tv Senate Health Education Labor Pensions Committee on Health Care Costs CSPAN September 22, 2018 12:12pm-1:56pm EDT
wrapping up speaking at the value voters summit. he is the first sitting vice president to speak at this summit. if you want to see this portion of today's session again, we plan to re-air it today at 3:10 p.m. eastern here on c-span. up next, health care executives talk about health care costs during a senate hearing. they discussed creating a way for patients to have more access to compare cost information for websites and mobile apps. this is one hour and 40 minutes.
>> senator murray is not the wasrglow, but when he introduced the senator would , speak at an event, he would wait in the back of the room until he was introduced and people would begin a plus -- applause. and then he would've slowly walked to the front to extend the applause for a long amount of time. senator murray has double duty today. choose managing the labor health and human services on the floor, and she is here. so i want to recognize that and compliment her on that piece of legislation, because it has a variety of good things in it. again, i believe it takes an important step in increasing funding significantly for biomedical research. she and senator blunt have lead that effort. and i and others supported.
it is good for our country. the senate committee on health, education, and pensions will please come to order. senator murray and i will have an opening statement and then we will hear from the witnesses and senators will have five minutes to ask lessons. -- ask questions. any american, even the secretary of department of health and human services knows, it can be difficult to find out how much a simple health care test will cost before a doctor's visit. secretary a var recently told the story of his doctor ordering a routine echocardiogram's test. he was sent -- the secretary was sent down the street, admitted to the hospital where after , considerable effort, he learned the test would cost him $3500. after using a website that compiled typical prices, he learned the same test would have cost $550 in a doctor's office. the secretary said that consumers are so in the dark,
they often feel powerless. the internet has made it easier for consumers to know more about what they want to purchase before they buy it. you can easily read an online review and compare prices for everything from a coffee maker to a new car. this is true for everything but not health care. the cost of health care has remained in a black box. anyone of us who has received a medical bill in the mail has wondered what we are actually paying for. four years, patients were more or less ok with that, because insurance companies and the government paid most of the bill. however, as premiums have increased, more americans are covered by plans with high deductibles, meaning they are paying higher monthly payments. in exchange for spending more out-of-pocket when they go to the doctor or fill prescriptions. according to the kaiser family foundation, half of all single
covered workers in 2017 had to deduct at least $1000, which is kaiser's threshold for a high deductible. this is an increase from 34% in 2012. and because americans themselves are footing more of the bill, more are showing an interest in shopping around as the secretary did. today's hearing is a fourth in a series on reducing the cost of health care. it is an opportunity to learn how to improve the information that is available so patients can make the best decisions for their families, themselves, and their wallets. without better information health care stays in a black , box, making it hard for americans to be good consumers, make good decisions, and pay reasonable amounts.
senator paul, a member of our committee, has talked about how an elective surgery likely sick, a patient is more likely to call doctors offices to find the best prices, calling an average of four different doctors. as patients have shopped around, the price started to dramatically decrease. it has gone down 75% over the past 15 years according to senator paul. the black box also discusses the quality of care. for example, stephen joel trachtenberg who has spoken freely about raising tuition to raise the profile of george washington university while he was president has said quote people equate price with value of education. while the price of tuition, unlike health care, is easily
available on the university website, deciphering the quality of education and health care is hard. this is an area where the private sector in the states are largely leading charge. for example, medical centers like the surgery center of oklahoma. they list their services on their website so patients know up front how much surgery will cost. health care bluebook, represented by another witness, is a tool that helps employees find the best price for the highest quality care in their area using employer-sponsored insurance. this is a useful tool to lower costs, because the amount a patient place for cataracts surgery can range from as little as $2000 to more than $8,000. in 2017, the state of maine passed a bill requiring health insurers to split the savings if the patient shops around and chooses a doctor that is less than the average price the insurer pays. in oregon, the state compiles
data on insured residents and uses that information to run a tool similar to health care bluebook that allows patients to compare the cost of procedures used. while the health care usually leads the charge, the federal government can also play a role. they announce that by january 2019, hospitals who participate in medicare or medicaid must list their current standard prices online. in an age when you can compare different prices and checked a
dozen reviews when shopping for a new barbecue grill, americans should be able to know more about the cost of their health care. senator murray. thank you mr. : chairman, thank you for your comments on the bill i will be leaving shortly to conduct on the floor. and i appreciate your support for that thank you mr. chairman, thank you for your comments on the bill i will be leaving shortly to conduct on the floor. and i appreciate your support for that and much of our work here. thank you to all of our witnesses. i am especially looking forward to hearing about your amazing work. very glad to see you. the alliance has been an incredible advocate and taken on incredible projects to increase transparency and arm our providers with information they can use to provide care. one report details how improvements to our systems could help more kids get
checkups, or more women get screened for health cancer, and more diabetics get the treatment they need. another report looks at overused treatments and low about care found that nearly one half of our patients receive that care. that is up to $82 million in unnecessary spending, or one out of every three dollars. that is consistent with testimony we have heard from experts across the country. your work shows exactly why transparency is such an incredible tool for patients and providers. unfortunately, instead of taking steps towards greater transparency, president trump has only taken steps towards greater chaos by sabotaging our
health care system and making it harder for families to get access to care and information. look at the navigator program, which provides clarity, transparency, and guidance to people who are trying to understand our complex system and get health insurance. this program is especially important for patients who do not speak english as a first language and people who are less familiar with the system. last year, they cut navigator funding, slashing it from $63 million to $36 million, and two months ago, they did it again. after getting little heads up to the organization, they cut funding by two thirds and it is now down to $10 million. in addition to funding, they cut the number of facilities required down to one and announced that it can be located anywhere. in our stabilization hearing, this committee heard just how
valuable navigators with a physical presence and cultural competency can be, especially for travel communities. we can't expect those -- we can expect these communities to be hit very hard by president trump's sabotage of the navigator program. but while his decision to shortchange the program and deny navigators adequate time to prepare for those changes is disappointing, it is not surprising. sabotaging the health-care system and raising the costs for families has become standard practice for this administration. from day one, president trump has made every possible effort to restrict access to health care and rollback protections for pre-existing conditions, despite people across the country rejecting his backwards agenda. last year, people spoke out against the trumpcare bill which would have gutted conditions and spiked costs.
