Some employers in Colorado have figured out a simple fact that could save millions on medical bills.
Hospitals are the pricey place for outpatient care. Independent medical centers can prove far cheaper.
Over a two-year period, shifting even half of their employees’ needs for 10 common procedures to those more affordable sites could save nearly $6 million.
That’s $400 per colonoscopy, $900 per hernia repair, $3,500 per appendix laparoscopy.
Employers learned about the potential savings through Colorado’s database of insurance claims, a treasure trove that allows Coloradans to dig into health care prices in ways that Kansans can’t.
Kansas is one of about 20 states that, for regulatory or research purposes, collect prices that the health care industry has long guarded as trade secrets.
But Kansas, unlike Colorado, doesn’t share those numbers.
Employers want to see them so they can do some comparison shopping. Researchers covet them to better understand industry trends. Kansas officials say their hands are tied by state regulations.
Without knowing prices, employers argue, they can’t fight back against the mushrooming cost of care. Nationally, medical prices have risen far faster than economic inflation.
The ballooning costs don’t just cut into employer profits, they take away from potential pay raises and retirement benefits. It costs taxpayers money.
“It’s a dysfunctional marketplace,” said Bob Smith, president of the Colorado Purchasing Alliance of employers who banded together to buy medical care at better rates. “We have to have pricing (information). It’s essential.”
Wrestling with hospitals
Smith’s group includes private companies but also public employers, like Denver, the state of Colorado and school districts.
It also checks hospital pricing against quality measures and has found that some pricey hospitals appear to deliver worse care than competitors that charge less.
Elsewhere in his state, another alliance has made its own discoveries through that same centralized warehouse of medical information.
Peak Health Alliance is a nonprofit effort to negotiate better prices than insurance companies get from hospitals in several Colorado counties.
It started with Summit County, asking actuaries to crunch numbers from Colorado’s database. The local hospital, it turned out, typically got five times what Medicare pays for outpatient care, and more than eight times what Medicare pays for emergency care.
“And we said, ‘Holy Toledo,’” Peak CEO Claire Brockbank said. “850% of Medicare is crazy.”
So Peak pushed for lower prices.
“When we sat down at the table with the hospital, and the hospital said, ‘We're really not expensive,’” Brockbank said, “We were like, ‘You really are. Like, seriously — 850%? Seriously?’ … They weren’t entirely used to people having data.”
The new prices ended up saving an estimated $2 million on premiums last year for about 4,500 insured people in the county.
Comparison shopping
Despite objections from the health care lobby, more and more states have started collecting insurance claims into what are called “all-payer claims databases.”
They offer a tempting source of information for researchers studying everything from the price of filling your molar to picking up your cholesterol drug.
“It would be really nice to know what the prices are,” said Chris Garmon, an economist at the University of Missouri-Kansas City who previously worked on antitrust investigations at the Federal Trade Commission. “Not just overall, but for particular services.”
If Kansas allowed it, Garmon would happily tap into the state’s numbers to analyze not just hospital bills but physician fees, too.
The Kansas Insurance Department says it can only share aggregated figures, and that state regulations bar it from revealing specific prices.
“Compilations of data shall not contain patient-identifying information or trade secrets,” the regulations say.
Hospitals have argued that disclosing prices would give insurers the upper arm in negotiations, to the detriment of patients.
Kansas isn’t the only state with restrictions on releasing data, according to the Commonwealth Fund. But some states use their troves to drive websites where patients can research the prices for care in their area.
New Hampshire’s decision to publish imaging prices led to an estimated $44 million in savings for patients and insurers over a five-year period, the Commonwealth Fund wrote.
Researchers have yet to figure out if the same would prove true more broadly. New Hampshire has added price estimates for scores more medical services to its website.
Independently operated
Meanwhile, about a dozen states with claims databases will contribute information this year to a major RAND Corp. analysis of hospital prices.
That includes Colorado.
Unlike Kansas, Colorado doesn’t consider the prices that RAND wants trade secrets.
“Definitely not,” said Ana English, CEO of the Center for Improving Value in Health Care, or CIVHC.
The independent, nonprofit group runs the Colorado all-payer claims database. (In Kansas, the state insurance and health departments run it.)
Employers, insurers and hospitals, for example, can all request numbers or analyses from CIVHC. One community hospital learned which services locals traveled elsewhere to get. It added those services and increased revenue.
At times, CIVHC faces pushback from insurers or health care providers that argue against revealing prices or other information that they consider to be trade secrets.
But the group does its homework. To avoid releasing data that could inadvertently lead to anti-competitive behavior, CIVHC says it follows Federal Trade Commission guidelines, regularly consults an antitrust lawyer, and on occasion consults the state attorney general.
“Part of our main mantra has to be to make this information available — appropriately,” English said. That means resisting the impulse to play it safe by aggregating everything.
But she knows first-hand that the topic makes people squirm. She’s seen it in meetings with public officials from other states. When anyone mentions releasing claims data, they literally wring their hands.
“I call it the hand-wringing syndrome,” she said. “They get really, really nervous.”
Celia Llopis-Jepsen reports on consumer health for the Kansas News Service. You can follow her on Twitter @celia_LJ or email her at celia (at) kcur (dot) org.
The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy. Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org.
