One of the many trends in healthcare today is a move toward making specific quality and pricing information available to the public.
“When you’re buying a car, you can easily compare quality, features, and prices to make an educated guess,” points out Eric Siegal, MD, regional medical director, Cogent Healthcare, Madison, Wis., and chair of SHM’s Public Policy Committee. “In contrast, healthcare is completely opaque. People choose a doctor or a hospital—sometimes for a surgery that’s life threatening—by word of mouth or [based on] proximity. How do you make it possible to choose based on quality of care and on price?”
Known as healthcare transparency, this trend is driven by multiple sources. “The [CMS] Hospital Compare initiative was a first step in this, as were the Leapfrog initiative and the IHI [Institute for Health Improvement] Collaborative,” says Dr. Siegal. “In fact, the government is a little late to the game, but they’re quickly closing the gap.”
Mandate from the President
On August 22, 2006, President George W. Bush signed an executive order requiring key federal agencies to collect information about the quality and cost of the healthcare they provide and to share that data with each another—and with beneficiaries. Agencies included in the order are the Department of Health and Human Services (HHS), the Department of Defense (DoD), the Department of Veterans Affairs (VA), and the Office of Personnel Management (OPM).
The executive order directs these four agencies to work with the private sector and other government agencies to develop programs to measure quality of care. They were required by Jan. 1, 2007, to identify practices that promote high quality care and to compile information on the prices they pay for common services available to their members. Ultimately, the executive order calls for combining that data in a comprehensive source on providers’ quality and prices; this information will then be available to consumers.
President Bush has said that his order sends a message to healthcare providers that “in order to do business with the federal government, you’ve got to show us your prices.” The new requirements for transparency will affect healthcare providers across the country because treating about one-quarter of Americans covered by health insurance entails “doing business with the federal government.” That one-quarter includes Medicare beneficiaries, health insurance beneficiaries at the DoD and the VA, and federal employees. (The order clearly states that the directive does not apply to state-administered or -funded programs.)
House Legislation: Make Prices Public
Comprehensive pricing transparency may also be required on a state level. On Sept. 13, 2006, Representative Michael Burgess (R-Texas) introduced the Health Care Price Transparency Act of 2006 in the House. This American Hospital Association (AHA)-supported legislation would require states to publicly report hospital charges for specific inpatient and outpatient services and would require insurers to give patients, on request, an estimate of their expected out-of-pocket expenses.
—Eric Siegal, MD
The bill would also require the Agency for Healthcare Research and Quality to study what type of healthcare price information consumers would find useful and how that information could be made available in a timely, understandable form.
Thirty-two states already require hospitals to report pricing information, and six more are voluntarily doing so, but this legislation would likely change the information that hospitals and other providers are gathering and providing.
At press time, the legislation had been referred to the House Subcommittee on Health.
How Transparency Will Roll Out
While the House legislation is in limbo, the executive order will have an immediate effect on healthcare, starting this year. The quality measures to be included in reporting will be developed from private and government sources, including local providers, employers, and health plans and insurers.
After the data are gathered and the information technology (IT) infrastructure is set up, consumers will be able to access specific information on pricing and quality of services performed by doctors, hospitals, and other healthcare providers. This information may be available through a variety of sources, including insurance companies, employers, and Medicare-sponsored Web sites.
One of the keys to success will be in the collaboration among the agencies involved. “There’s a keen understanding among the major players that if everyone does their own thing, we’ll have chaos,” says Dr. Siegal. “There has to be a significant degree of harmonization [among] physician measures, hospital measures, inpatient measures, and outpatient measures.”
Where Hospitalists Fit in
Will healthcare transparency affect hospitalists? “It’s already impacting hospitalists,” says Dr. Siegal. “Not on pricing, but on quality reporting. The good news is that hospitalists may be the single best-prepared group of physicians [for transparency] because we’re already doing it. The question will be, as it becomes more pervasive, will it be done in a way that is thoughtful, measured, and practical?”
Hospitals are likely to look to their hospitalists to ensure that their quality measurements are competitive. Dr. Siegal explains, “Hospitals looking to improve quality will be most effective in getting results from the physicians whose financial incentives are aligned with theirs.”
However, additional—or more public—quality indicators will not necessarily create a huge source of income for hospital medicine. “The low-hanging fruit won’t be the patients that hospitalists see; it will be elective surgical cases,” predicts Dr. Siegal. “Those are cleanly defined procedures, with bundled payments and predictable outcomes, where a hospital can understand what happens and what’s included. Then they can say, ‘Why do we charge 20% more for a total elective hip [surgery] than the hospital down the road?’ ”
As transparency is rolled out in U.S. hospitals and healthcare systems, hospitalists will look good. “Hospitalists already live in a quality reporting world, more so than other doctors,” says Dr. Siegal. TH
Jane Jerrard writes “Public Policy” for The Hospitalist.