in the end, the people succeeded and his sabotaged bill failed however, instead of learning his , lesson, president trump decided to continue to sabotage health care from the oval office. by pointing back control to insurance companies, making it easier for them to sell junk insurance which discriminates against older people, women, and preconditions. after his top of law and order, he or the justice department not to defend the law of the land and take the highly unusual step of refusing to defend pre-existing conditions. or when he nominated a nominated a judge, hand-picked for his willingness to strike down health care protections. at every step, president trump has moved health care in the wrong direction. while i am glad to know there is bipartisan agreement about the importance of transparency in helping ensure quality and value, i hope we can find common ground to reject the seven touch
-- the sabotage and address the damage and skyrocketing prices it has caused. transparency alone is not enough. a drug companies being transparent about its exorbitant prices does not help people. and a company being transparent about it discrimination based on age and sex does not help people get the care they need. today i look forward to hearing from our witnesses about how transparency can help us move, but for the sake of families across the country, i hope the conversation does not stop there. thank you, mr. chairman. >> thank you, senator. would like the witnesses to summarize their testimony in about five minutes. the senators can ask questions. i want to welcome each witness, first, miss leah binder, ceo of the leapfrog group in washington , d c a nonprofit representing , employers and other purchasers of health care that are working on ways to improve safety and quality in hospitals.
leapfrog developed a system to grade hospitals across the country based on quality and safety and posts this information on a public website. formerly, she was vice president at the franklin community health network in maine. next, we will hear from mr. bill campain. senior at health care bluebook in nashville, tennessee. health care bluebook is a tool to help individuals find high-quality health care options at fair prices. prior to this, he served in a number of executive role at healthways, an organization specializing in disease and lifestyle management. previously, he was a health care economist and consultant. senator murray would you like to , introduce the next witness? senator murray: thank you i , would, and i'm pleased to
introduce her. she is the national director of the washington health alliance. i have the opportunity to meet with nancy about a year ago about some of the projects her organization is working on. as i learned then and will hear about today, her organization has done some incredible work to provide information and transparency that can improve health care in our state and serve as a model to many others. her experience includes the national institute of health, the american hospital association, intermountain health care, and providence health and services. nancy, great to see you again, thank you for making that long trip. we appreciate it. chairman thank you, senator. tibbetts, an administrator of a physician owned surgical center in rural southern utah. in the surgical center began 2014, posting cash prices online for all of its surgical procedures that patient could know the cost of their care upfront.
in addition, they also accept medicaid, medicare, and commercial insurance for the services provided. welcome to all of our witnesses. ms. binder let's start with you. >> thank you, chairman. i am appreciative of the opportunity to be here. i am leah binder from the leapfrog group. we are an independent, national, based here in d.c. we are with other purchasers of health benefits, attempting to improve health care through transparency and publicly reporting on the performance of hospitals. we have been doing this for 18 years, so we have a great deal of experience and have found it to be a successful method of improving care and lowering costs. we represent almost every state
in the country, and two of the represent almost every state. two of those states, i want to note, our washington state and also tennessee. they are two of our more notable states. tennessee, we have not one but two business groups of health that are very active. one of which, our outgoing chair christie travis heads up the business group on health and health care 21 in nashville is very active from the beginning. both of them have been active. in addition, hca is 100% transparency. it is a state that we think quite highly of, a vibrant part of the leapfrog movement. in washington state, they have been an active member since day one.
they formed leapfrog. they're one of the key partners in doing so. and also, we awarded our highest award ever awarded to a hospital by the front to the virginia mason medical center as a top hospital of the decade. so it is a pleasure to be here with you and to tell you just a couple of things about why transparency has been so effective and what we need to do in the future to maintain and improve that record. leapfrog collects data from hospitals. we ask them to report data to be collected that cannot be collected from any other source. this includes, for example, c-section rates by hospital. that is not available at the national level except through leapfrog. that is voluntarily provided by almost 2000 hospitals through
leapfrog. we also grade hospitals, and for that, we use data we collect and data we collect that is publicly reported. it is an abcd or f. all of the data we collect is available for free to the public. the issue of price transparency is never enough, it will backfire if it is only transparency. that is because bad care is never a bargain, and unfortunately, it is possible to encounter bad care. in fact, errors in hospitals and safety problems are considered the third leading cause of death in this country. they are quite common. and some hospitals and health centers are better at protecting their patience than others and consumers deserve to know which is which. that is why we grade the
hospitals, even when we found that consumers do in fact to use the grades. we have used incredible growth in the use of that information to drive behavior by consumers. we've also seen how hospitals change their own rules. we have seen incredible uptake by hospitals in trying to achieve that and inputting patient safety first, including putting their grade on the list of bonus incentives. we have seen everything happen as a result of transparency. we are moving to start to collect data on ambulatory surgical centers where there are relatively little quality data optically available. the majority of surgeries are now performed an outpatient or ambulatory surgical centers. the next step is to work with the administration to expand the availability of what is
available publicly by cms and others. we are concerned that cms seems to be prioritizing things, the burden on providers. the burden on others, taxpayers, the american public, employers, also needs to be considered and should be the priority. so we look to you to help us to expand transparency. thank you. thank you, ms. binder. chairman alexander, murray, and others, thank you for the opportunity to testify. price and quality and transparency is an important topic and it is key to get more value out of our system. i start the day with the brief story, about the first consumer,
my cofounder. he needed an outpatient for surgery, not complex, but a rare procedure. jeff did his homework, scheduled the surgery at a nearby hospital. not because he had a high deductible. he called the hospital to get an estimate of the price, you can imagine how the conversation went. they said, we don't know, and why are you asking? he said they had a high deductible and the hospital agreed to do research. 10 days later, he got a call. and while the hospital cannot provide an exact price, they had a in network estimate. that is a minimum of $15,000. he thinks to himself that is expensive for a one hour surgery, so he called his doctor and asks is there another facility where we can schedule? absolutely, same quality, or convenience. he calls the second facility on anybody want to guess at the second price?
