Readers Write: My Notes On Last Week’s Senate Finance Committee Hearing

My Notes On Last Week’s Senate Finance Committee Hearing
By Data Nerd

In a rare twist of fate, I had some down time last week in between deadlines and got to choose between a variety of Congressional hearings to ridicule observe. While I’d really have loved to see Gen. Alexander prove that the NSA has foiled a legitimate terrorist threat, I decided to go with the Senate Finance Committee’s hearing on the dually-pressing grievances of high prices and low transparency in the health care industry as enumerated in Steve Brill’s Time piece, “Bitter Pill: Why Medical Bills are Killing Us.” The hearing lasted about as long as it took me to read the original article and unfortunately I couldn’t “observe” all of it, but here are the questions and responses I found most relevant on the topic.

Sen. Baucus kicked off the questioning by stating that disclosure alone may not be sufficient to bring down healthcare prices and asked each of the panelists to supply a solution to the problem. Mr. Brill pointed out that injecting competition into the insurance market alone doesn’t guarantee price reduction. He brought up the large amounts of campaign contributions made by the healthcare industry to each of the members on the committee, the least of whom accepted half a million dollars in the past five years. Suzanne Delbanco, executive director of Catalyst for Payment Reform, states that consumers tend to assume that higher price means higher quality, while Paul Ginsburg, president of Center for Studying Health System Change, suggests changing benefit design so that consumers care which provider they see.

Sen. Hatch questions what type of data is being released and how reliable and useful it is to consumers. Dr. Ginsburg hones in on insurers and employers as the best source for consumer health care pricing data, stating that data has to be customized and reflect details of particular health plan, and these organizations are in best position to provide that.

Sen. Hatch shifts focus to hospital chargemasters: “If they are only marginally relevant, what steps should we take to move away from these systems and replace them?” Dr. Delbanco responds by agreeing that CMS pricing data released was great education for all concerning price disparities, but that providers and consumers need to understand costs of delivering care and the costs of delivering high-quality care.

Sen. Thune next takes the floor and cites some state measures to publish price lists. He asks Dr. Delbanco if published price lists for elective procedures are effective in putting market pressure on hospitals. Dr. Delbanco states that very little research has been done on whether consumers use this data, but is a beginning. She stresses the need of customization to make usable, vis a vis connecting price data to health care plan specifications.

Sen. Thune astutely acknowledges the role of recent regulations in pushing the industry towards more consolidation and asks what role this plays in pricing and whether antitrust laws need to be reevaluated in light of this shift. Dr. Ginsburg says that the best approach is to take steps to make the market more competitive despite its consolidated state. He mentions a need to revisit FTC Safe Harbor policy to require demonstrations of benefits for patients, and asserts that government can take a legislative approach to outlaw non-competitive contracting practices between health plans and providers.

Sen. Burr asserts that “seniors don’t like choice” and that “faced with healthcare decisions, their [adult] children are increasingly being turned to rather than healthcare providers”. He also offered that it “would be a cheap shot” to say that donations that health care organizations have made to him as informing the healthcare legislation he has written. Mr. Brill pointed out that he didn’t accuse him of such.

Sen. Rockefeller brought up the “public option” and the fact that everyone loved it but no one voted for it, so it was replaced with a “medical loss ratio” that resulted in private insurers being forced to issue rebates to consumers. He brings it all home by praising Congress on the establishment of IPAB to take the power of the purse away from lobbyists and Congress and give it to physicians that can make “wiser” decisions to save Medicare dollars. To this, Dr. Ginsburg responds that IPAB is “constrained,” with only the authority to squeeze money from reimbursement. Reimbursement, he says, is on autopilot and Congress can still lower reimbursement amounts at will. Instead, he expects more savings to come from Innovate Reimbursement models.

Sen. Baucus highlights the price variations and states that “he saw a chart somewhere” that showed that Medicare reimbursement amounts do not vary as much as private insurance reimbursement. He asks why this is so and if CMS has access to private insurance reimbursement data. Dr. Ginsburg agrees with Sen. Baucus’s assessment and asserts that new reimbursement models should address price variances. He mentions regulating private prices like Maryland has done since the late 70s. Brill asserts that a five-column list should be made public: what Medicare pays, what the Chargemaster charges, and what the three largest insurers pay for the same service. Dr. Delbanco asserts the need for quality input. She states that it matters little what you pay for a service unless the quality is satisfactory.

Sen. Menendez quickly launched into an attack, stating that Mr. Brill’s article did little to acknowledge how healthcare reform is addressing price disparities. Brill interjects and refers the senator to a specific paragraph of the article, to which the senator tells him to wait until he is done stating his question. He then attempts to corner Mr. Brill into agreeing that Obamacare addresses price volatility by eradicating low-quality health insurance plans and expanding coverage for citizens. Mr. Brill maintains that, while beneficial in other areas, the ACA does not directly address price variation in the market. Menendez asks him if he believes prices should be controlled by the government. Mr. Brill states that he believes “patented, life-saving drugs” should be controlled, but not procedures, and that “some interference is needed to preserve a free market.”

Sen. Baucus asks why hospitals are so fancy and compares healthcare to education and insurance to student loans. Dr. Delbanco points out that patients do not have data on which to base their provider choice, so they generally go on perception of facilities. