July 3, 2019

New Hampshire has bet big on hospital price transparency. What does its experience mean for Trump's plan?

Daily Briefing

    President Trump last week released a controversial executive order requiring hospitals across the country to disclose the negotiated rates they set with insurers, but New Hampshire's experience with a price transparency site suggests the practice may not lead to major savings, Melanie Evans reports for the Wall Street Journal.

    Infographic: What patients want along their financial journey

    New Hampshire's price transparency website

    Since 2007, New Hampshire's Insurance Department has published health care prices charged by hospitals for many of services on its website, NH HealthCost, Evans reports. The published prices are gleaned from information health insurers disclosed to the state under a New Hampshire law, Evans reports.

    On the website, consumers can search for about 120 medical procedures, including MRIs, ED visits, and blood tests, and compare the median prices for those procedures by hospital, medical group, insurance company, and free-standing surgical center.

    Tyler Brannen of the New Hampshire Insurance Department said the state's median prices are bundled to incorporate all services provided in a single procedure, since health care bills for one procedure often include prices for different services, such as scans, lab tests, and medical specialists. 

    According to Evans, relying on the median price, as opposed to the average, provides patients "a sense of what a procedure will cost, but the variation can be wide." To help alleviate that uncertainty, the state also calculates and publishes a score of low, medium, or high to give patients an idea of how likely they are to pay the median amount.

    According to Josephine Porter, director for the Institute for Health Policy and Practice at the University of New Hampshire, "What [the score] tells people is, 'Holy moly, there's variation.'" While consumers don't get exact prices on the site, they are able to figure out which providers offer less costly services, she said.

    NH has seen limited price reductions and low public use

    This information has helped lower prices, but by a small amount, according to Zach Brown, an economist at the University of Michigan who has studied New Hampshire's price transparency law. Brown said publicly listed prices for MRIs and other imaging services dropped by 1% to 2%.

    That decrease has contributed to a 3% reduction in spending by consumers and insurers for imaging services listed on NH HealthCost compared with ones not listed on the site, Brown said.

    "We don't have evidence that this is a magic bullet," Brown said. "It seems to lead to some modest savings. The effects aren't huge."

    The state also has had trouble getting people to utilize the site, Brown said. He estimated that just 8% of people who could use the site have. Brown said he believes it's possible that not enough residents know about the site and others could lack the incentive to shop around for care because they have generous insurance plans or have already met their deductibles.

    However, use has been increasing following a state campaign. New Hampshire in January launched an online advertising campaign that increased visits to the site's cost-related pages from about 9,300 in the first five months of the previous year to about 48,000 in the same period.

    New Hampshire isn't the only state to experiment with price transparency websites. Other states that have done so include Colorado, Florida, Massachusetts, Maryland, Maine, and Washington, but they all take a slightly different approach, which Evans reports could be key as the Trump administration drafts regulations to carry out Trump's executive order.

    For many states, designing easy-to-use websites and advertising them has been a problem, according to John Freedman, president of Freedman HealthCare. "Transparency has been an area of great interest and relative lack of success" (Evans, Wall Street Journal, 6/26).

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