Maryland's New Initiative

Newtown, CT - October 20, 2017

And now it’s others’ turn to own up – Yesterday the state of Maryland released the initial version of its new price and quality transparency website, WearTheCost. The information is currently limited to four elective inpatient procedures and the pricing information is for commercially insured residents of Maryland using data from 2014 and 2015. The pricing information is supplemented by quality information as defined by potentially avoidable complications (PACs). For those accustomed to this missive, you know that PACs are adverse events that can occur to patients during or after a procedure and constitute harmful waste. For most common procedures there are few PACs and that holds true in Maryland, although, on average, as we show in a Health Affairs Blog post, there is a higher incidence of potentially avoidable complications in Maryland than in other comparable states. Even more surprising, and somewhat contrary to the common understanding of Maryland’s all-payer rate setting scheme, is that episode prices are not consistently lower than in other states, and they still vary a lot from facility to facility. For those who may be confused by this last statement, note that prices in Maryland are set by procedure for a facility across payers, and that’s done for each facility. In other words, it’s not the same price for all hospitals for a given procedure and the variations are significant. Of course, that’s the whole reason why price and quality transparency is important: it sheds needed light on what has been hidden. Predictably, those on whom the light has been shed disputed the methods, the utility of the information, and the ability for consumers to understand and act on it. But it’s time for them to own up.
What this means to you – As Diane Stollenwerk said during yesterday’s press conference (39 mns in) every time a transparency site is released the reaction is the same – providers support transparency while slamming its utility. So let’s address the objections and myths that were raised head on. First, pricing information leads consumers to pick higher priced providers: FALSE. Public Agenda’s reports on surveys in several states show clearly that most consumers no longer equate higher health care prices with better quality. Plus, WearTheCost bakes in quality information. Second, adverse selection: MOSTLY FALSE. While there always are a few facilities that become referral centers, not all hospitals can claim they are being adversely selected against, because if they are, then by definition everyone has adverse selection and it cancels itself out. Plus, WearTheCost adjusts for patient severity, excludes patient transfers from the episode count of facilities to whom the patient was transferred, and creates apple-to-apple comparisons. Third, confusing information for consumers: COMPLETELY FALSE. Not only has WearTheCost been rigorously consumer-tested, but multiple studies have shown that consumers understand perfectly when price and quality information is presented in a clear and compelling manner. According to Medstar Health, however, the information may be confusing to consumers because the episodes include services other than just the facility costs (seriously, I’m not making this up). Here’s a news flash, what consumers don’t understand is why procedures aren’t priced “all in” as opposed to piece meal. What they don’t understand is why a “system” like Medstar has highly variable episode prices and quality across its facilities and why, for the most part, those prices are higher than others. What they don’t understand is why anyone would make it harder for them to quantify, ahead of time, their total out-of-pocket exposure. Clearly, WearTheCost is not as comprehensive as it should be, and price and quality transparency is not a magic bullet solution, but it is the essential foundation for a high value health care system. So it is time for the naysayers to own up, take stock of the unwarranted variation of the cost and quality of care they are delivering, and provide the value that all consumers deserve.