Transparency alone is not the silver bullet

“Nobody else has the robustly large data set we have to estimate prices as accurately as we will be able to estimate them.”

David Newman is executive director of the Washington-based Health Care Cost Institute. The organization’s mission is to foster better understanding of the drivers of healthcare costs and to provide a database on public- and private-sector costs and quality. Prior to joining the institute, Newman worked at the Congressional Research Service and served as a consultant to the CMS, the Food and Drug Administration, HHS and other government agencies. Modern Healthcare reporter Darius Tahir recently spoke with Newman about the institute’s new transparency project for consumers. This is an edited transcript.

Modern Healthcare: Please describe your institute’s partnership with insurers to create online transparency tools for consumers.

David Newman: We are working with Aetna, Humana, UnitedHealth Group, Assurant Health, Harvard Pilgrim Health Care, Health Net, Kaiser Permanente, Partners HealthCare and the National Committee for Quality Assurance to develop consumer transparency and public reporting standards for capitated, integrated and value-based plan designs.

Historically, we have done very technical reports for wonks on cost and utilization trends. We held well over 10 billion claim lines from insurers with the actual amounts paid for services. We wanted to broaden the mission and have a more public-facing focus on transparency.

MH: How is that initiative progressing?

Newman: As we reach out more broadly to insurers, we get different reactions. One is, “This is really helpful—we’d like to participate across the board.” Other players look at the price transparency initiative and say, “We’re moving toward integrated delivery and bundled payment and we think you need transparency that’s applicable to these models.” We want to develop models of appropriate price and quality transparency for integrated delivery systems and bring those players into the larger transparency initiative. We also want to save states and other organizations some of that effort by putting out suggested standards.

MH: Many groups are working on price transparency. What is your organization offering that’s distinctive?

Newman: We’re not trying to create a business model and commercialize healthcare data. As a nonprofit, this is a noncommercial activity to provide independent, objective price and quality information to consumers. Nobody else out there has the robustly large data set we have to estimate prices as accurately as we will be able to estimate them. We currently hold data on over 50 million Americans. We hope to set the standard in the transparency space by being the most transparent.

MH: How will your transparency tools work?

Newman: We’ll offer a public website called Tier 1. If you are an uninsured person, you can get an average price across an array of services in a geographic area. If your kid has an upper-respiratory tract infection, you put in your ZIP code. What we’ll put up there is the average price for that bundle of services, and a measure of the variance in prices within that geography. This will be free, with no user registration or password. News reporters can look across geographic locations. You can map states. I don’t believe anybody is currently doing this on a national level, with thick data for a free service.

In Tier 2, people whose insurer is participating in the initiative will receive a user ID and a password. When they log in, the website will assess where they are with their deductible. It will know what their plan design is and who their network providers are. It will be able to give them price and quality information that’s specific to their plan design. At this point, it looks similar to insurers’ existing websites. But none of those websites are getting massive traction. People’s employers may change carriers from year to year, so each year the employees have to find the new website. By creating a crossindustry portal, all insurers will be promoting a single website for consumers to go to, and we hope consumers will use this website far more often.

MH: That sounds like a real challenge technically.

Newman: Tier 1 is a pretty easy lift. We already hold all the data. We know the care paths, the episodes of care and the important CPT codes. Tier 2 is far more complicated. Each insurance company already has this type of website, so they have expertise in-house and can help us. But when you move to a cross-payer portal, it’s more complicated because different companies structure the data differently. The Tier 1 portal will be publicly available by the end of this year. We expect to launch the Tier 2 portal in the first half of 2015.

MH: Have insurers agreed to keep giving you fresh data?

Newman: Yes. For Tier 2 you need current data and network design. You need to know as contracts change who is in-network, and that’s been a problem, both in the exchanges and elsewhere. And you need real-time feeds with respect to the deductible.

MH: Is there a way this can make data individualized and meaningful for consumers?

Newman: You want to give people the range of prices and a sense of what creates that variance in price. That certainly will help. You can get consumers who are engaged around figuring that out, and you can also get burnout among consumers who say it’s too complex. We’re working to make the consumer experience as engaging as possible.

You can look at an individual’s behavior and say, “Oh, they ignored the price/quality information.” But what happened is they went to their doctor to discuss knee surgery and the doctor said, “I just had the same knee surgery and Sara down the hall is a great orthopedic surgeon.” What should a patient do at that point? Just because they didn’t do what we think they should do doesn’t mean they didn’t thoughtfully consider the facts and evidence before them. If people make decisions on things other than price, or in addition to price, but we provided information that’s useful for them, that’s great.

MH: Are there any specific procedures where you think these data would be especially helpful?

Newman: It has to be those things that are discretionary and schedulable, such as hip and knee replacement. Emergency room visits— sometimes yes, sometimes no. Transparency is not the silver bullet. It’s one of many things that we need to do to improve the system.

MH: What does the future hold for your organization?

Newman: Both of these websites are going to have initial releases and more extensive builds over time. The other key thing is bringing in more holders of claims data to make our ability to report at a granular geographic level more possible. We’re willing to work with the states, we’re willing to work with other insurers. Providers, hospital associations, consumer stakeholders and employers are all welcome to participate in the initiative. Our ultimate goal is to include data from Medicaid and other public payers. Adding data from the Federal Employees Health Benefits Program would be particularly useful.

How do we pay for all this? At the moment, it is the insurers paying. I think that looks OK in terms of sustainability. But other people need to step up with data, with endorsements and with commitments.