Health Plans Ramp Up Hospital-Physician Price and Quality Transparency Tools

Tools' Usefulness and Availability Still Limited; Consumer Interest Unknown

News Release
Aug. 28, 2008

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—While health plans are developing tools to help consumers compare price and quality information across hospitals and physicians, the tools’ pervasiveness and usefulness are limited, according to a study released today by the Center for Studying Health System Change (HSC).

Responding to large employers’ interest in greater health care price and quality transparency, health plans generally provide some price information on inpatient and outpatient procedures and services, according to the study. However, the information often lacks specificity about individual providers, and its availability is often limited to enrollees in specific geographic areas. Likewise, few plans provide price information on services in physicians’ offices.

When providing quality information, health plans generally rely on third-party sources to package publicly available information instead of using information from their own claims, the study found.

"While health plans are devoting a lot of attention to price and quality transparency tools, we’re a long way from a critical mass of consumers trusting and using the information to choose physicians and hospitals," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded in part by the Robert Wood Johnson Foundation, which funded the study.

Many large employers view price and quality transparency as key to a broader consumerism strategy, where employees take more responsibility for medical costs, lifestyle choices and treatment decisions. Some health plans view providing price and quality information to enrollees as creating a competitive advantage, while others are skeptical about the benefits and are proceeding cautiously to avoid potential unintended consequences, the study found.

"None of the health plans we interviewed believed that price and quality information is being used extensively by their enrollees today, in part, because few have incentives in their benefit structures to encourage cost comparisons," said HSC Health Researcher Ann Tynan, M.P.H., coauthor of the study with HSC Health Analyst Allison Liebhaber and Ginsburg.

The study’s findings are detailed in a new HSC Research Brief—A Health Plan Work in Progress: Hospital-Physician Price and Quality Transparency—available by clicking here. The study is based on HSC’s 2007 site visits to 12 nationally representative metropolitan communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y. HSC has been tracking change in these markets since 1996.

Other key study findings include:

• Few plans provide price information that is customized to reflect individual enrollees’ benefit design. Only one health plan interviewed—Humana—reported having Web site capability to allow for individual customization of price information based on an enrollee’s deductible, copayments and out-of-pocket maximum.
• Few health plans reported providing price information for physician services; when they do, they generally provide the average cost of physician office visits in a particular geographic area, sometimes by city or zip code, and these costs are not specific to particular physicians.
• Plans are weighing the advantages of providing price and quality information against potential pitfalls. Plan executives perceive one of the biggest risks to be the misinterpretation of price and quality information by consumers. Health plan respondents were particularly concerned that enrollees may interpret high price as a proxy for high quality and shift to higher-cost providers, thus raising costs, but not necessarily improving quality.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.