Stateline Story

Moves Afoot to Shed Light on Hospital Costs

Comparison shopping for hospitals is easier in Wisconsin than in most of the country, thanks to a private effort to showcase state-collected data.

If someone there wants to know how much a hospital charges for a common procedure or how well a local hospital followed a list of best practices for patient treatment, he can simply check online. Basic price and quality information is available on two Websites run by the Wisconsin Hospital Association that draw on data collected by the state.

One, called Price Point, displays typical charges and lengths of stay for individual hospitals, alongside state and county averages. With the click of a mouse, users can go from the pricing information to a display of the hospital's rating on a list of treatment practices on Wisconsin Check Point.

Wisconsin lawmakers were among the first in the country to require hospitals to report their prices to the state. But that information remained difficult for the general public to use for a decade until the state gave the job of making it public to the hospital association in 2003.

Other states are looking for ways to publish hospital information, too. The Wisconsin hospital group already is working with the Oregon Association of Hospitals and Health Systems and is negotiating with hospital groups in two other states, which the group declined to name.

Meanwhile, lawmakers in Minnesota and South Dakota pushed through laws last year requiring state agencies to list hospital prices. Arizona and California already post that information, and the idea has gained traction in Utah, as well.

In Wisconsin, the hospital association jumped at the chance to publish the data as a way to promote the idea of transparency in the health care market. The hospitals see it as the first step in putting customers in charge of making health care decisions based on price and quality, as well as on location.

But the group also says Wisconsin's experience shows the pitfalls of relying solely on government to incite change.

"What Wisconsin proves is simply introducing a bill and mandating disclosure … really doesn't get you where you want to go," argued Eric Borgerding, a lobbyist and senior vice-president of the Wisconsin Hospital Association.

After an initial state grant to cover start-up costs, the hospitals' Web disclosure effort is self-sufficient. The group sells detailed data to insurers, employers, hospitals and vendors.

Still, the price information has several important limitations. Currently, it covers only inpatient treatment, although the hospital association is working to expand to outpatient procedures as well. The listings don't include charges by the doctors because they bill separately.

A separate effort is under way through the nascent Wisconsin Health Information Organization to disclose physician and hospital quality and pricing information. It would report how much insurance companies actually pay, on average, for different treatments.

That's an improvement over the current site, which lists only what hospitals charge for treatment, not what they collect. Insurance companies, along with state and federal governments, often pay far less than the listed price because they use their buying power to demand lower bills.

The Price Point site does indicate, though, the percentage of overall charges each hospital typically recovers from Medicaid, Medicare and private insurance. That information could give customers a rough idea of how much their insurance would pay for a procedure.

"If you're covered by traditional health insurance, what a hospital charges has little or nothing to do with what you pay," acknowledged Joe Kachelski, the vice-president of Wisconsin Hospital Association Information Center, which manages the Web sites.

With the introduction of health savings accounts and other high-premium policies, more customers are sensitive about the price of health care. It is becoming increasingly common for customers to shell out $1,000 premiums or pay 20 percent co-payments.

South Dakota state Sen. Tom Dempster (R) sponsored legislation requiring that state to publish online the prices of the top 25 procedures most often performed by hospitals. His proposal became law last spring, and the Web site is expected to go public by July.

Left unchecked, health care costs would spiral out of control until the government would take over the entire system, Dempster said. But putting "consumers back in charge" through health savings accounts and similar products is a first step to helping cure that system, he said.

California now requires hospitals to let anyone inspect their "chargemasters," thick lists of prices the hospital sets for all of its procedures and equipment. California also has published prices for the 25 most common hospital procedures, which Internet users can download in Excel spreadsheet forms.

One of the chief advocates for such changes is Assembly Majority Leader Dario Frommer (D), who was concerned about allegations of price gouging by hospitals. Frommer cited the Wisconsin site as a model for what he would like to see in California.

The California Hospital Association (CHA) took no position on the mandates, once they were tweaked to address hospital concerns. But CHA spokeswoman Jan Emerson questioned their usefulness because the chargemasters are impenetrable for all but specialists. Even a small hospital's list contains 10 pages of prices for stents.

More importantly, she argued that disclosing the price lists isn't bringing charges down and isn't helpful to the vast majority of Californians who are in managed care plans that often pay only a third of the amounts listed.

Even those without insurance usually avoid treatment until they can no longer avoid it, so the uninsured aren't shopping around for prices either, Emerson added.

"When you're healthy, you're not thinking about what hospitals are charging. And when you're sick, you're focused on doing what your doctor says," she said.

But Utah Rep. Mike Morley (R) disagrees. Morley pushed legislation through the Utah House to start collecting data on treatment costs, though the measure stalled in the Senate.

"That's also the case when you're driving down the road and your car breaks down. If there's competition in the marketplace, it's more likely that the place you pull into has a competitive price," he said.

Meanwhile, the federal government also plans to roll out more tools to help patients decide where to go for treatment.

The Department of Health and Human Services displays information about hospital quality on its " Hospital Compare " Web site, which was launched last April. HHS Secretary Mike Leavitt announced last week that the agency soon would begin posting the prices Medicare and other federal government programs pay for medical procedures.

"People have a right to know the quality of care they are receiving and its cost. Every consumer should have a reason to look for the best value. None of that is true right now," he told the Commonwealth Club of California.