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Jim Flynn: Health care industry lacks financial transparency

By: Jim Flynn
June 18, 2017
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photo - Jim Flynn.
Jim Flynn. 

Health care is the only marketplace I know of where people make large purchases without a clue about price.

With some effort, it's possible to compare benefit coverage and premium cost for health insurance plans. But, if you want to know what a hospital and/or doctor is going to charge for their services - and what they will actually be paid - well, good luck.

You'll likely only find this out afterwards, when you receive a "statement of benefits" from your health insurance plan and bills from your health care providers. With those documents, and diligent effort, you might be able to figure out what the hospital and doctor charged, and what you health plan actually paid them.

This lack of financial transparency in health care has long been a subject of debate and has generated occasional attempts at a legislative fix. The Colorado General Assembly took a swing at the ball in 2008 with what it called the Health Care Transparency Act. The legislative declaration for this act says its purpose is to "allow consumers to make educated choices regarding their health care needs and to require health care providers and carriers to share more information on prices and reimbursement rates."

The act says hospitals must provide data on their charges to a central repository supervised by the state insurance commissioner. The commissioner is required to publish this data on the Division of Insurance website "in a manner that allows consumers to conduct an interactive search to view and compare the information for specific hospitals."

This data is indeed available in an annual document called the Colorado Hospital Price Report, most easily found searching the internet for that report. The hospital price report gives you aggregate data and also lets you look up data on a hospital-by-hospital basis, and to compare hospitals.

The aggregate data show both charges and reimbursement rates for procedures within various diagnostic groups. The hospital-specific data only addresses charges. Reimbursement rates are uniformly less than charges - sometimes shockingly so, according to the aggregate data. (Chest pain: average charge - $30,262; average reimbursement - $2,999.)

This differential results from health plans negotiating charges with hospitals and not paying what is charged. Only people without insurance get stuck with the charged price.

As an example of how local hospitals compare, the 2016 report says UCHealth Memorial Hospital's average charge for chest pain was $20,423. For Penrose Hospital, the average charge was $24,244. Does this mean, as an enlightened purchaser of health care services, you should always go to Memorial Hospital for chest pain? No, but it does raise questions.

A 2003 Colorado statute requires hospitals and other health care facilities to provide prospective patients - if they ask - with the "average facility charge" for the treatment in question. This right must be disclosed to patients before admission.

Perhaps the best source of detailed information about health care charges and reimbursements comes from the Center for Medicare and Medicaid Services. This information, "Medicare Provider Utilization and Payment Data," can be found at www.cms.gov. Using this data, you can drill down on charges and reimbursements for individual hospitals and doctors.

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