it wasn't $15,000, it was $1500. same dr., same quality, more convenient. over $13,000 differences in price. i would like to tell you that the story is an artifact of a different era, but that is not true. we know that every day, consumers face concisely this level of price variability. and it is why we have created health care bluebook. it should be easy for employees and family members to understand what they should reasonably pay for care, compare providers, and get better value. each year, employers and consumers have an out-of-pocket cost of $1.5 trillion. conservatively, about a third of that is on acute procedures. year, employers and if consumers were to use more cost-effective providers within their existing network, both consumers and employers can save half of that, $250 billion returned to the the consumer side, what is the
number one cause of bankruptcy in the united states? medical bills. leah had mentioned the number three cause of death is medical errors or poor quality, and in this room, we talked about caused inequality on a large scale. the job consumers are trying to solve is simple. safety and savings. there is an important role for transparency to help consumers meet that need. from 10 years of working with consumers, what i know is when consumers understand that they can shop for care and they have access to comparison tools, they will use those tools. i also noticed consumers to shop for care are two to three more times more likely to choose cost-effective. they can save hundreds of dollars on cost-effective services like diagnostic and imaging and on surgeries, whose inpatient and outpatient. as the committee turns its
prices online, our patient base has expanded. we served a patient for monetary and a -- from montana who needed l reconstruction. the best price he found in nintendo was $30,000 just for the hospital. fees,ice includes dr. utility fees. nationally, wee have saved medicare approximately 2.5 billion dollars each year. billion and.5 almost $40 billion each year. is only one factor in determining value.
lower prices must be combined with high quality care and a safe patient environment. patients must understand the cost does not indicate higher quality. across the 23,000 procedures on 13,000 patients performed since 2013, only five cases have reported infection. our quality and patient safety rates are so good that a prominent physician from salt lake city asked to have his staff visit our center to study best practices. thatommunity is concerned in terms of measuring quality to determine value, there is little uniformity across settings. if a patient can choose to get their care from an asc or a hospital, shouldn't it be easy to compare price and safety measures? they cannot. as an example, in the center for
services,nd medicaid only asc report on such adverse excepting. wrong site surgeries and hospital transfers. 2012, asc's have been so consist than that they have proposed to eliminate them, that measured performance rying that meaningful disturbances can no longer be measured. group like the ambulatory surgical center to declare victory and move on. we believe these metrics are so elementary -- elemental, we will ask to keep them. to expande reporting andrequire us to report
that other sites do the same. will find, a growing body of academic research shows that we are achieving equal or better outcomes than other outpatient surgical facilities while saving billions for bose patience and public and private sector. patients to empower get the best by you for their health care dollars, both price and quality data must be transparent, meaningful, and comparable. thank you for inviting me to participate. i look forward to answering questions. >> thank you and thank you to each of you for interesting testimony. senator murray. >> thank you. let me start with you. witnesses talked
about the need to make sure the transparency policies are implemented in the right way. transparency can be confusing or lead to higher health care. i do not want a key product. said to get transparency policies right, information has to be translated to the audience and used to promote engagement and achieve outcomes. tell us a little bit more about how washington health alliance works with your stakeholders to make those reports effective for everyone. ms. giunto: thank you, senator. we work with four standing committees and our board of directors. the four standing committee representing clinicians, consumers, and the health economics committee and purchasers. all of our work happens through committees, both what we
study, the methodology that we use as well as how we communicate to the consumer. often times we are making available two different reports, one for the public good or the health economist kind of public, and one for the consumer. i will mention one in which we were coached by our consumer education committee on an opioid report where they told us patients do not understand they are on a brand name that they might actually be taking an opioid, and they said please when you develop this, put that front and center. we look for multi-stakeholder input for the work we do and work through the committee structure in our board. sen. murray: thank you very much. ms. binder, you noted that medicare, the cdc, and other agencies and programs are increasingly requiring providers to expand the measures they report.
those measures are in turn reported to the public. talk about why these policies are so important to employers that make up the leapfrog group. ms. binder: the example of use -- the example i use is infection measures. to achievedecades the public reporting of five of the most common and deadly infections, which is mircette, cdif causedmrsa, often by being in the hospital. they are extremely dangerous, and they kill americans every year. they are costly. employers, we have started to track an estimate of the cost to employers. perverage, it is $9,000 inpatient stay that is in excess
of hospital errors, including infections. it is expensive for employers and hard to track. we really depend on cms and cdc, in particular, to help us identify the rates of these infections, so employers can steer employees toward the higher performing hospitals. there has been some effort to pull us backward in that direction. i think that cms has recommitted, recently, to public reporting of infection rates, but we remain concerned. there was a proposed rule that suggested they stop public reporting of those five measures. we were very concerned. a lot of purchasers came forward, as well as consumer advocates, to ask that they not do that. they have recommitted to transparency. yesterday, there was another proposed rule issued suggesting
proposal issued by cms suggesting that cms is taking a high priority on provider burden in collecting infection measures. again, we believe there is also a burden on our entire economy by having so many infections and that we ought to also put a priority on the american public and what they need to know about how their hospitals are doing. so i would ask this committee, especially in your jurisdiction of the cdc, that we would love to see cdc public reporting measure they are collecting, and they are doing a great job. we would like to see that reported, which would enable us helpve peace of mind and employers and providers of services in their efforts to ensure their employees are getting the safest care. sen. murray: thank you.
senator cassidy. sen. alexander: thank you, . sen. cassidy: thank you, mr. chairman. when you give the power of price, it makes a huge difference in terms of our health and our pocketbook. i would add the other bits of information you advocated. i agree with each of you so much in fact, i cannot really challenge you. i almost have to ask you to amplify where we are going together. [laughter] sen. cassidy: i also point out you have a bipartisan support. we have been working with senators bennett, young, grassley, carpenter, mccaskill, and i will refer to something senator smith and others are working on in regards to administrative overhead -- i could go on. let me first, though, speak about surprise medical billing. this is something i am concerned about. the darker the color, the more likely somebody is going to an
in-network facility with an out-of-network provider, and they think they are doing the right thing, because they go to their hospital that they know is in network, but the er group, for example, or the anesthesiologist -- which you mentioned specifically the anesthesiologist is looped in -- the anesthesiologist is not in.
