May 4, 2023:

Hospital Price Transparency

The House Republican Policy Committee held a public hearing, hosted by Rep. Rowe at Open Discourse in Lewisburg, to learn about hospital pricing practices and efforts to inspire financial transparency between patients and their healthcare providers. It is a common occurrence for hospital prices to fluctuate dramatically depending on the patient and their insurance, and transparency in the pricing process will enable competition and increase consumer confidence in our healthcare system. The lack of price transparency disables the free market from bettering our healthcare providers through competition in the marketplace and has lead to steadily increasing costs and restrictions on services that patients can receive. Federal rules and regulations have been pursued to encourage transparency, but lack of clarity, hospital cooperation, and federal enforcement now require action by the states to investigate and address this growing concern.

The testifiers that joined the Policy Committee were as follows:

Dean Clancy - Senior Health Policy Fellow, Americans for Prosperity

Patrick Neville - Former Republican Leader, Colorado State House of Representatives

Jim Jusko, JD - President and Founder, FireLight Health

Chris Deacon - Owner, VerSan Consulting

Agenda - Bios - Testimony

Dean Clancy, Senior Health Policy Fellow of Americans for Prosperity, was the first to testify and share his insight with the Committee. He began by stating that healthcare costs have increased at a rate higher than inflation for the last 50 years. This increase in costs is no surprise to any patient that has recently needed healthcare, with 40% of Americans agreeing that healthcare costs are in crisis. These costs are leading to debt and financial concerns for an ever-increasing number of Americans, often when they are in times of dire need. The federal government, via an Executive Order issued by President Trump in 2019, required 6,000 hospitals around the country to provide an online compilation of rates for 300 common services in an effort to add transparency to the ever-rising costs. These common services include X-rays, outpatient visits, Cesarean deliveries, and lab tests. The federal government instituted this pricing transparency rule, but positive results from the rule have yet to be delivered.

The federal government’s hospital pricing transparency rule is capable of working as-is, but there has been little-to-no federal enforcement of the rule on our healthcare providers. A rule or law, without enforcement, is bound to be broken. This rings true for many of our healthcare providers who have refused to post prices online in an easy-to-understand manner, or who have outright defied the rule and listed services with a price noted as “not applicable”. The federal government has been reluctant to penalize healthcare providers for noncompliance, even though penalties and fines are incorporated into the federal mandate. Mr. Clancy suggested a simple means to address federal non-enforcement and hospital noncompliance, incorporate the federal rules directly into state-law to enable state-level enforcement. This method of incorporating federal laws or rules into state law is tried-and-true, and is preferable to having the federal government and federal agents operating in Pennsylvania. The Trump-era rule can be tweaked and strengthened in a manner to best fit Pennsylvania’s needs, and our existing agencies can ensure the law is complied with.

“The true customers of our hospitals are currently not the patients, but the insurers.”

Dean Clancy
Senior Health Policy Fellow, Americans for Prosperity

Patrick Neville, former Republican Leader of the Colorado House of Representatives, joined the hearing to share his insight into the public perception of hospital price transparency and state’s approaches to enshrining the federal rule into state law. Under Leader Neville, Colorado successfully enshrined hospital pricing transparency into law. This was largely a bipartisan and well-supported effort, as healthcare costs impact all Americans. In recent polling it was found that greater than 90% of Americans support greater transparency in hospital pricing, and legislation encouraging or mandating pricing transparency is becoming increasingly common.

At this time, the states of Colorado, Texas, Virginia, Oklahoma, Ohio, and Wisconsin have all enacted some degree of state-level hospital transparency legislation. Many of these states have simply enshrined the federal rule into state law and enabled their state agencies to enforce the law at little to no cost without the need for federal intervention. These states have increased compliance from healthcare providers, and also instituted specific elements of the legislation designed to meet the needs of their states and people. Pricing transparency has not solved all of these state’s healthcare woes, but the existing problems cannot be addressed without first encouraging transparency. States enshrining federal laws into state laws, and making them apply specifically to the individual needs of the state, is a great example of why our Constitutional Republic has continued to grow and exist for nearly 300 years.

