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Medicare to Post Price Data on June 1 Under Transparency Plan

MAY 1, 2006 -- In a speech Monday that otherwise broke little ground in his campaign to make consumers more responsive to the price of health care, President Bush told hospitals Medicare will start posting price data on the Internet June 1.

Although he repeated the administration's pitch to hospitals to make price data available to the public as a way to avoid federal legislation requiring "transparency," Bush used the speech, delivered to the American Hospital Association, more as an opportunity to urge Congress to adopt a familiar mix of proposals he said would make health care affordable. The speech also appeared to be prepared with the upcoming congressional election season in mind, laying out a broad defense of his record on health care.

AHA responded by issuing a new policy on transparency that drew Bush's thanks. AHA had to be dragged by the administration to that policy statement "kicking and screaming," a health care lobbyist said. Whether it will be enough to satisfy the administration remains to be seen.

Medicare Data
Bush offered no details on what price data Medicare would post, but a Health and Human Services (HHS) spokeswoman said the information would be in line with plans outlined by HHS Secretary Michael O. Leavitt in a March 14 speech to the Commonwealth Club in San Francisco.

Leavitt announced then that government analysts will examine claims data from Medicare, Medicaid, the Defense Department, and the Federal Employee Health Benefits Program so that "price and quality data will be available for each hospital and doctor." The initiative calls for listing the total costs of particular procedures, even though insured patients pay only a small fraction of those costs themselves.

"Take hip replacement surgery, for example," Leavitt said. "It would change the health care world if people could know, before their operation, what the overall package price is going to be, including lab tests, anesthesia, rehab costs, as well as specific information on quality, such as complication rates and patient satisfaction." He added that "we will start with a few of the most common procedures and expand as quickly as possible."

Key congressional committees have yet to take up legislation promoting hospital pricing disclosure. In a statement Monday, Senate Finance Chairman Charles E. Grassley, R-Iowa, said he intends to draft legislation this year that may benefit Health Savings Accounts, or HSAs.

"I strongly support efforts to expand and improve HSAs," Grassley said. "I hope to draft and advance a health care tax incentives package this year that may include an expansion of HSAs, especially for small businesses."

Grassley has said, however, that he doesn't think new HSA tax breaks proposed by the administration would attract enough votes for Senate passage.

U.S. Leadership at Stake
Bush said that keeping health care affordable is critical to preserving the nation's position as global leader. "One of my concerns is that the United States of America loses our nerve, fears competition and we become an isolated and protectionist nation. And health care plays a vital role in making sure this nation remains competitive," he said. "You're part of an industry that must be reformed to in order for the United States to be an economic leader."

Unleashing market forces to restrain health care costs is the key to keeping the United States number one in the world in health care, a position it holds because of the innovations of the private sector, he said. And the key to unleashing market forces is widespread adoption of health savings accounts and posting of health care prices to foster comparison shopping by consumers, he said.

HSAs "will mean that Americans who do not have coverage will be able to get coverage and afford coverage," Bush said. As a result, "fewer people will show up at our nation's hospitals needing uncompensated care." Bush urged hospitals themselves to offer HSAs, noting few of them do so now.

As an important step to further sales of the accounts, Bush said Rep. Eric Cantor, R-Va., will introduce legislation this week increasing tax breaks for buying HSAs, including a tax credit of up to $3,000 for purchases by low-income families.

Step two in making health care more affordable is allowing consumers to spend their HSA dollars wisely by informing them what medical procedures cost. "We're asking doctors and hospitals and other providers to post their walk-in prices to all consumers," Bush said. "Every hospital represented here should take action to make information on prices and quality available to all your patients. If everyone here cooperates . . . we can increase transparency without the need for legislation from the United States Congress."

Bush also urged Congress to pass legislation controlling medical malpractice costs, and allowing small businesses to pool their health care purchasing power. And he said the administration is working to make care affordable by promoting health information technology.

AHA Policy Statement
AHA "supports federal requirements for states, working with state hospital associations, to expand the many existing state efforts that make hospital charge information available to consumers," the association's President Dick Davidson said in a statement Monday. "The AHA also supports federal requirements for states, working with insurers, to make available in advance of medical visits information about a patient's expected out-of-pocket costs."

The administration is urging that hospitals disclose the entire costs associated with various procedures, while AHA asserts that what matters more to consumers is information on what their out-of-pocket costs will be. The policy statement urges a federal-led research effort on what price information will be most useful to consumers, and the use of consumer-friendly terminology to explain pricing data. Pricing explanations also should make clear why prices vary, AHA says.

AHA officials emphasized that a public–private approach has worked well to publicize data on the quality of hospital care and that a similar approach would succeed with pricing data. The Federation of American Hospitals also urged support Monday for that approach.

The lobby's president, Chip Kahn, praised Bush for highlighting "the groundbreaking public–private sector quality partnership where hospitals are publicly reporting on clinical performance. And we look forward to working with the administration to expand this quality initiative to include additional measures as well as . . . health care pricing information."

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