New Hampshire website reduces sticker shock for patients
While New Hampshire is a test case for price transparency, its experience is limited by a lack of hospital competition.
Many view price and quality transparency as fundamental to moving the U.S. to a true consumer-driven healthcare market. New Hampshire started down that road a decade ago, and the state, recently recognized as the nation’s transparency leader, offers lessons to other states that aren’t as far along.
Its experience suggests that publishing the rates insurers actually pay providers can have an impact on payment negotiations.
The price transparency initiative also has encouraged new health plan benefit designs that are sending consumers to lower-cost care settings, and has prompted hospitals to offer patients lower-cost care settings.
While New Hampshire is a test case for price transparency, its experience is limited by a lack of hospital competition. Only two cities, Manchester and Nashua, have more than one hospital; the whole state has only about 30 hospitals and three major commercial insurers.
And, by focusing so far on about 40 healthcare services, the state-run price website, NH HealthCost, doesn’t tell the whole story on how hospitals compare on price. “It’s just a piece of all the work and all the services (hospitals) provide,” said Paula Minnehan, vice president of finance and rural hospitals at the New Hampshire Hospital Association.
Earlier this month, New Hampshire was the only state to receive an A grade in the annual report card on state transparency efforts issued by the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute.
The state has an all-payer claims database, the Comprehensive Health Care Information System, known as CHIS, which was established by state law. It now is a national leader in providing information to consumers on what selected healthcare services will cost.
Based on claims data from CHIS, NH HealthCost gives consumers an estimate of what their health plan pays for a service and what their outof-pocket cost would be. Colorado, Maine and Vermont have also created claims databases and are trying to let consumers look up actual prices. North Carolina recently began publishing cost data submitted by hospitals on 100 common inpatient services, 20 surgical procedures and 20 imaging procedures, including the actual prices paid by public and private insurers.
NH HealthCost went live in February 2007. The site uses a bundled approach that tries to reflect the true cost of a service, for example, the technical part of performing a mammogram and the radiologist’s fee for reading it, said Tyler Brannen, a health policy analyst for the New Hampshire Insurance Department. It’s continuing to add prices for more services.
Nearly 2,800 people visited NH HealthCost in the last quarter.
Although the site was built for consumers, insurers and providers have been its most attentive audience. A study last year by Mathematica Policy Research found at least one case where a higher-cost provider had to lower its rates because of the data. In 2010, Anthem Blue Cross and Blue Shield, the state’s dominant insurer, threatened to terminate its contract with Exeter (N.H.) Hospital, citing rates that were 50% higher than competitors. After a well-publicized dispute, Exeter lowered its rates.
Health plan designs in New Hampshire are evolving faster than in other parts of the country, at least partly because of its price transparency, according to the Mathematica study.
Health plans started offering incentives to members who choose lowercost sites of care—such as waiving the deductible for selecting a free-standing ambulatory surgery center rather than a hospital-based facility.
In response, Dartmouth-Hitchcock Medical Center, Lebanon, and St. Joseph’s Hospital and Southern New Hampshire Medical Center, both in Nashua, opened their own free- standing surgery center, the Surgery Center of Greater Nashua, as a joint venture.
Dartmouth-Hitchcock CEO Dr. James Weinstein wrote an October newspaper op-ed stressing that consumers need information not just on price but also on outcomes. His hospital publishes both on its site.
One limitation to transparency is that it’s often not possible for patients to shop around for the best price and quality, particularly in emergency situations, said Michael Morrisey, chairman of health policy and management at Texas A&M Health Science Center.
There also are concerns that in markets where prices are transparent, rates tend to narrow and average costs rise, said David Newman, executive director of the Health Care Cost Institute.
Brannen said the state wants NH HealthCost to expand its transparency program to enable employers to compare health plan premiums and benefit designs.
State lawmakers have proposed bills requiring providers to publish their charges, but the state has continued to invest resources in NH HealthCost, Brannen said. The website has taken pressure off providers to post their prices, he said.
Providers and insurers in other parts of the country are likely to face greater pressure for transparency, and soon. “Consumers are now on the hook for much more of the cost than they used to be,” Morrisey said. “Even if states don’t do much, the market will push payers in that direction.”