“Price transparency is the first step in developing a functioning healthcare system.”

Patrick Neville
Former Republican Leader, Colorado State House of Representatives

Founder of Firelight Health, Jim Jusko, explained to the Committee how modern data and analytic management can empower patients to “shop” for the healthcare they need. Firelight Health compiles data from hospitals and insurance companies to determine the true cost of care, and passes that data along to assist employers, unions, benefit consultants, and purchasing groups in determining what manner of healthcare is best for them. Healthcare providers have expressed that certain services are uncoded or can’t be priced individually, but Mr. Jusko found that healthcare provider correspondence with insurers proves otherwise. Hospital billing does not need to be reimagined, as existing insurance codes can easily be used to analyze and utilize healthcare cost data. By compiling costs and comparing services, individuals and groups can find what healthcare options are most affordable for their budgets and needs.

The federal rule on hospital pricing transparency requires that service prices be made visible online, generally in an Excel document. The rule explains what must be made visible, but not how the information should be displayed. This has created a difficult situation for our IT professionals and software developers to navigate as different hospitals use different means for displaying their prices, making side-by-side comparisons tough to update and display in a user-friendly format. If there were established standards for how hospitals should provide this data, our talented IT professionals could write code to revolutionize our healthcare process and truly enable patients to “shop” for procedures without needing to consult with each care provider throughout the state. Consumers drive across town for a deal on a new home appliance they spotted online, so why should healthcare be different? Standards for how the data should be shared can be incorporated into the state-specific hospital pricing laws pursued by Pennsylvania.

“If the price of food rose like healthcare over the last 50 years we’d be spending $150 for a gallon of milk!”

Jim Jusko, JD
President and Founder, Firelight Health

Chris Deacon, Owner of VerSan Consulting, works with employers and legislators to bring accountability to healthcare. She shared her experience researching the ideal healthcare provider for different entities, as well as her personal experiences navigating our healthcare system. Her personal journey into healthcare costs and transparency began when she forgot her health insurance information card when pursuing a common procedure. Chris chose to pay for the procedure in cash immediately, only to later find that her insurance provider (once the details were found) was charged a substantially higher cost than the cash amount. This disparity is not uncommon, and the “cash price” is significantly less than the cost passed along to insurers. Chris asked, “If patients had access to the true cash price of common procedures would insurance truly be necessary for all Americans?”

Mrs. Deacon expressed that transparency in pricing will assist more than just patients. Price transparency will encourage competition between major healthcare providers, as well as enable private practices and family doctors to fairly compete with the services of established hospital networks. A small practice or family doctor may not be able to provide all of the same services as a major hospital network, but they may be able to specialize in certain procedures such as laser vision enhancement, X-rays, and plastic surgeries. These smaller specialty healthcare providers can provide cost savings to patients and combat the consolidation of major healthcare providers and insurers.

The conjoining of our insurers and healthcare providers through vertical integration is a foreboding occurrence that is becoming increasingly common. The same entity that is being paid to insure a patient is capable of setting prices and determining which procedures are necessary or provided for. To Mrs. Deacon this seems to be a major conflict of interest, as insurance providers benefit from higher costs, and such a conflict of interest is far easier to combat if prices are made transparent. Even if the public is unaware, we are fast on our way towards a single payer healthcare system, and the only bulwark against this effort is price transparency.

“With the combination of healthcare providers and insurers we’re moving towards a single payer healthcare system today, even if we’re unaware of it. The only bulwark against this is price transparency.”

Chris Deacon
Owner, VerSan Consulting

The hearing concluded with Rep. Rowe sharing his support for efforts to institute hospital pricing transparency legislation specific to Pennsylvania. Encouraging transparency in pricing, whether at our grocery stores or our hospitals, is necessary for our financial system to operate properly. Efforts to institute transparency by the federal government are well intentioned, but have not yielded the results patients desire. Transparency combats corruption and empowers customers, and the House Republican Policy Committee will take heed of the testimony provided to bring fairness and increased choice to patients throughout the Commonwealth.