[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

=======================================================================

                                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

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions
                                
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                    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

                              ----------                              

                               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.
---------------------------------------------------------------------------
    \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 
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \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 
---------------------------------------------------------------------------
        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.
---------------------------------------------------------------------------
    \5\  Health Care Cost Institute, 2016 Health Care Cost and 
Utilization Report
---------------------------------------------------------------------------
          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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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 
---------------------------------------------------------------------------
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.]

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