two--well, not for a minute or
two, but----
Mr. Kampine. Fifteen seconds?
Senator Scott.----on the importance of that aspect, that,
in fact, what consumers need to know in order for us to have a
quality outcome is not the transactional expenses that are paid
per transaction, but the quality of the outcome, and how that
links back to the price that they paid?
Mr. Kampine. Absolutely. So here's how we think about it at
Bluebook. Most hospitals do most services. There are very few
hospitals in the U.S. that do all services equally well, and so
you can't use brand as a determinant necessarily for quality.
You could have a hospital that's in the top 10 percent in the
U.S. for complex cardiac care and in the bottom 10 percent for
joint replacement. So our obligation is to help consumers
understand, when I need this particular service, what are the
outcomes for the different locations I can go to.
The way we look at it, again, is specifically related to
patient outcomes, and it's measured in four dimensions. One is
mortality. Do patients survive the surgery? Second is
complications, very important. Third are safety events, and,
fourth are unanticipated readmissions. So what we want to do is
collect that information and help patients understand two
dimensions, right? The first is cost and quality, explained
very simply, green, yellow, red, or cost, and then the second
is quality, explained using the same color coding system so
that both of those pieces of information can be aligned so that
patients can make a good decision.
Senator Scott. Thank you.
Thank you for your patience, Senator.
Senator Kaine. Thank you, Senator, and again to the panel.
This is a great hearing.
I want to read you an abstract of an article that was
recently published by the National Bureau of Economic Research.
The article is entitled ``Are Healthcare Services Shoppable:
Evidence From the Consumption of Lower Limb MRI Scans,'' and,
Mr. Chair, if I could introduce this for the record.
Senator Cassidy. Without objection.
[The information referred to follows:]
Senator Kaine. But I'm going to read you the abstract, and
I'm just curious as to your thoughts about this abstract.
``We studied how individuals with private health
insurance choose providers for lower limb MRI scans.
Lower limb MRI scans are a fairly undifferentiated
service and providers prices routinely vary by a factor
of five or more across providers within hospital
referral regions. We observed that despite significant
out-of-pocket cost exposure, patients often received
care in high-price locations when lower-priced options
were available. Fewer than 1 percent of individuals
used a price transparency tool to search for the price
of their services in advance of care.
``The choice of provider is such that, on average,
individuals bypassed six lower-priced providers between
their home and the location where they received their
scan. Referring physicians heavily influence where
their patients receive care. The influence of referring
physicians is dramatically greater than the effect of
patient cost-sharing.
``As a result, in order to lower out-of-pocket cost and
reduce total MRI spending, patients must diverge from
the established referral pathways of their referring
physicians. We also observed that patients with
vertically integrated, i.e., hospital-owned referring
physicians are more likely to have hospital-based (and
more costly) MRI scans.''
Is that abstract of this piece that's just been published
by the NBER consistent with your own understanding and
experience?
Ms. Giunto, you look like you're ready to weigh in.
Ms. Giunto. Yes, Senator. I think that patients turn to
their physicians for advice about where their care should be
handled. I think there is often an issue of convenience, and
because consumers are not used to shopping on the basis of
cost, quality, or patient experience, they follow their
physician's advice, and, frankly, the physician may not even
know the price differential of the facilities where he or she
is referring.
Senator Kaine. Other thoughts?
Mr. Kampine. Sure. I'm very familiar with the study. I've
reviewed it a couple of times for public forums and speaking
engagements. A couple of things about the study. The outcomes--
well, I agree that your physician plays an important role in
this, and it's a huge opportunity that is yet untapped, as
Nancy mentioned. And in a story that I told about Jeff's
experience, doctors generally know that there's a difference in
cost. They don't know exactly what that difference is, and they
don't have the tools to help patients make better choices.
In the particular study, though, I think the outcome that
they noted is really sort of an effect of education, education,
education. So these were patients that did not use price tool,
or they did, they had access to one, but it was a passive
transparency program. So no education, no incentives, none of
those things that help us educate patients.
One thing I took away that was very deep--nerdy guys like
me read this stuff--deep in the appendix is there is a
statistical analysis, and one of them shows, look, not a lot of
people shopped in this instance, but the ones who did--guess
what? They got lower prices for the services they consumed. So,
again, we see that effect. If people know, then they shop, they
get better prices--huge opportunity, though, to influence our
referring physicians and make sure they have that information
in their hands.
Mobile applications--somebody mentioned young people. It's
easier to show it to your doctor. But I think it's a huge
opportunity. We are doing some pilots. I would imagine Nancy,
you are doing some pilots, and Leah as well. So a huge
opportunity.
