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Health Plan Lifts the Veil on Charges: List of Doctor, Hospital Prices is Most Extensive Available

Posted on: Friday, 24 February 2006, 03:03 CST

By Guy Boulton, Milwaukee Journal Sentinel

Feb. 24--More than 44,000 people in a new health plan now have access to the most extensive information made public to date on what hospitals and doctors in the Milwaukee area charge.

The information allows members of a new Humana Inc. plan to compare estimated prices for 30 inpatient and six outpatient operations and tests at most area hospitals.

The health plan's Web site, for instance, shows that prices for a colonoscopy can range from $940 to $1,150 at Milwaukee Endoscopy Center to as much as $2,500 to $3,050 at Froedtert Memorial Lutheran Hospital and $2,890 to $3,530 at Columbia St. Mary's, Ozaukee Campus.

It also shows that the price for a hip replacement can range from $20,600 to $41,800, depending on the hospital.

Other procedures and tests included in the comparisons are appendectomies, spinal fusions and mammograms.

Publishing the prices was a key component in a plan that Humana put together for the Business Health Care Group of Southeast Wisconsin. The group, which includes many of the area's largest employers, was formed three years ago to find ways to lower health care costs in southeast Wisconsin.

"This is something we view as the first step," said Larry Rambo, chief executive for Humana in Wisconsin and Michigan. "And next year there will be another evolution that hopefully will be better than we are able to show you today."

Humana began quietly disclosing the information on prices to people enrolled in the new health plan on Jan. 1.

The prices -- which are in an estimated range -- are only for the network of hospitals and doctors put together for the new plan. They do not reflect the rates negotiated for other health plans offered Humana or other companies that sell health insurance and administer health plans.

In the past, the prices negotiated health plans with hospitals and doctors have been confidential. The Business Health Care Group's plan marks a step toward so-called transparency, the push to provide consumers with upfront information on prices and quality.

"What we are telling our clients is, it's a start," said Brian Jensen, a senior consultant with Aon Consulting, which advises businesses on health plans. "It's certainly better than what we have today, which is essentially nothing."

In the Milwaukee area, only HealthCare Direct LLC, a small Waukesha County company that negotiates contracts with hospitals and doctors, has disclosed what hospitals charge.

Last year, HealthCare Direct persuaded ProHealth Care and Columbia St. Mary's, two health care systems in the Milwaukee area, to accept a flat rate for 26 common hospital procedures and to disclose the price of each.

For most industries, that would be no big deal. But in health care, what Humana and HealthCare Direct have done -- albeit in a limited way -- is radical.

One of the quirks of the health care system is that health plans individually negotiate different prices with hospitals and doctors. The result is that two health plans can pay different prices for the same procedure at the same hospital.

The contracts typically prevent a health plan from saying that it charges a certain amount for a procedure, though a health plan can show the discounted charges on patients' bills.

Many economists contend that the practice contributes to the inefficiency of the health care system and lessens hospitals' incentive to become more efficient. It also makes it impossible for consumers to shop for hospitals with the best prices.

The lack of information on price, quality and efficiency is considered one of the weaknesses in so-called consumer-driven health care, the move to shift more costs to employees and their families with the hope that they will become more savvy consumers of health care.

That goal is the underpinning of the health savings accounts touted President Bush and others as a way to check rising health care costs. The accounts, which allow people to save money for medical expenses tax-free, are paired with health plans with high deductibles.

People can't become savvy consumers, though, when they don't know what anything costs.

"Consumer driven (health care) will only reach its full potential when people have access to this kind of information," Jensen said.

Disclosing information on prices also could pressure high-cost hospitals and doctors to become more efficient. That has been one of the goals of the Business Health Care Group, whose 100-plus members include Rockwell Automation Inc., Johnson Controls Inc., Briggs & Stratton Corp., Harley-Davidson Inc. and Miller Brewing Co. (Journal Communications Inc., the owner of the Milwaukee Journal Sentinel, is also a member.)

The group came together in part because southeast Wisconsin has some of the highest health care costs in the nation. A report the Government Accountability Office last year found that the Milwaukee area has the fifth-highest hospital costs and ranked 22nd in total health care spending out of 232 metro areas.

The new plan's network includes most of the large health care systems in the area. Covenant Healthcare, which has four hospitals in the Milwaukee area, and SynergyHealth Inc., the parent of St. Joseph's Hospital near West Bend, opted not to join.

The 30 inpatient procedures for which estimated prices are available account for about 40% of hospital admissions, said Gary Hovila, Humana's chief financial officer for the Wisconsin and Michigan markets.

Humana's Web site for the new health plan also includes some information on quality, such as how often a hospital does a certain procedure, mortality rates, complication rates, average length of stays and other measures.

That should help consumers decide whether higher costs mean higher quality -- an assumption that some research has challenged.

Disclosing limited information on prices and quality, though, is just the first step. Employers now must get people to use it.

"You have to get consumers to understand the role they play in controlling health care costs," said Dianne Kiehl, executive director of the Business Health Care Group.

Barbara Ehlers, manager of benefits administration for Briggs & Stratton Corp., said educating employees will be important.

One of the goals of consumer-driven health care is changing people's behavior. "You need to give them the tools to do that," Ehlers said.

Humana's Web site is one of those tools.

"Progress is made taking steps," Kiehl said. "And we are taking the steps that need to be taken."

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Copyright (c) 2006, Milwaukee Journal Sentinel

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Source: The Milwaukee Journal Sentinel

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