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State, Feds Move to Increase Hospital Price Transparency

By coincidence, a proposed N.C. bill to increase hospital transparency moves through committee on the same day the federal government releases data on hospital pricing.

By Rose Hoban and Tyler Dukes

It’s a common scenario:

A patient goes to the hospital for appendicitis or heart surgery or a hip replacement, and when the bill arrives, the response is:

“Huh?”

But that may soon change for people in North Carolina, thanks to a bill making its way through the state Senate, as well as changes to federal law.

The Health Care Cost Reduction and Transparency Act would require hospitals to list on their websites the prices for their 100 most expensive procedures.

WhatIsA_DRGThe bill would also require that bills be easier to read and that hospitals post their charity-care policies prominently on their websites.

“This is all about providing opportunities for consumers … and the businesses who are paying the bills for health care to get a better picture on what the real cost of health care is and where they should put their dollars,” Sen. Bob Rucho (R-Matthews) told the Senate Finance committee Wednesday afternoon.

“This is the first step in a process, so that we can find some information on how we can best get control over the cost of health care,” he said.

Under the bill, hospitals would list prices for procedures or treatments using a federal disease categorization known as Diagnostic Related Groups, or DRGs, which are used for calculating payments to hospitals (see box, “What’s a DRG?”).

Hospitals would be required to list charges negotiated with all the major payers for health care, including Medicare, Medicaid, a range of rates paid by private insurance companies, the State Health Plan for state employees and the rates for people who are uninsured and paying out of pocket.

It’s designed to allow consumers to make decisions based on the facts, Rucho said.

“You go out to Walmart, you know what the cost is,” he said. “Well, we may not get right to that nth degree, but we’ll get a lot closer.”

The bill passed the committee by a unanimous vote.

New data

The bill’s appearance in the committee coincided with the release by the federal Centers for Medicare and Medicaid Services (CMS) of the same type of data as that being legislated in North Carolina. Release of this data was mandated in the Affordable Care Act, signed into law in March 2010.

Federal officials Wednesday released a massive national database that shows the costs for the 100 most common DRGs across the country and how prices among hospitals vary.

An analysis done by North Carolina Health News found that for patients with kidney failure hospitalized with other complications, the costs ranged from a low of about $8,200 at Beaufort County Medical Center in Washington to a high of $32,000 at Sandhills Regional Medical Center in Hamlet.

The state average for an episode of care for kidney failure was about $16,500.

Costs of statewide medical procedures, kidney failure

Kidney failure can be caused by infection, or injury, but most commonly it’s the result of having had diabetes over the course of many years. Treatment for kidney failure for people with other complications was one of the most common procedures in hospitals across North Carolina in 2011. Yet this newly released data from the Centers for Medicare and Medicaid Services show providers bill at vastly different amounts than the state average of $16,500.38.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Health and Human Services Sec. Kathleen Sebelius wrote in a prepared release.

This data, she said, will help fill that gap.

CMS is challenging foundations and advocates to create ways for consumers to use the data in a way that makes sense.

Similar data on hospital costs was already posted on the CMS website, but making sense of that data has remained elusive for many in the public.

Costs of statewide medical procedures, blood infection.
Blood infections are serious conditions that often result in admission to an intensive care unit and supportive care on a breathing machine. Treatment for blood infection was one of the most common procedures in hospitals across North Carolina in 2011. Yet this newly released data from the Centers for Medicare and Medicaid Services show providers bill at vastly different amounts than the state average of $30,196.51.

“We already post a lot of this data on our website,” said Cody Hand, a lobbyist for the N.C. Hospital Association.

Hand said there was some concern that making public the prices negotiated with insurance companies would drive up prices.

“Our concern is that as insurance companies see that someone else is getting paid a higher rate, they will want the higher rate and vice versa,” he said. “We’re worried that it’ll lead to people wanting the higher rate that someone else is getting.”

Hand said some of those concerns were allayed by making the data show negotiated rates for five different insurers, but not naming the insurers in the process.

“We believe we are overpaying for hospital services in the State Health Plan,” said Chuck Stone, lobbyist for the State Employees Association of North Carolina. “The information being provided by this bill, we believe, will let us look and see if that is true.

If so, he said, the state health plan could save in excess of $200 million to $400 million a year.

Stone said he hopes revealing this kind of information will help the plan reduce costs and co-pays for state employees.

Costs of statewide medical procedures, gastrointestinal distressTreatment for gastrointestinal or esophageal distress (everything from food poisoning to irritable bowel syndrome to diverticulitis) was one of the most common procedures in hospitals across North Carolina in 2011. Yet this newly released data from the Centers for Medicare and Medicaid Services show providers bill at vastly different amounts than the state average of $14,643.03. One provider, Frye Regional Medical Center in Hickory, charged twice the state average.

Easier billing

The bill also forbids state-funded facilities at UNC Health Care and East Carolina University from aggressively pursuing patients who owe them money by using wage garnishment and state income tax refunds.

Model bill proposed by the NC Hospital Association

Model bill proposed by the NC Hospital Association

“UNC and ECU should be treated like every other hospital,” Rucho said. “They will be able to use normal procedures through legal systems, as any other hospital facility, or any other business, for that matter.”

The bill also calls for easier-to-understand billing, something that’s also mandated in the Affordable Care Act.

“A law degree does you no good in reading your bills,” said Sen. Buck Newton, an attorney from Wilson. “I’ve had many years of practice for clients, and it’s still very hard to interpret it or decipher it.

“I used to have a medical savings account. I always wanted to ask what this was going cost me – what am I going to pay out of my medical savings account. No one could ever tell me.

“I’m looking forward to voting for this on the floor.”

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  1. State Highlights: Feds Sue Fla. Senate President’s Former Co. Over Medicare Billing | Health CareMay 10, 2013 at 6:48 pm

    […] North Carolina Health News: State, Feds Move to Increase Hospital Price Transparency By coincidence, a proposed N.C. bill to increase hospital transparency moves through committee on the same day the federal government releases data on hospital pricing (Hoban, 5/9). […]

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