March 12, 2014

Hospital Price Transparency Bill A Bold And Necessary Reform

In the coming days, the Show-Me Institute will release a policy brief about what Missouri can do to improve access, cost, and quality of care for Medicaid patients. Authored by yours truly, the paper outlines five serious reform ideas, and one of those ideas focuses on price transparency from hospitals.

One of the biggest obstacles to greater competition and lower prices in the health care arena is the absence of readily accessible and easily comparable pricing information for common medical procedures. For as many things as the Affordable Care Act got wrong, it got right its requirements for greater price transparency. A review of the data last year by the U.S. Department of Health and Human Services hammers this point home.

For example, average inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif.

Even within the same geographic area, hospital charges for similar services can vary significantly. For example, average inpatient hospital charges for services that may be provided to treat heart failure range from a low of $21,000 to a high of $46,000 in Denver, Colo., and from a low of $9,000 to a high of $51,000 in Jackson, Miss.

There are numerous reasons costs can vary wildly from hospital to hospital, and quality of care is almost certainly a component. But if you’re from California and could travel to Oklahoma instead to pay less than 3 percent of the cost of a joint replacement, wouldn’t you want to know that? If you could travel across town to another hospital to pay one-fifth the cost for a procedure, wouldn’t it be important to have that information? With few exceptions, state transparency requirements for hospital pricing are pretty awful nationwide, and consumers are hurt when that information is effectively withheld.

That is why I am very much a fan of Missouri Senate Bill 684, sponsored by Missouri Sen. Jason Holsman (D-Jackson County), which would help deliver precisely that sort of information. Coincidentally, the bill will be heard in a Senate committee later this week — right about the time we release my policy brief. I intend to submit testimony on the bill.

SB 684 would be a great stride forward for Missouri health care consumers. I hope Sen. Holsman’s colleagues take the proposal very seriously.

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