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Rare Chance at Bipartisanship Finds House Panel Not Really in the Mood

May 6, 2010 -- Democrats and Republicans may agree that consumers need more information to compare the prices of health care services, but the spirit of bipartisanship was not in full bloom at a House subcommittee hearing Thursday that considered several bills on the subject.

House Energy and Commerce Health Subcommittee Chairman Frank Pallone, Jr., D-N.J., showed signs of wanting to move on the issue but wasn't committing to a markup date.

"It was a legislative hearing, so the intention would be to consider a markup, but we haven't made a decision," he said during a break in the hearing.

Republicans, meanwhile, their anger unabated about passage of the health care overhaul law, spent a fair chunk of their time slamming that measure. While "transparency" is a big part of their vision for improving health care by unleashing marketplace forces, they made sure to use the public forum to launch attacks on the overhaul law – as has been their wont all spring.

The overhaul law is "an unmitigated disaster," said Rep. John Shimkus, a Republican from Illinois.

Greater consumer awareness of the price of health care services could help Americans get better deals and make the health care system more efficient, Pallone said, but he added that price disclosure must be handled in the right way.

Pallone noted aspects of health that make it different from other markets, such as the delivery of high-cost services in emergencies when patients aren't able to be good shoppers. Patients' choices are often limited by their health plans, and they "may not want to go against their doctor's decisions in order to find the lowest price," he added.

Testimony by Wisconsin House Democrat Steve Kagen led off the hearing, emphasizing that the overhaul law does not go far enough to help consumers get the information they need to shop for better value in health care.

"While the passage of our nation's new health security law earlier this year will help guarantee that no citizen will lose their home or go broke just because they get sick or have an accident, it did not create a transparent medical marketplace to foster competition between caregivers, pharmaceutical manufacturers and health insurers," he said.

"Competition is a good thing, indeed, it is an essential element of capitalism, and when there is a level playing field, competition drives quality up and prices down."

Kagen urged passage of his bill, HR 4700, to better drive competition. He said the measure "will guarantee that any individual or business entity offering medical products or services for sale to the public will at all times openly disclose all of their prices, including on the Internet."

But more pricing information won't necessarily bring clarity to the market, cautioned Steven J. Summer, president of the Colorado Hospital Association. Testifying on behalf of the American Hospital Association, Summer said, for example, that "a gall bladder operation for one patient may be relatively simple but for another patient, it could be fraught with unforeseen complications, making meaningful 'up front' pricing difficult and, perhaps, confusing for patients. Moreover, hospital prices do not reflect important information from other key players, such as the price of physician care while in the hospital or how much of the cost a patient's insurance company may cover."

Summer also noted that the health care law requires hospitals to report annually a list of hospital charges for items and services. In addition, the Centers for Medicare and Medicaid Services posts what Medicare pays for 35 procedures, showing, for example, the range of payments by county.

But more should be done, he added, calling for an expansion of state-based efforts. Summers said AHA supports a bipartisan bill (HR 2249) introduced by Reps. Gene Green, D-Texas, and Michael Burgess, R-Texas, that would expand reporting requirements to all 50 states and also require insurers to disclose estimated out-of-pocket costs for various procedures.

Ambulatory surgery centers are also calling for a state-based approach, HR 4803. In addition to addressing disclosure of hospital prices the measure would provide information on pricing in ambulatory surgery centers. Chris Holden, president of the ambulatory surgery chain AmSurg, suggested that measure could produce savings by revealing how much less expensive procedures are in the ambulatory center than in hospital outpatient departments.

Other testimony noted the complexity of the pricing issue. Michael G. Cowie, an antitrust lawyer with the Washington, D.C., firm Howrey LLP, said "overbroad" disclosure requirements in some cases could lead to higher prices. "Collusion among companies to raise prices is more likely in industries where pricing terms are known among competitors," he said.

Cowie noted that the Federal Trade Commission has opposed public posting of pricing by liquor wholesalers and has raised similar concerns in pharmaceutical pricing. For example, public posting of discounts negotiated by pharmacy benefit manages could lead to more collusion by manufacturers on pricing, he said. HR 4700 "in particular would conflict with established antitrust principles designed to prevent collusion," he said.

But Harvard Business School professor Regina E. Herzlinger said that pricing transparency was "the No. 1 change Americans wanted from the government" in overhaul legislation. "Transparency could help insurers to better control costs by constructing narrow networks of the best value doctors and hospitals," she said.

She also called for mandatory national reporting rather than a state-only approach. "While state level reporting could supplement national reporting, state transparency agencies that limit information to local providers may prevent insurers from creating multi-state networks of best-value providers," she said. "Absent governmental oversight, we have little hope that health care will significantly improve transparency," she said.

Republicans used the hearing in part to press Democrats for a separate hearing on a report by CMS Actuary Richard Foster concluding that the overhaul law would create access problems through deep cuts to Medicare. But Pallone said that is "just one of many" reports and there are often "contradictions" between CMS and the Congressional Budget Office. Pallone said he's more concerned at this point with considering and "moving legislation that has been held up."

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