Medicolegal Issues

A Look inside Healthcare Transparency


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?”

Excerpt from the Executive Order

In general … Each agency shall implement programs measuring the quality of services supplied by healthcare providers to the beneficiaries or enrollees of a federal healthcare program. Such programs shall be based upon standards established by multi-stakeholder entities identified by the Secretary or by another agency subject to this order. Each agency shall develop its quality measurements in collaboration with similar initiatives in the private and non-Federal public sectors.

Transparency of pricing information … Each agency shall make available to the beneficiaries or enrollees of a federal healthcare program (and, at the option of the agency, to the public) the prices that it, its health insurance issuers, or its health insurance plans pay for procedures to providers in the healthcare program with which the agency, issuer, or plan contracts. Each agency shall also, in collaboration with multi-stakeholder groups … participate in the development of information regarding the overall costs of services for common episodes of care and the treatment of common chronic diseases.

Promoting Quality and Efficiency of Care. Each agency shall develop and identify, for beneficiaries, enrollees, and providers, approaches that encourage and facilitate the provision and receipt of high-quality and efficient healthcare. Such approaches may include pay-for-performance models of reimbursement consistent with current law. An agency will satisfy the requirements of this subsection if it makes available to beneficiaries or enrollees consumer-directed healthcare insurance products.

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.

The good news is that hospitalists may be the single best-prepared group of physicians [for transparency] because we’re already doing it.

—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.

Slow Adoption of Electronic Records

Researchers at Massachusetts General Hospital (Boston) and George Washington University (Washington, D.C.) unveiled the first comprehensive study on the use of electronic medical records (EMR). The conclusion: A mere 9% of doctors currently use EMRs. Least likely to use the technology were physicians over age 55 and those in small private practices with one to three doctors. The researchers estimate that if the current rates of adoption continue, only half of U.S. doctors will have systems in place by 2014—the deadline set for widespread deployment by President Bush.

IOM Makes P4P Recommendations for Medicare

The Institute of Medicine (IOM) recently released the report “Rewarding Provider Performance: Aligning Incentives in Medicare,” which highlights the deficiencies of the current Medicare physician payment system and offers thoughtful recommendations for implementing a pay-for-performance payment program within the Medicare program. The report, released in September 2006, is available online at

New Quality Measures for Voluntary Reporting

More quality measures will be added to the Centers for Medicare and Medicaid Services (CMS) Physician Voluntary Reporting Program (PVRP) in 2007, possibly including more that will be relevant for hospitalists. CMS released a list of 86 quality measures in the fall of 2006, stating that it plans to select a subset as the 2007 PVRP measures. The goal is to achieve an appropriate balance in measures to be reported by different specialties. Most of the reporting measures have been developed by medical associations involved in the AMA’s Physician Consortium for Quality Improvement. SHM is participating in this process.—JJ

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.

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