which would attempt to address surprise medical billings in all once i went tos central park in new york with my daughter, i was not watching her, she falls off and we have a we went to central park in new york with my daughter. in full confession, i was not watching her, she falls off of alice in wonderland, and we have a trip to the er. my wife being a general surgeon, we did not pick up on that. any thoughts, mr. kampine, on surprise medical billing? mr. kampine: thank you, senator. it is a huge issue. patients have a fighting chance if it is not emergency care. we can instruct them to speak with her doctor, called the doctor, call the
hospital, ensure the anesthesiologist. in an emergency case, your anesthesiologist may be working local terms. you have no idea if it is going on or not. if it is scheduled care, at least the patient has the opportunity -- if they are educated -- to talk to the hospital and her doctor and make sure everything is in network. something has to be done by it. i am actually surprised by your chart. my understanding is the state of texas does have some protections, i believe, while for patients who are in hmo's, not ppo's and i was a little shocked to see that in your graph. for example, use an in-network hospital, and they receive a bill for an out-of-network anesthesiologist or pathology, i think that is well worthwhile. you would be limited on the out-of-pocket. that is well worthwhile,
exploring that. sen. cassidy: i pulled this from your testimony. the cataract surgery fees, tenfold difference between the low and the high. mr. kampine: correct. sen. cassidy: and it seems principle facility fees. mr. kampine: correct. sen. cassidy: it is quite remarkable. one thing that i had a conversation this morning with somebody, and although medicare is beyond the scope of this committee, still it is worthwhile considering, what if we made it passable for m.a. plans to share savings with beneficiaries who sign up for medicare if the beneficiary chooses a lower-cost facility?
making sure we have information on infections and quality and everything else that everyone else spoke to. for example, a hip replacement, mr. tippets. what are your thoughts about that, mr. kampine? mr. kampine: i think medicare advantage plans would embrace that. i can value quickly, my wife wants home health care models for medicare plans, because they are at risk, to make sure they are guiding their patients to cost effective, even in medicare, there is a difference in the pricing for imaging. i think there is absolutely promise. we know that value-based incentives are incredibly important. there has been a lot of legislation in terms of right-to-shop laws. we do it with over 50% of our clients, use incentives to shopd patients when they for the lowest cost. i think absolutely there is an application in the medicare environment. sen. cassidy: so this would be a
win-win and also the medicare trust fund would pay for less. mr. kampine: absolutely. sen. cassidy: i yield back, and i assume there will be a second round. sen. alexander: thank you, senator cassidy. senator warren. sen. warren: thank you, mr. chairman. transparency is an important part of any competitive marker. best market. -- competitive market. if the consumer does not have information, it is impossible to shop around at that point. without transparency, businesses can raise prices, cheat customers, and they never face the discipline of a competitive market. it is clear that transparency allows patients to shop for a doctor that is right for them, compare prices across hospitals, know which providers have the best outcomes. there are a lot of features
about health care system that need to work if we're going to improve care. i am going to talk about where transparency can help and where it cannot. mr. kampine, your company, the healthcare bluebook, estimates fair prices for various health care procedures to help consumers benchmark what they should be paying. you did this for hundreds of procedures, and i want to look at just one, total hip replacement. what is the fair price for total hip replacement? mr. kampine: the fair price, the way we do our analysis of prices is we look market by market. typically, we look at a metropolitan area. the fair prices going to vary by market, as you pointed out. competition in that local market will have an impact. sen. warren: about what is the price? mr. kampine: roughly, if you look across the united states, a very common fair price would be about $30,000. sen. warren: mr. tippets, you run a surgical center in utah that has been increasing transparency by actually posting rises of procedures on your website. -- the prices of procedures on your website. what is the expected cost of a total hip replacement at st. george's?
mr. tippets: $17,985 including the doctor, the facility, anesthesia, the implant and an overnight stay. sen. warren: $30,000 is just the average, and you're down by posting just at $17,985. that is pretty impressive, obviously well below the fair price, a good deal for patients who can pay out-of-pocket, because st. george's website includes a disclaimer that if you are not paying cash, meaning you have to use insurance, the price may actually be different. let me ask another question -- how many of your patients are actually able to pay out-of-pocket for their surgeries?
mr. tippets: right now, about 10% of our patients utilize the cash pay pricing. sen. warren: so only about 10%. it is great that you are able to keep prices low and transparent for patients to pay out-of-pocket, but we want people to be able to afford a hip replacement. transparency alone is just not going to get them there. most americans cannot pay for any of these expensive procedures. they need affordable insurance covers. 28% do not have any health-care coverage at all. 43% struggle to pay their deductible. obviously not going to work perfectly here. let me ask about the kind of transparency. transparency around hospital performance. ms. binder, leapfrog group reports quality information so that individuals and families can make best decisions about where to get her care. what good is this comparison tool if you have only one provider in your network?
[laughter] ms. binder: well, i happen to have lived in a community where there was only one provider. i happened to have worked for that provider. it was a rural community in maine. you know everyone. when you live in one community with only one provider, we know everyone. when our hospital did not do well on something and it got publicly reported, which did happen a couple of times, everyone talked about it, including stopping you in the grocery store saying -- what happened to your hospital? guess what? that had a big impact. for anyone who knows health care, you will notice is e this is dramatic. the physicians call a special meeting in the morning. physicians never call meetings -- believe me.
they called one because they got a poor rating from leapfrog -- that is how i first heard of leapfrog. it had quite an impact, because people talk to each other. sen. warren: i hope that is the case. i genuinely do. but we have to be realistic here. when a health plan has all of the power over whether or not you can get quality care, information on price and transparency alone are not going to solve the problem. earlier this year, i introduced the consumer health insurance protection act. there is a lot in this bill to increase transparency on how insurance companies set rates, which providers are in network, and who gets the most complaints, that the bill also makes health coverage affordable and brings health plans to the market, so that these insurance providers actually have to compete for customers.
