Clinical Faceoff: How Will Recent Price Transparency Policies Impact Orthopaedic Surgery and its Patients?

Abstract

The Centers for Medicare & Medicaid Services (CMS) recently implemented major policy changes to promote price transparency in healthcare. With orthopaedics constituting an enormous share of healthcare spending, these changes, like most efforts on spending, will likely have a disproportionate impact on our field. As of January 1, 2019, hospitals have been required to post prices on their websites in the form of a machine-readable charge sheet known as a “chargemaster” [10]. While this new rule was a first step toward sharing information with the public, it did not readily provide patients with useful information, such as their out-of-pocket cost for services that can be scheduled, known as “shoppable” services. (Popular orthopaedic procedures like THA and TKA are considered shoppable services). On November 15, 2019, CMS revised the policy to address this shortcoming [13]. In addition to the chargemaster, the new rule requires hospitals to publicly release the actual rates they have negotiated with insurance companies and the rates they charge self-paying patients for all items and services. Maybe more significantly, hospitals are also required to release their rates for at least 300 “shoppable” services. This information can be either in the form of the rates negotiated with insurance companies or a patient’s estimated out-of-pocket costs based on their insurance plan. Despite legal challenges in the courts from major hospital groups [17], these requirements went into effect on January 1, 2021, and another policy is set to follow later in the year that would require insurance companies to provide patients with out-of-pocket costs and publicly post the reimbursement rates they have negotiated with providers [11]. Both prices and quality have historically been notoriously opaque in healthcare, so these new policies are meant as a step toward a value-based system. But are they the right steps? I have invited two policy experts to discuss this broad and complicated topic. Kevin J. Bozic MD, MBA is an arthroplasty specialist and the Chair of Surgery at Dell Medical School at the University of Texas at Austin. Dr. Bozic has written extensively about the value-based healthcare system, particularly in his well-received CORR column, “Value-based Healthcare.” Ariel Levin MBA is the Senior Associate Director for Policy at the American Hospital Association (AHA), a national organization that represents nearly 5000 hospitals and healthcare providers. R. Carter Clement MD, MBA:How do these new price transparency policies move us toward value-based healthcare, and how do they fall short in that effort? Kevin J. Bozic MD, MBA: As noted by Michael Porter and Elizabeth Teisberg in their seminal work, Redefining Healthcare [19], value in any industry is defined by the customer; healthcare is no different. Our customers are people who access the healthcare system. To create competition based on value, healthcare consumers need access to valid, reliable information on the factors that determine value for them: outcomes and costs. Creating competition based on value is particularly attractive for “shoppable” healthcare services such as orthopaedics. When consumers take time to compare alternatives, they make more value-oriented decisions. For instance, when shopping for electronics, consumers have access to information regarding functionality, user experience, and cost. Suppliers compete based on these factors. Over time, this competition leads to better products: My cell phone has exponentially more functionality than the IBM mainframe computers of the 1970s at a fraction of the cost. The value created through that competition accrues to the customer. Recent government efforts to increase price transparency in healthcare. aim to arm patients with information that drives competition based on value, which I firmly support. There is a notion that healthcare consumers will have a difficult time interpreting raw data on healthcare prices and understanding how those prices impact their own out-of-pocket costs. But as healthcare providers, we are advocates for our patients, and it is our responsibility to ensure that information about healthcare costs and outcomes are presented in a way that is useful for patients. Organizations like Healthcare Bluebook [15] and Castlight [9] are already doing this, and others will follow. Rather than dismiss these efforts due to the complexity of the problem, we have an obligation to our patients to work collaboratively with other healthcare stakeholders to improve the interpretability and actionability of this information in order to facilitate value-based competition. Ariel Levin MBA: The AHA fully supports providing patients with ready access to estimates of their out-of-pocket costs. It is important to recall that the stated goal of the rule was to give consumers the tools needed to make more informed decisions about their healthcare. The theory was that increased price transparency would enhance competition. However, the rule, as it has been written, is unlikely to achieve its stated goal. In fact, the Federal Trade Commission, one of the nation’s leading competition authorities, has consistently warned that the disclosure of negotiated rates would harm consumers by “facilitat[ing] collusion” and discouraging innovation. The Department of Justice (DOJ) Antitrust Division’s challenge to commercial health plan consolidation underscored the likelihood of collusion among commercial health plans in increasingly concentrated markets [21]. Further, the DOJ’s Antitrust Division suggested it would impede innovation and drive prices below competitive levels for providers and without sharing any of the savings derived from that harmful conduct with