Model State Health Care Price and Quality Transparency Legislation

Model State Health Care Price and Quality Transparency Legislation

In March 2013, the Health Care Incentives Improvement Institute and Catalyst for Payment Reform issued a report card ranking each state in the US on the availability and accessibility of health care services pricing. In December 2013, another report card was issued surrounding the transparency of physician quality information. The results of the two report cards showed that, generally, most residents in the large majority of states do not have access to pricing information on health care services or quality information on local clinicians and hospitals.

With an ever-larger proportion of consumers in health plans with large deductibles and high co-insurance, the importance of pricing and quality information is growing. Consumers are awarded certain protections with respect to pricing information for almost all purchases other than health care.

The purpose of the draft legislation is to provide state lawmakers with a starting point for enacting legislation that would meet the needs of the different stakeholders in their State, including consumers, employers, health plans, and referring practitioners. The draft legislation essentially has three components.

First in Section 2, the model bill requires the establishment of a public database on health care price and quality, primarily by instituting an all-payer claims database (APCD). A number of states are mandating APCDs that are designed to publish historical prices for a basket of routine or common procedures. The data generated by the APCDs enable consumers to understand, prior to having such a procedure, the estimated price and how it could vary by health care provider. This type of comparative pricing information has been in practice in New Hampshire for several years. Many consumers only have catastrophic coverage or might be self-pay or uninsured, and as such would not get this information from their health plans. Further, physicians have patients with coverage from myriad health plans and such a public resource could become a useful look-up to help guide price-conscious patients in comparing facilities and practitioners. APCDs are also being used to monitor public health issues, provide insights on price disparities and quality issues, and many other health policies of interest to state officials.

Section 3 addresses the need of the general public for directionally accurate information on the price of health care services in a State if individual consumers are self-insured or uninsured or if they are insured through a health plan but contemplating going out-of-network for services. Some of that information can come from a hospital or practitioner when dealing with a direct inquiry from a consumer. This will ensure that all consumers are provided charging information from a provider of health care services up front, not after the fact.

Section 4 requires health plans to be responsible for providing estimated out-of-pocket expenses for common inpatient discharges and outpatient procedures (e.g. a knee ligament repair), not simply specific services (e.g. a blood test or X-ray). Recent legislation and regulations in states such as Massachusetts and Rhode Island are mandating that health plans communicate estimated out-of-pocket expenses and quality data for plan members. This is important because there are many services involved in a medical event and without an estimate from the health plan on the cost of the full event, there is virtually no way for consumers to put the pieces together and understand their potential financial liability. Health plans are also obligated to give their plan members information on quality of care based on recognized national quality standards .

Taken together, the model bill should provide those who are insured by commercial insurers and Medicaid, as well as the uninsured, employers, and policymakers, access to pricing and quality information on health care services in their state.