if we are going to improve health care coverage in this country, i think we have to look at all the pieces together and try to make them work together. thank you. thank you, mr. chair. sen. alexander: thank you, senator warren. senator murkowski. sen. murkowski: thank you. there has been a lot of discussion, as we have two different ways that we can help families when it comes to the health care costs. i have been working with a colleague of mine on making sure that we are able to have health savings accounts that are robust enough to cover those costs. but in fairness, if i have a good nest egg of an hsa sitting over here, i do not really have a good ability to save dollars wisely, what are we doing? this conversation here is so important to talk about transparency. in my hometown in anchorage, the largest city in the state,
last year, we passed an ordinance that requires our health care performers in our facility to request information, they have to post it, they have to provide information within a certain number of days. granted, it is still very early, but at this point in time, it does not appear that it has had much of an impact. some of that is due to those issues that we have already heard -- the difficulty of predicting services during an episode of care, varying insurance benefit structures, bills from multiple providers, and the like. to senator warren's comment there, i live in a state and a place, anchorage, again, our biggest population center, but we do not have a lot of competition. if you are looking to go to a hospital in bethel, no real point in shopping around because you have got one. the same is true in just about every community outside of
anchorage, alaska. i look with great interest at the chart that senator cassidy showed at the facility plots and -- costs and how those weighed in. greateroving toward transparency, whether it is through blue books or other mechanisms. maybe it started out slow, but we are looking at the better ability to obtain access to the pricing. what is the role here for congress? how does congress mandate the education and the engagement part that are so critical to this? because if you have got a situation where, my gosh, i am not well right now, and i feel it. i do not know what may happen.
am i going to have a heart attack? i don't know. does that mean that i start shopping around now, while i am feeling ill? am i one of these people that is going to look at my health, my family's history and say, hmm, i better do my own analysis early on, because within the next 10 years, i am likely to need some of these services for cardiology in my community. how do we engage people early enough to make a difference? because most folks are going to have a hard time engaging on a topic that they may not need and then everyone hopes that they are not going to need. what advice do you have here? because it seems that so much of what we are doing is kind of after the fact or at the very minute that something is happening.
who can educate me here? ms. binder? ms. binder: the role of government should actually be as narrow as possible in looking at this issue. sen. murkowski: sure. ms. binder: i think the role of government is to ensure that the data and information is scientifically sound, reliable, and available, and then make that available to public entities like all of us, and then we can -- we have an incentive to reach out to the public and engage them. i think there are a lot of private sector industries, both in the for profit and not-for-profit space. but we need the data, and that's what we are missing. we need more data, much more publicly available data that we can use. that is where i think there is a role for government. sen. murkowski: others? ms. giunto: i would offer two suggestions.
first, help us all teach consumers that health care is shoppable. i would also say there are many organizations like the alliance called regional health improvement collaboratives around the country that have all the stakeholders convened around the table to try to work on this issue in their local environment. when things get solved locally with people who all have skin in the game, it is an opportunity for improvement. mr. kampine: if it is ok, i would like to weigh in. most people are healthy most of the time, so they do not think about this. it is key to educate up front what we know. if consumers know that they should shop and they know prices vary and they know quality varies, then it will shopping
-- they will shop to get better value. but it has to be continuous. someone with heart disease need s to know ultimately when they need to consume. regular communication. i do think we need to do that, and we do, but access to data is key to learning so that there is a regular drumbeat of education so that people understand this when they do need to consume. sen. murkowski: i wonder how much of this is generational. in our generation, we did not have the ability to shop. we did not know that we could. young people can look at this and say yeah, you shop for everything. [laughter] sen. alexander: thanks, senator murkowski. senator smith. sen. smith: thank you, chair alexander. i want to thank you and senator murray for these meetings. -- these hearings. they have been so helpful and interesting.
health care costs is one of the number one issues i hear about from minnesotans. i appreciate your testimony on this. we have had a lot of questions about how simple fighting our -- simplifying our health care system and making it more transparent could help eliminate wasteful spending and lower costs more broadly. with this in mind, my colleague, senator cassidy, and i have introduced a bill focused on administrative costs and lowering the administrative cost burden, which in some cases can be 25% of the total cost of health care. this bill is aimed at cutting costs, streamlining administration and easing the burden on health care providers as well as patients. it builds on a successful effort in minnesota to automate these common, high-volume health care transactions like prior authorizations, for example. any time when a provider submits a bill to insurers.
in minnesota, this is projected to save somewhere in the range of $60 million, which is a lot. my question, mr. tippets, in what ways could efforts to toeamline systems help improve transparency in your experience? mr. tippets: as an asc, we already have to run very tight ships with low overhead. i do not think that is an area of expertise that asc would have. but i recognize that although we encourage reporting, i think the overall burden sometimes in reducing paperwork, in reducing burdens would assist with lowering the cost of administrative health care.
sen. smith: what others like to comment on this? if we had more transactions automated, patients would have better real-time information about what things cost. what what others say? ms. giunto: i would say, senator, i agree with you, and i would stretch to think about administrative overhead in the way we think about the clinical work and effort that goes into measuring and reporting to the multitude of agencies about measuring our reporting. many health care deliverers have lots of stuff to do this work, , and if to do this work we can get to it point where we have closer common agreement on the measures that really impact equality, and that is what we focus on, i think we would be ahead, yes. sen. smith: so it could actually help with the data-gathering as well as the transparency, understanding how much the stuff costs. ms. giunto: and how many staff were dedicated to the effort within the institution.
sen. smith: right. based on your work, do you think this could help patients avoid unnecessary costs, too? ms. giunto: i do. sen. smith: great. i want to get to something my colleague, senator murkowski, i think, was getting at as well, so we traveled all over, and i have traveled all over minnesota , people are talking about how they want more transparency, how much things cost. for example, one woman named leah in mankato shared that she did not get an estimate for how much it would cost to deliver her baby. this was her first child. this was a huge source of stress for her and her baby and how much with this going to cost. i talked with another man who needed to have polyps removed from his nose, and no one could tell him how much this was going to cost. let me stay with you, ms. giunto. could you talk to how this will
help patients make better decisions? what i am getting at, and i think maybe what senator murkowski was getting at, is it is so hard to know which questions to ask even, when it is so complicated. not all of us are senator cassidy, who know a lot about this sector. ms. giunto: so working with our health care authority in the state of washington, senator, we put together a very simple series called the savvy shopper series that is part of my written testimony, where on a single page, we helped consumers looking for cost, quality, and patient experience think about the basic questions to ask of their physicians or their care providers. we put that together to talk about getting value in health care. these are things employers in our state put on their website,
put in the wellness program. our state of washington has this information on their website. i think it starts with a focus on education. as we continue to do our work, all of us on the panel, making this information much more transparent and having individuals speak up and asked a does thison, what cost, is this a high-quality provider, have people had great patient experience with this provider, that will put us ahead. sen. smith: thank you. thank you, chair. sen. alexander: thank you, senator. senator kaine. sen. kaine: thank you, mr. chair. i agree that these have been helpful. i want to ask about your own st. george's ambulatory service center. let's talk about the replacement. if the price is $17,985 for cash, what is the amount that the center receives?