consumers. That conclusion was buttressed by one of the nation’s largest commercial health insurance companies that publicly complained that disclosing negotiated rates would inhibit competition among health plans to innovate for the benefit of patients and allow those plans with market power to punish providers that give innovative payors better rates and therefore diminish competition to innovate [2, 4]. That is among the reasons that AHA has been so concerned that the rule goes far beyond the sensible step of providing consumers with their out-of-pocket costs. Disclosure of negotiated rates provides virtually no benefit to consumers and, instead, is likely to harm them in multiple ways. Instead, we should be focusing our efforts on making the information that is useful to consumers more readily accessible. The need for those efforts was recently underscored in a Health Affairs article that concluded structural factors are what is actually inhibiting consumers’ best use of price transparency tools [14]. Dr. Clement:Can you describe a better way for the healthcare system to achieve the stated goals of this price transparency policy? Ms. Levin: Hospitals and health systems are helping to lead the charge toward payment for care based on value as opposed to volume. We also recognize that, for many patients, understanding the costs they will be responsible for paying is part of that value equation. The financial information that patients need to make informed decisions about their care is their potential out-of-pocket cost obligation. Patients cannot be expected to reverse-engineer negotiated rates into the information they need to make prudent healthcare choices. While hospitals and health systems have traditionally used in-person assistance to help a patient navigate his or her coverage and expected out-of-pocket costs, more are developing and using automated tools. If the government is serious about meeting its stated goals, it would focus on helping with the development and adoption of these tools. For example, policymakers and industry experts could work together to publish best practices to make transparency tools more useful and accessible. This could include recommended technical standards for out-of-pocket cost tools and solutions to common technical barriers. Instead of addressing the real issue, this rule diverts substantial resources to an exercise of virtually no value to patients. In addition, it does nothing to assist hospitals that would want to implement this type of tool to address the technical and/or financial barriers to doing so now. Dr. Bozic: Although developing tools to help patients understand their out-of-pocket costs is a laudable goal, I believe we must first address the lack of competition based on value that plagues our healthcare system today. To facilitate competition based on value, providers, payors, and policymakers need to work collaboratively to publicly report risk-adjusted measures of cost and health outcomes from the patient’s perspective. Only with this level of transparency will providers begin to compete based on value delivered to patients. Dr. Clement:By disclosing prices, it seems to me there is a risk that consumers will shop on price alone, rather than value; it won’t help patients or the healthcare system to flock to low-cost providers who also provide low quality. How can transparency of quality be built into this new approach so that both halves of the value proposition—cost and quality—factor into patients’ choices? Dr Bozic: You bring up a very good point. We must simultaneously tackle transparency of health outcomes and price transparency. Several institutions have already begun to share their outcomes, including Cleveland Clinic [12], Hoag Orthopaedic Institute [16], and the University of Rochester Medical Center [22]. As difficult as it is to interpret healthcare costs, measuring outcomes is much more controversial. There are many reasons: Health outcomes are subjective. The outcomes that matter to me, namely maintaining an active lifestyle and spending meaningful time with my family, may be different than the outcomes that matter to someone who experiences housing insecurity, is not employed, and who has multiple medical comorbidities. The differences among patient populations. Clinicians do not yet have confidence in risk-adjustment models. When comparing outcomes across providers, it is important to control (or adjust) for factors outside the provider’s control, such as age, socioeconomic status, and nonmodifiable medical comorbidities. The Society for Thoracic Surgery has developed sophisticated risk models [20]; the orthopaedic community can and must do the same. Measuring health outcomes is expensive and burdensome to patients and clinicians. Although this may be true, the same can be said for imaging, yet most orthopaedists rely heavily on imaging. Outcome measurement should be incorporated into routine clinical practice in the same way. There are many technology-based solutions for integrating outcomes (pain, functional status, quality of life) into electronic health records. We must embrace rather than resist efforts to increase transparency related to the cost and outcomes of healthcare services. By collaborating with payors, purchasers, policymakers, technology developers, and most importantly our patients, we can improve the validity, reliability, and actionability of these data. In doing so, we will facilitate value-based competition, which will make the practice of orthopaedics even more rewarding, and ultimately improve the lives of our patients. Ms. Levin: Dr. Bozic is absolutely on target in pointing out that patients make choices about their care with a number of factors in mind. The out-of-pocket cost for which they will be responsible is certainly one of them, but other considerations can often be more