Pricing Transparency Or Payment Reform? One Policy Leader's Perspective

Well, to me, greater transparency is not the goal here; to me, the goal is getting lower prices for patients who are purchasers. That’s why I have an issue with releases like those from CMS, because not only are the data misleading and not particularly meaningful; but even publishing better data in that area does not contribute to what I see as the principal goal, which is getting lower prices.

So in a sense, first of all, in my testimony, I made the point that the most potent approach to getting lower prices is benefit designs that provide incentives to use higher-value providers.

Now, there is a data element there, of course, correct?

Yes. Once you have these benefit designs, then the data are very important in steering the patient. And here, there are two approaches. One that is useful for high-deductible plans for outpatient services, is to provide the enrollee with their co-pay information under their insurance policy, to go to different providers. But then the other approach, which I said in my testimony is probably more powerful, is to have insurers crunch the data and give the enrollees very simple incentives, such as grouping hospitals into tiers and saying, you’ll pay less for going to that tier.

Now, some of the politicians talking about transparency believe in transparency as a societal value, whereas I’m talking about how to get lower prices for patients.

Where does clinical outcomes information fit into that kind of insurer schematic?

That would be a part of it—information on both cost and quality.

Have the initiatives that have published outcomes data so far been helpful?

I think that publishing quality data is very important, and unlike putting out a lot of data on prices, where I have some reservations about it, putting out data on quality, I think that can only be positive, as long as the data are meaningful.  And what the California Health Care Foundation has done, is a much stronger effort than Medicare Compare.

What should our audience know about all this?

I think that developing measurements of outcomes and costs—sophisticated measurements—is going to be very important going into the future.

And what do see happening in the next couple of years?

Well, I think there are issues about provider pushback against tiered benefit designs; that’s something policymakers need to address, and they basically need to prohibit contracting practices that obstruct that. I think what’s happening is that, based on some significant informatics, we’re seeing a lot of limited or narrow-network insurance products, which to me is a useful direction; it’s important for purchasers and health plans to gain leverage with providers. But I think it’s a second-best approach, second-best to tiered designs, but because there are no barriers to it, that’s where a lot of the movement is. Point-of-service incentives, to choose higher-value providers—I think that consumers would prefer that to the more common approach of keeping some providers out of the network. I’m drawing on what happened with prescription drug designs, where we went to tiered designs, rather than going to closed formularies.