what do you receive when you do a hip replacement for somebody who is a medicaid patient? mr. tippets: unfortunately, as an outpatient procedure, asc is not approved for medicare or medicaid yet. sen. kaine: and that is not approved by -- mr. tippets: cms. sen. kaine: they will not approve that for an ambulatory service center? mr. tippets: right now, i believe the only total joint is knees, but only through hospital outpatients, not through asc's yet. sen. kaine: this is an interesting phenomenon, because you talked about the quality at replacements performed at ambulatory service centers. in your view, should cms
authorize hip replacement that ambulatory service centers? mr. tippets: absolutely. we have written testimony how all procedures were equal to or superior to hospitals. and i need to address that in not all outpatients should end up in a surgery center. sen. kaine: right. mr. tippets: because they may be too old or there are lots of reasons why they need to go to a hospital. but a healthy individual coming through, especially if they will be medicare, medicaid, could save the taxpayer and the individual thousands of dollars. sen. kaine: so while not every hip replacement should be performed at an ambulatory service center, you would take the position that cms should not bar them from being performed. is there any disagreement with that on the panel? should cms allow hip replacements at ambulatory service centers? ms. binder? ms. binder: as long as we have
data on whether they are safe. we do not have data right now. sen. kaine: if they are not allowed to be done, you will not have the data. if they are being done, and it sounds like there is data, about the quality measures of hip replacements done in ambulatory service centers. ms. binder: right, but they need to be monitored by an independent entity of some sort. to the credit of asc's, they are asking for this to have entered happen, they are doing it for the commercial population, and that is good, that we need to see the data, and it needs to be verified. that is what they should be looking at before they are all in. sen. kaine: if the price is $17,985 for somebody paying cash, what do you receive if you perform a hip replacement for somebody with private insurance, and does it vary with insurance companies that perform? -- vary by the insurance company
? mr. tippets: we just started our outpatient, but unfortunately, most of our payers will follow -- but fortunately, most of our payers will follow closely the medicaid or medicare procedures. i think we will see a rush of -- once those are approved and hopefully approved, the total hips, medicare and medicaid, i think the commercial payers will bring those in. sen. kaine: how about this? let me switch to another procedure -- knee replacements, have you been doing those longer? mr. tippets: we have. sen. kaine: do you have private insurance covering your knee replacement patients e? mr. tippets: most have been cash pay. sen. kaine: or their procedures where you that includes cash pay, private insurance, medicaid or medicare? mr. tippets: we do not bundled those. sen. kaine: i think i saw in your testimony that about 220 procedures. mr. tippets: we do. sen. kaine: you would post the price. mr. tippets: that is correct.
sen. kaine: are any of those procedures wherein you would provide a procedure to cash, private pay, and medicaid and medicare? tippets: yes, we did a procedure for a patient from virginia beach. sen. kaine: if somebody came and they were a medicaid patient and they wanted a hysterectomy, would you receive the $7445? mr. tippets: the challenge is we do not built the doctor. -- bill for the doctor. i know what our costs would be for a hysterectomy like that, it would be about $4000 we would receive. sen. kaine: you have a sense of what the cost when the total professionals would be? more or less $7445? mr. tippets: i do not have all of the information to equate with the cash pay would be. sen. kaine: so even within your
own pro- transparency network, you are not aware when patients are being treated he did with respect to the cost that they are being charged or what the medical professionals are receiving for a particular procedure? mr. tippets: right. sen. kaine: how about private insurance? do you bundle on the private insurance side if you perform a hysterectomy? is the amount more or less than the $7445? mr. tippets: we received less than $7445. the doctor is not in the picture. essentially, the only thing we would bill for is the facility fee only. sen. kaine: the gist of your testimony must be the only reason people would pay cash -- if you are not aware what the bundle or total is, you are
nevertheless setting a bundle payment cash only because it would be less than the cost combined effect of payments charged in another matter, correct? mr. tippets: we can equate that to a hospital. we know historically we are anywhere from 60% to 80%, sometimes less than what a hospital fee is, just for the facility fee. sen. alexander: we will go to a second round. sen. kaine: oh, excuse me. sen. alexander: go ahead and finish your answer. sen. kaine: i have finished. sen. alexander: what i will do is -- i have got a couple of questions. i will ask senator murkowski to chair a second round of questions for anyone who wishes to stay. mr. tippets, following up with senator warren's question, i think you said that about 10% of the procedures were cash payments. is that right? mr. tippets: that is correct. sen. alexander: but that does not mean that those people have
no insurance. isn't that correct? it might have been cheaper for them to pay cash than to pay the deductible for the insurance that they have. am i correct about that? mr. tippets: that is correct. especially with high-deductible hsa's, they do not want to burn through all of their co-pays on one hernia, for example, costs $3000. sen. alexander: do you have a guess about what percent of the people who pay cash also have insurance that they don't use? mr. tippets: i think it would be very low. i don't have the exact statistics. the individuals paying cash usually do not have insurance, but they have the means to do so, or they have high-deductible plans. sen. alexander: generally speaking, 55% or 60% of americans -- most americans are insured, more than 90% of americans.
