GAO outlines complications of erasing sticker shock in health care

Kevin Lyons

There are, no doubt, millions of health care consumers who get surprises in the mail about the costs of their most recent medical exams or procedures; perhaps they didn’t account for the extra day they spent in the hospital or the additional medicines they needed.

One of the tenets of President Obama’s Patient Protection and Affordable Care Act is to rid the health care system of sticker shock.

When state-level health insurance exchanges — online marketplaces for health insurance shopping — take effect in 2014, participants will be able to go to a website to see what their deductibles or co-payments would before receiving in-network medical care that’s covered by their health insurance. Already, hospitals are required to publicize the standard charges for items and services they provide. The U.S. Department of Health and Human Services and the federal Centers for Medicare & Medicaid Services also offer cost information for some services, drugs and insurance plans.

Bringing transparency to health care costs may be a tall order, according to a report from the U.S. Government Accountability Office (GAO).

But a report by the U.S. Government Accountability Office (GAO) indicates that making the costs of health care even more transparent will be a tall task.

For one, the GAO said, it is difficult for a medical provider to determine in advance what kind of health care services a patient might need.

For example, when the GAO anonymously polled 17 hospitals about the cost of a full knee replacement surgery for a patient on Medicare with no insurance, none of the hospital officials could provide a complete cost estimate. And 14 of them said they would need additional information, such as how long the operation would last, what model knee would be used or what kind of anesthetics would be administered.

Of the seven hospitals that did give some kind of price information for knee replacement surgery, the costs ranged from $33,000 to $100,000.

“This lack of health care price transparency presents a serious challenge for consumers who are increasingly being asked to pay a greater share of their health care costs,” wrote Linda Kohn, director of health care at the GAO.

The GAO also determined that legal issues can prevent health insurers and health care providers from detailing their rates because of the proprietary nature of the information. And this is likely to remain a sticking point with transparency, as many states have adopted the Uniform Trade Secrets Act, which protects companies’ competitive advantages.

Still, some providers do provide some price information, including eight public and private health care institutions surveyed by the GAO. Most of them offered general costs for common surgeries or procedures that are planned ahead of time, such as knee replacement or diagnostic testing, according to the GAO.

Several officials were concerned with how consumers might use the pricing information. Officials from the Centers for Medicare & Medicaid told the GAO that they worried health consumers go to high-priced health care providers under the assumption that a higher price means higher quality.

What’s next?

The GAO recommends that the Department of Health and Human Services (HHS) take these steps regarding price transparency:

• Determine how realistic it would be to estimate the full costs of health care available to consumers.

• Come up with steps to make these full cost estimates available to consumers.

“As HHS continues and expands its price transparency efforts, it has opportunities to promote more complete cost estimates for consumers,” Kohn wrote.