Senator Kaine. Ms. Binder, you are ready to weigh in?
Ms. Binder. I think what the study shows is that the idea
of being able to shop and not just doing what your doctor tells
you, like Marcus Welby days, is a relatively new one. This is
fragile new movement.
Senator Kaine. Yes. We have to fight the culture, right?
There's a cultural----
Ms. Binder. This is a massive shift in our culture. It's
happening very quickly, though, I think. My feeling is that
millennials, as soon as they realize they are not immortal,
which means they get to be a little bit over 30 and they start
to have some health problems, that is when we are going to see
a transformation, because they will not tolerate the level of
transparency which we have now, which really isn't where it
should be.
Senator Kaine. Mr. Tippets, do you have a thought about
that?
Mr. Tippets. Yes. One study I read is that 89 percent of
individuals needing healthcare want to know what the price is,
but only 26 percent actually ask their physicians, ask their
doctors. They just expect that the doctor knows best, and
that's why this whole movement of price transparency is so
critical--educating and letting the consumer know they actually
have a choice. And the doctor may or may not always know best,
especially in terms of what the price would be.
Senator Kaine. But that means that price transparency is
really important for physicians. I mean, it's the education of
physicians about pricing as well as the education of patients.
Mr. Tippets. That's correct. Everybody needs to know what
we're talking about, and doctors live in their own world,
especially if they have their own specialties. They may not
know what an MRI will be.
Senator Kaine. Right. Sure.
Mr. Tippets. But there are huge variances, even in small
communities, in what prices would be. So just having the
ability to find it in a simple manner is really critical, not
just for the consumers, but the physicians as well.
Senator Kaine. Right. Thank you.
Thanks, Mr. Chair.
Senator Cassidy. Let me build upon what Senator Kaine said,
though. The typical physician cannot know what the charge is
from a hospital because, frankly, the hospital doesn't know. It
depends upon the insurer. It depends upon the interaction with
the patient's co-insurance, et cetera.
So, Ms. Giunto, one thing I've always stressed--it can't
just be the physician-patient relationship as it was with
Marcus Welby, but there has to be an alignment of both the
financial interest and the healthcare interest of the two
parties, mutually beneficial. Are you familiar with the Direct
Primary Care Model, which has been, to a certain extent, led
out of Washington state?
Ms. Giunto. Yes, Senator.
Senator Cassidy. Do you want to comment on that?
Ms. Giunto. Well, I think any time that the incentives can
be aligned around care----
Senator Cassidy. Let me just say for those who may not
know, the Direct Primary Care Model, which I call the blue
collar concierge--the patient pays the physician a fee per
month, and the physician takes care of all those needs except
those which require a referral. If the patient doesn't like it,
she can terminate at any time.
So if she gets sent to the ER with a headache on Friday
afternoon and spends all night there, she says, ``What the heck
is this doing for me?'' So the doc makes a point to see her on
Friday afternoon with her headache. If he does or she does
refer her to a specialist, the doc then has the incentive to
both look at quality and cost to make sure that she gets the
best value for her relationship with the primary care.
Ms. Giunto. Yes. Senator, thank you, and that is exactly
what I was going to say. Any time the incentives can be aligned
across the care delivery systems, and participators are
demanding that over the provider networks that they are engaged
with, the better it is for the consumer.
Senator Cassidy. Now, when you say that, though, you still
have to have value. One of my assistants, a physician, gave the
little formula: value is equal to quality divided by cost. Now,
obviously, the greater the quality, the more you're willing to
pay. But that becomes difficult, and one of you, Ms. Binder or
Ms. Giunto, mentioned that.
But, Mr. Tippets, let me just go to the practical aspect of
this. Somebody with ischemic heart disease, diabetes, and
hypertension has to go in for a joint replacement. Probably,
that needs to be at the general hospital. But when you have
your cash price, does that cover those with various
comorbidities which may require extra effort? Or is there an
epi-payment upon that? I'm just asking how you would
practically handle that.
Mr. Tippets. No. We're very sensitive, because it's not
about the dollar. It's about the patient and what we can do for
them. So in our policies and procedures, we're very specific on
what individuals--their level of health, the ASA chart--we only
accept individuals that are healthy.
Senator Cassidy. So then let me ask--because if we had a
representative of the American Hospital Association here, she
would be saying, ``Aha, they're cherry picking. They're taking
those who are the healthiest patients, and we are left with
those who are the most complicated, so, of course, we look
worse both in terms of quality and cost because we do have the
person with the ischemic heart disease, et cetera.'' How would
you respond to that?
