Price transparency is supposed to be one of the keys to controlling the cost of health care. But as journalist Michael Chang reported in The Miami Herald, getting insurers to release the figures on what they pay for health care and getting providers to release the figures on what they receive for delivering care can be difficult if not impossible.
In his article, Chang reported on the struggle a consultant for a local union had in determining what Miami-Dade County paid to doctors and hospitals caring for county employees, their family members and retirees. The numbers could not be released, he reported, because data in contracts between insurers and providers are proprietary. In fact, most contracts between health plans and providers include “gag” clauses that prohibit either side from releasing price information.
Even a public employer, such as Miami-Dade County, could not get the data due to gag clauses. Chang quoted Duane Fitch, the consultant for Local 1991 of the Service Employees International Union, saying, “We really need to understand where the money is being spent in order to be insightful about benefit design changes.’’ Local 1991 represents physicians and nurses at the Jackson Health System, which is a county-owned hospital.
As a public employer, Miami-Dade County uses tax dollars to pay for care and some of those funds go to county-owned hospitals in the Jackson Health System. Yet Fitch was denied his request each time he asked for how much the county was spending. The county spends $400 million annually to provide health care for 60,000 county employees, dependents, and retirees, Chang reported. Also, the county is self-insured, meaning it does not have a health insurer to manage the financial risk of providing health care benefits to its workers. Instead, the county assumes the financial risk.
The county’s Labor Healthcare Committee was formed to research health care trends and options to reduce the health care costs, Chang reported. But the failure to get the transparency data it needed undermined the committee’s efforts.
“And that means that the mayor’s health care committee has no more insight than the average Florida consumer on how to lower costs for their employees or themselves—frustrating everyone from union leaders to county commissioners who are trying to push down prices,” Chang wrote.
The article is an excellent introduction into the struggles that all employers and consumers encounter when seeking to find out what it costs to deliver health care. It also shows the hurdles consumers need to overcome to get the data they need to compare one hospital or physician against another on the basis of price.
In addition to the reporting he did on the difficulties the committee had in getting the information it needs to manage costs more effectively, he included two other important facts that stood out in this article.
First, he reported that in 2013, the CEO of a Miami hospital pledged during a radio interview to release data on the cost of care in his facility. But this executive was stymied by the gag clauses in his hospital contracts. The CEO, Steve Sonenreich of Mount Sinai Medical Center, told Chang that without price transparency, large hospital systems can use their market clout to raise rates to health insurers who then pass along those higher prices to employers and consumers.
Second, Chang explained one of the problems employers and consumers encounter when prices are known for only one provider or only a few providers. In 2012, the county paid hospitals in the Jackson Health System an average of $9,380 for each overnight stay. This amount was $6,133 lower than the average the county paid to all other hospital systems, Chang reported. But when the Jackson system learned that it was the low-cost entity, it raised its rates during renegotiations, he wrote.