important. Some of the factors that may come into play when selecting a health system include: whether it is in network, the quality of the physicians on staff, the availability (or not) of coordinated care, geographic convenience, the range of services and technology available, and the overall reputation of the system. In the US healthcare system, what is old often becomes new again. In that context, it is worth remembering that we have tried a cost-centric approach before with the rise of health maintenance organizations in the 1980s and 1990s. These were extremely narrow networks developed by commercial insurance companies that were sold as cost-savers to large employers. What we learned from this experiment is that these narrow networks often failed to meet the clinical needs of patients and resulted in frequent gaps in coverage and care. The ensuing backlash led to a number of state and federal reforms, culminating in the 10 essential benefits and other provisions of the Affordable Care Act. More recently, we have seen more large employers explore working around commercial insurers altogether through “centers of excellence” and other models. Walmart is one such employer that has piloted this approach, which assesses hospitals and health systems according to a number of quality-related metrics, including their outcomes in specific lines of service like cardiac surgery or cancer. We can expect more employers to move in this direction in the coming years. Dr. Clement:The AHA has consistently voiced support for value-based healthcare. What do you think are the most important steps that our health system can take in the transition to a value-based model? Ms. Levin: Our health system was already moving toward value-based payment prior to the COVID-19 pandemic, and those changes accelerated over the last year. The AHA believes we have an opportunity and an obligation to build a system where care is driven by what is needed, not by how it is paid for. The system must deliver superb clinical outcomes and focus on promoting wellness. When possible, care should be convenient and allow individuals to receive it without leaving their homes, should they so desire. To advance this needed change, the AHA launched The Value Initiative [7] in 2017 to help leaders of hospitals, health systems, and the field take on value and affordability in their organizations. At the AHA, we think about value as part of an equation that includes improved outcomes, enhanced patient experience, and reduced cost. Care delivery models that impact any of those components contribute to improving value. A few of the value-based strategies we have promoted include: Adopting more team-based care models. To better support patients and their families through an acute or chronic illness, hospitals are adopting team-based models of care that encompass patients’ medical and social needs across the care continuum [1]. Team-based care is a promising, low-tech approach that allows healthcare workers from varying professional disciplines to provide customized, patient-centered care to manage the physical, psychological, and spiritual needs of their patients. The Value Initiative developed an issue brief [7], associated case studies [3], and resources to show the value of this approach to care. The AHA is also developing a Team Training model [1] aimed at educating, convening, and shaping clinician competencies as they provide team-based care during labor and delivery. Addressing the societal factors that influence health. This is a key strategy to improve health equity and value. The AHA’s Societal Factors that Influence Health Framework [5] guides hospitals’ strategies to address the social needs of their patients, social determinants of health in their communities, and the systemic causes that lead to health inequities so the entire field can have meaningful conversations around these issues. Using Z Codes (diagnosis codes that represent the nonmedical factors that influence health) for social determinants of health is one way hospital leaders can see benefits at the local and federal levels when they standardize their approaches to documenting social needs. We have developed resources to encourage hospital leaders to use these codes and to assist clinicians and coders. Building age-friendly health systems. The Age-Friendly Health Systems [8] initiative seeks to create a structure where every older adult gets the best care possible, experiences no healthcare-related harm, and is satisfied with the care he or she receives. Hospital and health system leaders should also continue to focus on improving accessibility. This means care on-demand, portals, and virtual care, as well as improved access to primary care and mental health services, among other ideas. Recently, the AHA endorsed legislation to make permanent many of the geographic and originating site restrictions to allow patients to receive telehealth in their homes and other locations. Dr. Bozic: Moving toward value-based care means focusing on a few straightforward principles that focus on giving patients and providers the tools they need to achieve the greatest improvements in health per healthcare dollar spent. As noted by Porter and Lee [18], making this transition will require a few basic building blocks, including: Organizing clinical care around conditions, such as osteoarthritis, rather than specialties; Measuring health outcomes and costs for every patient; and Moving to value-based payment models like bundled payments that align incentives across patients, providers, and payors. In. musculoskeletal care, we are well down this path, and continued leadership from the orthopaedic community will be necessary in order to help all healthcare stakeholders make a smooth transition to a healthcare system that incentivizes and rewards value delivered to patients.