55% or 60% of those who do have insurance have employer insurance. they get it on the job. maybe 35% or 40% get it from medicare or medicaid. am i correct, we have mandates from washington about transparency on cost and quality for medicare and medicaid, but not employer-sponsored insurance, correct? how useful -- i have two questions -- one is how useful are the current federal mandates on government-sponsored insurance? i mean, can the consumer really figure anything out from those, or do they need to be rewritten or may more meaningful? -- made more meaningful? and two, should the federal government create similar
mandates for the 55% or 60% of the policies that are employer insurance? let's start with you, mr. tippets. mr. tippets: great question, senator. what we are seeing, especially with high-deductible plans, we are seeing more and more individuals have these accepted excessive burdens on them, and so what we are seeing is a more consumer driven system, where they are becoming more educated, not just on price and quality, to deal with these issues. because that is being driven by the consumers, insurance companies and many private employers are going self-funded plans to where they actually participate in price transparency and cash pay programs. what is beneficial in that situation, for example, we have employers come in and say --
sen. alexander: i will ask you to keep it kind of short, because i want to hear from mr. kampine on this, and i do not want to go over my two-minute. i do not want to violate here. mr. tippets: in going to the thought that mandates, i personally believe that a very free market system, that consumers are very educated and driven, is a much stronger system than mandating that something should be done. sen. alexander: mr. kampine, how useful are the current government mandates? should there be federal mandates on the nongovernment insurance? mr. kampine: all of our employer clients have insurance. many of them have transparency tools. those transparency tools are not used. they choose bluebook for the ease and the option that they have, including doing things like cash pay bundles that maybe be outside of their network, which, for things like joint replacements, by definition, when i look in the claims data, significantly lower than what you would pay in the network for the hospital for that service.
the quality questions are solved in the future, but in terms of effectiveness, i am not sure exactly which mandates we are talking about, but in terms of insurance and access to transparency tools, the place where innovation has been driven here is in the market. sen. alexander: thank you very much. i am now going to go to senator cassidy to chair, and i will ask senator scott, if you would like to let senator cassidy go along with his question, or senator kaine, or are you ready, senator scott, to ask your questions? sen. scott: i am ready. [laughter] sen. alexander: we will go to senator scott. senator scott is always ready. [laughter]
sen. scott: said with such confidence. thank you for being here this morning. i appreciate your time and ways of looking at this. in 2016, the senate spent about $3.3 trillion on health care. $3.3 trillion on health care. about 28% of those dollars came out of households. $938 billion paid by households. the u.s. is expected to spend $5 trillion on health care by 2026. if the current ratio holds true, 20% would represent $1.6 trillion for average households. am i pronouncing your name right, mr. kampine? mr. kampine: yes. sen. scott: you estimate that $1.5 trillion of our current health care spending is paid for by either employers or directly by consumers and $500 billion of
that is by shoppable. nonacute healthcare services. when people have the tools they need to shop around for care, both consumers and employers can save $250 billion that they can use for all kinds of services, expenses, or savings, which would be a remarkable change as well. what steps can we take to improve the ability for consumers to shop around? mr. kampine: sure. again, in our experience, in terms of working with employers, we have found three things to be very successful. the first is education. we talked a little bit about it earlier. but, when consumers know that prices vary and they know that quality varies, they are much more likely -- in fact, 11 times more likely to actually shop and compare providers and get better value for themselves.
so, there has to be education, and it has to be consistent. we do not think about it until our son hurts his foot playing soccer, then maybe we had forgotten about it. the second is simplicity. it has to be easy for patients to shop. in my town or my network, what is the range of prices? what should i reasonably pay? make it easy. bluebook, there are color codes for cost and methodology, but there are different ways of doing it. and then they can act on that need. the last element that we do find very effective, and over half of our clients utilize this, are value-based incentives, for example, cash-based incidents. -- incentives that encourage people to be better consumers. once you met your deductible for many people, where is the incentive to continue to shop
for care? there are other elements as well, but i would say those are three. sen. scott: if you have met your course yourof incentive for shopping probably goes down precipitously. however, if you have an out-of-pocket expense, perhaps there is enough incentive for some matrix to play a role in the desire to shop. mr. kampine: and forgive me, i meant deductible and coinsurance, but once you have reached that, it makes absolute sense. we heard mr. tippets talk about hip replacement. the fair price at the hospital is $30,000. most people will meet their
out-of-pocket max on cost and quality. incidentally it makes a lot of sense in order to offer these incentives, and they could be $500,000, even larger than that, to encourage patients to make better, high-quality, cost-effective choices on care. sen. scott: it does remind me of secretary azar's ekg. $3500 in the hospital versus $500 out of the hospital. how do we explain that kind of disparity in the same market? [laughter] sen. scott: profit? mr. kampine: there are a lot of different reasons for that. and again, there was a graph that senator cassidy pointed to, the facility and where you go for care is the single biggest decision. there is a higher chance of the cardiologist referring you to that facility, and that is how
you end up with a $3000 ekg. again, this is the thing consumers need to understand. consumers need to understand what decisions drive the cost and how to select a doctor and keep your doctor but make sure that you're having care in the most cost effective venue and most docs can do this in more than one place. >> if you don't mind a follow up question. in order for price transparency to be effective, it's important for us to have more than simply the price points. there's the outcome. the number of times that someone returns to the hospital based on the same hospital, same care provider. can you talk for a minute or two, well, 30 seconds on the important of that aspect that what consumers need to know in order for us to have a quality outcome is that the transactional expenses paid per transaction and how that links back to the price that they pay. >> absolutely. here's how we think about it.
most hospitals do most services. there are very few hospitals in the u.s. that do all services equally. you can't use brand as a determinant for quality. you could have a hospital in the top 10% in the u.s. for complex cardiac care and in the bottom 10% for joint replacement. our obligation is to help consumers understand when i need this particular service what are the outcomes for the different locations i can go to? the way we look at it is specifically related to patient outcomes and measured in four thi dimensions. one is mortality. do patients survive the surgery? second is complications. third are safety events and fourth are unanticipated readmission. we want to help patients understand two dimensions, cost and quality, explain simply , green, yellow, red, cost.
and the second is quality. using the same system so that both of those pieces of information can be align sod that patients can make a good decision. >> thank you for your patience. >> thank you. this is a great hearing. i'm going to read awe an you all an abstract of an article that was recently published by the national bureau of economic research. the article is titled "are healthcare services shopable? evidence from the consumption of lower limb mri scans." i'm curious to your thoughts about this abstract. we study how individuals with private health insurance choose providers for lower limb mri scans. they are a fairly indifferentiated service and prices routinely vary by a factor of five or more. we observe that despite significant out of pocket cost exposure, patients often receive care in high priced location when lower priced options were available. fewer than 1% of individuals used a price transparency tool to search for the price of their services in advance of care.
