Colorado’s idea for transparency has detractors

Let’s say you need a colonoscopy. (Sorry about that.)

And let’s also say you know there’s one hospital in Colorado that quotes a price of more than $5,000 for the procedure and several that quote a price of around $1,500 and a couple more that come in with prices under $1,000.

Would you choose to have your colonoscopy done at the least-expensive hospital?

The answer may seem simple enough. But it actually illustrates the challenges facing one of the most popular ideas this year at the state Capitol for dealing with soaring health care costs — the idea that if patients better know the prices, they will make cheaper choices.

“Health care shouldn’t be a black box,” Caitlin Westerson, the policy manager of the Colorado Consumer Health Initiative, said during a legislative hearing this

year for a bill on prescription drug prices.

But, in health care, knowing the sticker price doesn’t always help in understanding what you’ll actually pay. All sorts of factors can intervene — such as where you live and how far you are willing to drive for care or whether you have insurance and whether your insurer contracts for special prices at only certain hospitals. And the flat price doesn’t tell you anything about the track record of a hospital in performing the procedure.

“The bottom line is transparency is not the magic bullet everyone has been hoping it is,” said Joe Hanel, a spokesman for the nonpartisan Colorado Health Institute, which has studied the issue. “It’s just not possible for a lot of your health care expenses to be bought and sold in the same way that you would a washer/ dryer or a TV.”

And that has made an idea as simple as posting price lists bitterly controversial.

Let’s go back to your hypothetical colonoscopy. (Again, sorry about that.)

Those prices above represent a real range of prices for basic colonoscopies listed by Colorado hospitals as part of a bill passed last year. The bill requires hospitals to post the “self-pay” prices of its most common procedures. Hospitals on the more expensive end of the spectrum are typically in rural areas, where there are fewer doctors to perform the work and fewer patients to spread the cost over. In the metro area, the posted prices for a colonoscopy typically hover within a couple hundred dollars of $1,500.

The problem with using those prices to shop around, Hanel said, is that more than 93 percent of Coloradans have some form of health insurance, meaning they wouldn’t pay the self-pay prices unless they chose to. Insurer “narrow networks” — limited groups of doctors and hospitals that an insurer’s customers can use — would also restrict choice.

A Denver Post review of hospitals’ posted self-pay prices identified other barriers to comparison shopping. Because the hospitals only have to report prices for their most common procedures, it can be difficult to compare specific procedures across a wide array of facilities.The Post, for instance, looked at the price lists of 31 facilities and found only 13 with a posted price for a standard colonoscopy.

The hospitals sometimes varied in how they described the procedures, or they provided a range of prices for a single procedure, further muddying the picture. Sometimes they posted one price, while noting that additional financial assistance may be available.

Even supporters of last year’s bill say the price information it revealed is only so useful.

“It’s a start, and it’s a step in the right direction.” said Adam Fox, CCHI’s director of strategic engagement.

“That’s the big challenge as far as transparency goes: How do you get to that really meaningful level of transparency?”

There’s a guy in Denver named David Silverstein who thinks he knows how.

Silverstein is a business consultant, but he founded the group Broken Healthcare after what he described as a frustrating experience dealing with health bills from a sports injury his daughter suffered. Now, Broken Healthcare is behind several proposed ballot initiatives and a newly introduced bill at the state legislature that would make hospitals essentially open up all the books on their pricing.

The measures would require hospitals to post their “chargemasters” — the gargantuan lists of every sticker price for everything a hospital does — and also post the lower prices they’ve negotiated with insurers for those procedures. That could amount to hundreds or thousands of pages.

In Silverstein’s view, this wouldn’t necessarily benefit patients directly — who has time to look through all those numbers? But, by having everything out in the open, he reasons it could put market pressure on hospitals to lower their prices. Without more transparency, he said, no one in the system can know who’s being treated fairly and who’s getting worked over.

“All we’re saying is, ‘Let’s move from a totally dysfunctional system to a moderately functional one, and let’s see what market forces will do for us,'” Silverstein said.

The bill, House Bill 1358, which has bipartisan support, is scheduled for its first hearing in the legislature Thursday.

And it will face a fight. The Colorado Hospital Association has come out against the bill, arguing that releasing all that information could actually cause prices to increase. They cite a 2015 opinion by the Federal Trade Commission staff that argued the following: If hospitals and doctors know what everyone else is charging, they might not bid as competitively when negotiating with insurers.

Julie Lonborg, a spokeswoman for the Colorado Hospital Association, said there’s another problem with posting chargemaster prices: No one pays them. They’re just used as a starting point for negotiations.

To understand how this works, in a new hypothetical, let’s assume you’re having a baby. (Hey, congratuGriffin’s lations!)

A new price reporting tool launched by the hospital association shows that hospitals, on average, reported a price of $16,500 for a vaginal delivery of a newborn without any complications. Data from the Colorado Department of Regulatory Agencies put the price closer to $15,000, but that’s from 2016.

Either way, that’s nowhere close to what people actually paid to have a baby. That same data from DORA shows that insurance companies — and the newly minted parents that they covered — paid on average just over $7,000 for a standard delivery in 2016. Meanwhile, the posted selfpay prices reviewed by The Post put the price for a delivery anywhere from about $5,000 to nearly $15,000.

To Lonborg, all this information could lead consumers to make decisions based on mistaken assumptions or cause other unintended consequences. She said patients who want to shop around should start by talking to their insurers.

Silverstein, though, disagreed that more information could lead to less competition.

“Right now,” he said, “we don’t have a marketplace we can trust.”