California Gets an 'F' for Health Care Price Transparency

California -- and 44 other states -- received failing grades in a new analysis on transparency of health care prices. The report comes from Berkeley-based Catalyst for Payment Reform (CPR), and it shows that consumers remain pretty much in the dark if they want to figure out, in advance, what a treatment or procedure will cost.

"Very few states have done anything meaningful to help consumers understand what their health care costs were going to be," said Suzanne Delbanco, executive director of the organization.

CPR looked primarily at laws and regulations around price transparency, as well as whether a state had a consumer-facing website where people could easily look up price information.

While California has taken "important symbolic steps" by passing price transparency laws, Delbanco said, "what hasn't happened is turning that information into something that's useful to consumers."

The state's Office of Statewide Planning and Development does compile information -- but it's based on the amount charged, as opposed to the amount that's actually paid by insurance companies or a consumer. In health care, there's almost always a discount off the "charge" price, so that original amount is virtually meaningless to consumers.

Many -- but not all -- insurance companies provide tools to their members to help them determine how much a specific procedure might cost. Some large employers might have these tools, too. But CPR believes a statewide "all payer claims database" -- a repository of data from all insurance companies, Medi-Cal, Medicare, even dental and prescription drug plans -- would be a "superior source of price information for consumers because they contain data on what was actually paid for all services and procedures from a broad group of payers."

Maribeth Shannon is with the California Healthcare Foundation and was not affiliated with the report. She said she thought CPR's grading was "a little harsh," -- she thought that the OSHPD charge data was of some use. But it was "nowhere near where we need it to be."

"California does not have legislation requiring health plans submit (actual price paid) data anywhere, so it's impossible to build a website," she said.

Providers and insurance companies often keep these negotiated prices sealed, but Shannon argues that "consumers have a right to know what things are going to cost them."

Especially in an era of increasing use of higher deductible health plans, including in plans under the Affordable Care Act, more tools for consumers to calculate costs can lead to a more competitive pricing environment, Shannon said.

"There's a clear direction to put more financial responsibility on individual patients, and if you're giving them that responsibility, you really need to give them tools to make those decisions."

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