Mr. Tippets. Well, absolutely. Hospitals--ASCs are not
anti-hospital. We recognize that we have individuals with very
complex physical issues, and that hospitals and ASCs should be
compensated or reimbursed for the level of complexity that a
patient has. Only about 40 to 50 percent of our total hips that
could be done in an outpatient setting should go to an
outpatient setting because of age, diabetes, sleep apnea, any
of those comorbidities. They need to go to the hospital.
Senator Cassidy. Now, in your community, is there a
differential payment based upon comorbidities?
Mr. Tippets. Well, we only are able--we only choose to
accept patients that are----
Senator Cassidy. I'm sorry. But the pay--if I went to the
general hospital where your ASC is, would I pay more with the
insurance company paying more if I had diabetes and heart
disease along with my need to replace my hip, or is there the
same payment for the hip replacement whether or not there are
comorbidities?
Mr. Tippet. From what I understand, the hospitals would be
reimbursed more for that. But I don't know what the hospitals
are reimbursed for.
Senator Cassidy. Ms. Binder, you discussed--and I think you
and Ms. Giunto as well--the difficulty in comparing different
sites of care for their quality measures, and, again, a value
is quality divided by cost, but quality is influenced by how
sick the patient is going in. That's another complexity on
that. I'm a big believer in price transparency, quality
transparency, et cetera.
How do we establish value for patients so they can know if
I've got something else going on, this is where I should go as
opposed to there?
Ms. Binder. Well, I think that's the information that has
to be provided through transparency tools. If you're at certain
risk levels, here are some options that you have in the market.
I think not everybody should go to a hospital. Not everyone
needs to go to a hospital, nor do they want to necessarily.
That option should be available to them. We don't need to send
everybody to the highest level of care.
Senator Cassidy. You mentioned the Leapfrog initiative,
that which is attempting to compile this. But also I think my
staff points out that if you go to CMS, every hospital rates
about the same----
Ms. Binder. Right.
Senator Cassidy.----and we know that there's incredible
variability. So despite them amassing all this information,
everybody comes out the same, a regression to the mean, if you
will. So how do we actually take this and compile it in a way
that I could say, ``Hmm, I've got diabetes. I'd better go here
as opposed to there.''
Ms. Binder. Well, I think that CMS needs to make data
available to the public, which they do, behind the tool--this
hospital compare, where they call everyone basically average,
which is--that's the problem. But behind that is a
spreadsheet----
Senator Cassidy. Like woebegone for hospitals.
Ms. Binder. It's worse than like--everybody's average. But
behind that is a spreadsheet, and all of us, or many of us in
the public arena can use that spreadsheet to populate our own
tools that do show variation among providers, and that's been a
very positive program, and that needs to expand. They need to
be able to do that for more measures. But in their public-
facing tools, because of political considerations, everybody
looks average.
Senator Cassidy. Now, Ms. Giunto, I'll finish with you.
Again, you all have done a remarkable job of kind of taking all
these different payers and getting information, obviously
comparing different types of systems to one another. How do you
all handle this issue?
Ms. Giunto. What we would say is that publicly available
data can show distinctions. It should be severely adjusted. We
haven't looked at the level of a particular case, as you've
mentioned, diabetes, but we have done this at the hospital
level in my state, where we've compared cost, quality, and
patient experience--patient experience, not satisfaction,
patient experience being how engaged in my care, how often does
something happen, and we've shown through the study called the
Hospital Value Report that, in fact, those hospitals in our
state that are the most efficient are also among the most
highest quality and have great patient experience. So we've
done this in our state.
Senator Cassidy. So high cost is, again, not necessarily
correlated with better patient experience nor better outcomes.
Ms. Giunto. Absolutely, Senator. It does not.
Senator Cassidy. You have found a way to address the
differences between case mix, at least to a certain extent, as
you compare different entities.
Ms. Giunto. Yes, we have. We have a long way to go, but
we've made an initial attempt.
Senator Cassidy. Thank you all very much for this, and I
have a script I'm supposed to read.
The hearing record will remain open for 10 days. Members
may submit additional information for the record within that
time if they would like. The HELP Committee will meet again
Tuesday, September 25th, for a hearing on the Every Child
Succeeds Act.
Thank you for being here, particularly to our witnesses.
The Committee will stand adjourned.
[Whereupon, at 11:44 a.m., the hearing was adjourned.]
[all]