Auditor: Price transparency still lacking in Vermont health care

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Posted on July 29, 2018 in Press Releases


The Vermont State Auditor’s office says the state has more work to do to make sure consumers know how much their health care services cost before they purchase them.

In a non-audit report Doug Hoffer’s staff released Monday, the office said that consumers often cannot find out the cost of health services, especially if they’re not proficient with technology.

The report is a followup to Hoffer’s efforts in 2014 to increase price transparency in the health care field, which he said was increasingly important because both insured and uninsured Vermonters can face high out-of-pocket costs.

Doug Hoffer. Photo by Roger Crowley/VTDigger

Across the nation’s health care industry, hospitals and doctor’s offices do not publish price lists for their consumers to peruse before they choose to get treatment. Instead, consumers receive their service first, and the doctor or hospital then bills the insurance company for every service the person received.

Once they get the bill, the insurance company will attempt to lower what the hospital charged them, either by enforcing a contract they have already negotiated that says how much the company has to pay the doctor or hospital, or by negotiating a new deal through a back-and-forth process.

The insurance company that has negotiated the best deal with the health care provider will pay the least amount for that service, meaning that the bigger insurance companies will often pay less than the smaller ones, and there is no market price for a health care service.

In contrast, the government-funded Medicaid and Medicare programs pay fixed prices for services and do not have to negotiate down prices. People without insurance have virtually no bargaining power to negotiate the price of a service, and must rely on charity care policies that the hospital sets rules for internally.

In a report from 2014, Hoffer’s office wrote that a years-old database called VHCURES — which the Green Mountain Care Board uses to perform analysis that leads to regulation — was set up in part to provide consumers with health care pricing information that they can use to shop for the right health care provider, and that use had not come to fruition.

The 2014 report quoted the Green Mountain Care Board saying it would “explore the feasibility” of using VHCURES to provide price transparency to consumers, but the auditor’s office said “providing consumers with price and quality information has not been a priority” for the board.

In response to Hoffer’s report and advocacy, the Legislature passed language in Act 54 of 2015 requiring the board to study whether it could use the VHCURES to set up a consumer website with pricing information. The board and the Legislature did not move forward with a consumer pricing website.

Act 54 also required Blue Cross Blue Shield of Vermont and MVP HealthCare to create databases where their customers could search the costs of procedures under their plans. Hoffer’s team reported Monday that it was only able to use Blue Cross’ website, and while the insurer is making progress, the information found there was incomplete.

“Our analysis finds that the approximately 30,000 uninsured Vermont residents must rely on publicly available information that does not provide health care price information specific to them and their families, or must turn to third-party providers … that provide similarly incomplete price and quality information,” the report said.

“Price information for (colonoscopies, mammograms and radiology) were each available for 60 percent of sampled facilities,” the report said. “Price information was available for 40 percent of physicians providing services related to diabetes, 80 percent of physicians providing services related to mental health, and 60 percent of physicians providing services related to osteoarthritis.”

However, the report said it was difficult to pair the data on prices to data on the quality of the services at a facility. Using separate random samples of providers, the auditor’s office found quality information for 0 percent of providers performing mental health services but 90 percent of providers performing diabetes services.

“On the quality side, we definitely need more and better data,” Hoffer said. “Optimally, you marry price and quality information because without the quality information, some people, they figure if it’s more expensive it must be better.”

Hoffer said that health care pricing is “the weirdest system in the world” and the quality of the services a person receives is not necessarily higher just because the price of the service is higher.

He said consumers deserve to have all the information, and as a society, “we’re all just spending too much money (on health care) not to have this information for everyone.”

This article was first published online Dec. 12, 2016.

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