May 11, 2023
A few years ago, the words ‘transparency and accountability’ were a mantra conservatives used to reinforce the idea that both government and the programs funded by government needed to be efficient and cost-effective. Then came the pandemic, election integrity battles, and stimulus money to burn…
With proposals circulating that reward lack of accountability, the drumbeat on transparency has faded considerably.
One bill that’s currently circulating for co-sponsorship takes a step back in that direction. Senator Felzkowski (R-Irma) has authored a bill to require price transparency from Wisconsin hospitals in state law.
Finding the Best Healthcare Value Isn’t Easy
For years, employers have been frustrated with the lack of transparency that makes it hard for them to find the best pricing options for health coverage for their employees. And if it’s been hard for employers, it’s been doubly hard for individuals to shop for the best prices and best quality.
According to a national study by the Rand Corporation, Wisconsin has the 4th highest hospital rates in the nation, meaning we pay more for care than nearly all other states – despite ranking 30th in median household income. Health care costs eat up more of our family budgets than in other states. Increased prices are outstripping increased utilization by nearly 5%.
Wisconsin’s health care quality also consistently ranks high nationally, but contrary to what you may expect, higher price does not necessarily predict higher quality. Rand has found low-cost hospitals delivering high-quality care and conversely, some high-cost hospitals providing lower-quality care.
The federal government put in place rules, passed during the Trump Administration which went into effect in January 2021, requiring price transparency to enable comparison shopping, promoting price competition and – eventually – improving affordability.
Conservatives have long championed Health Savings Accounts as a way for patients to take more control of their health care and health care spending, but without robust transparency it’s difficult for consumers to make meaningful comparisons.
Federal Transparency Rule Compliance is Low and Slow
Compliance with the rule by hospitals across the nation has been pretty abysmal. According to a report from Patient Rights Advocate, more than 75% of hospitals are noncompliant; Children’s Hospital of Wisconsin is among the least compliant across measures and listed as one of the 116 hospitals with no usable standard charges files available.
Many large national hospital systems are among the least compliant – only 4% of Ascension’s hospitals are compliant, according to Becker’s Hospital Review. (Ascension, a national system, has faced questions, most notably from U.S. Senator Tammy Baldwin, over their business practices, including their investments of tax-free earnings in for-profit enterprises at odds with their charity-based mission – including a debt collection company that was forced to cease operating in Minnesota when it was discovered debt collectors had been embedded in hospital staff.)
Despite this, the federal government has only penalized 4 hospitals for noncompliance as of April 2023.
The lack of enforcement is obviously a factor in hospitals ignoring the rule; the two hospitals cited earliest are now fully in compliance.
Felzkowski’s proposal largely mirrors the federal rules but gives the state teeth in the form of penalties for failure to comply. Wisconsin is not the first state to consider a state-level push to help force transparency. Indiana passed legislation that went into effect a year ago which similarly requires price transparency at the state level.
The Wisconsin Hospital Association (WHA) has said the bill is duplicative of the federal rule and that Wisconsin hospitals are leaders in complying with the national rules. They are not wrong. The state’s compliance rate is below 55% according to the Patient Rights Advocate 2023 report. That puts Wisconsin in the top 10 states for compliance but that speaks more to how slow compliance with the rule has been than how well we are doing as a state.
WHA also points out that there are substantially higher compliance rates on some of the individual measures included in the federal rule, and that as time goes on compliance is increasing. This is also true, but compliance with some of the requirements is not the same as full compliance with the rule. WHA also quite correctly points out that insurers and self-funded employers are also required to provide some transparency data but are not included in Felzkowski’s bill.
WHA also notes Wisconsin was an early adopter of transparency efforts a number of years ago. The federal rule did go into effect during the pandemic, and though there was significant lead time to implement the rule, it’s fair to assume that there were higher priorities for most hospital administrators.
But we’re more than two years into the rule now. Given that more than 1 in 4 people in the state are currently on Medicaid, and many covered by Medicare, not to mention state and other public health coverage plans, there’s a vested interest in price transparency. And if compliance is growing at a fast pace, and we lead the nation, there should be little risk to hospitals of incurring penalties, assuming Felzkowski’s bill makes it to the governor and is signed – far from a given at this point.
More Transparency Needed in More Areas
And WHA’s point on transparency in other areas of health care is absolutely correct. Transparency in one area but not others is window dressing that doesn’t help consumers or taxpayers. Stakeholders in the healthcare arena are always angling for advantage, and robust transparency is a knee-jerk ‘no’ most of the time from most of the stakeholders on most areas. Regulation has often been based on government taking sides and Felzkowski’s bill is a good start. There are several other areas where healthcare transparency – not just from hospitals, and not just on pricing – could, and should, be bolstered in the interest of saving healthcare dollars, improving outcomes, educating patients, and leveling the playing field. In the coming days we will dive into some of these areas.
But since government is footing the bill for well over one-third of patients – between Medicaid, Medicare and government employee plans, no one has a larger stake in the healthcare transparency game than taxpayers.