the choice of the provider is such that on average individuals bypass six lower priced providers between their home and the location where they receive their scan. referring physicians heavily influence where their patients receive care. the influence of referring physicians is dramatically greater than the effective patient cost sharing. as a result, in order to lower out of pocket costs and reduce total mri spending, patients must diverge from the established referral pathways of their referring physicians. we also observe that patients with vertically integrated ie hospital referring positions are more likely to have hospital based and more costly mri scans. consistent with your own understanding and
experience? .> it is patients turn to their physicians for advice. because consumers are not used to shopping on the basis of cost, quality or patient experience, they follow their physician's advice. the physician may not know the price differential. >> very familiar with the study. i reviewed it for public forums and speaking engagements. a couple of things about the study, the outcomes -- i agree. your doctors generally know there's a difference in cost. they don't know the difference and don't have the tools to help patients make better choices.
i thinkarticular study, the outcome that they noted is really an effect of education. so, these were patients that did not use price tools. they had access to one but it was a passive transparency program. no education. no incentives. none of those things that help us educate patients. , there's a took away statistical analysis. not a lot of people shop. the ones that didn't got lower prices for the services they consumed. shop, theynow, they get better prices. mobile applications, it's easy to show it to your doctor. it's a huge opportunity.
we are doing some pilots. >> you were ready to weigh in? >> i think what the study shows is that the idea of being able to shop is a relatively new one. this is a massive shift in our culture. it's happening quickly though. as soon as millennials realize they're not immortal, we'll start to see a transformation because they will not tolerate the level of transparency we have now, which is and where it should be paid -- is not where it should be. >> you have a thought about that? >> one study i read is 89% of individuals needing healthcare want to know the price. but only 26% actually ask their physicians and their doctors. they just expect that the doctor knows best and that's why this whole movement of price transparency is so critical in
educating and letting the consumer know they actually have a choice. doctors live in their own world especially if they're specialists. >> is the education of physicians about pricing as well as the patient's. -- patients. >> they may not know what an mri may be but in are huge -- there are huge variances. even in small communities of what prices would be and so just having the ability to find it on in a simple matter is very critical not just for the consumers but the physicians as well. >> great. thank you. >> the typical position -- know the charge
because the actual hospital doesn't know. so one thing i've always stressed, it can't just be the physician-patient relationship but there has to be an alignment , between the two parties. a mutual beneficial. are you familiar with the direct primary care model which has been to a certain extent led out of washington state? >> yes. >> let me just say for those who may not know, the patient pays the physician a fee per month and the physician takes care of all those needs expect those requiring referral. if the patient doesn't like it, she can terminate at any time. so, if she gets sent to the er with a headache on friday afternoon and spends all night there and says what the heck is this doing for me so the doc makes a point to see her on friday afternoon with her headache. if they refer her to a
specialist, the doc has the incentive to look at quality and cost to make sure that she gets the best value for her relationship with the primary care. >> senator, thank you. that's what i was going to say. any time the incentives can be aligned across the care delivery systems and purchasers are demanding that over the provider networks that they're engaged with, the better it is for the consumer. >> now, when you say that, though, you still have to have value. one of my assistants, a physician gave me the formula. value is equal to quality divided by the cost. now, obviously, the greater the quality, the more you're willing to pay. that becomes difficult and you mentioned that but let me just go to the practical aspect of this. somebody with a disease, diabetes, hypertension has to go in for a joint replacement. probably that needs to be at the general hospital but when you have your cash price, does that cover those with various
comorbidities which may require extra effort or is there epi payment upon that? how would you handle that is ? >> we're very sensitive because it's not about the drear. -- dollar. it's about the patient and what we can do for them. in our policies and procedures we're very specific on what , individuals at their level of health asa chart. we only accept individuals that are healthy. >> so, let me ask because if we had a representative of the american hospital association ha, thatould go a is cherry picking. how would you respond to that? >> ascs are not antihospital.
we recognize that we have individuals with complex physical issues and that a and asc's should be compensated or reimbursed for the level of complexity that a patient needs. or has. only about 40%, 40-50% of our total hips that can be done in a total outpatient setting should go there. >> is their differential p payment based on comorbidities? if i went to the general hospital, would i pay more, would be insurance company pay more if i had diabetes and heart
?isease i understand the hospitals would be reimbursed more for that. i don't know what the hospital numbers are. >> the difficulty in comparing the different types of care for quality measures -- the value is quality divided by cost. the quality is influenced by how sick the patient is going in. that's another complexity on that. i'm a big believer in price transparency. quality transparency, et cetera. how do we establish value for patients so they can know if i've got something else going on, this is where i should go as opposed to there? >> i think that's the information that has to be provided to transparency tools. if you are at essential risk
levels, here's some options that have you in the market. i think not everybody should go to a hospital. not everyone needs to go to a hospital nor do they want to . that option should be available to them. we don't need to send everybody to the highest level of care. >> you mentioned the leap frog initiative, but also my staff points out that if you go to cms , every hospital rates about the same, and we know there's incredible variability so thatte them amassing information, everybody comes out all the same. i think they need to make data available to the public which they do behind the tool, hospital care where they call everyone average which is the problem but behind that is spreadsheets. >> behind that is spreadsheets. many of us in the public arena
can use that spreadsheet to populate our own tools that do show variation among providers. that's been a positive program and that needs to expand. because of political considerations, everyone looks average. >> you all have done a remarkable job of kind of taking all these different pay ors and getting different information. how do you all handle this issue? >> what we would say is that publicly available data can show distinctions. should be severely adjusted. we have not looked at the level of particular cases you mentioned diabetes, but we've
done this at the hospital level in my state where we've compared cost quality and patient experience. patient experience not satisfaction. patient experience being how engaged am i in my care. how often does something happen? and we've shown through this study called the hospital value report that those hospitals in our state that are most efficient are also amongst the highest quality and have great patient experience. >> so, high cost doesn't necessarily correlate with better patient experience or better outcomes. >> absolutely. >> and you have found a way to address the differences between case mix, at least to a certain extent, as you compare different entities. >> yes, we have. all very much for this and i have a script i'm supposed to read. the hearing record remains open for 10 days. members may submit additional information for the record within that time. the health committee meets again
tuesday, september 25th for a for a hearing on the every child succeeds act. thank you for being here. specifically to our witnesses. the committee will stand adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2018] [no audio]
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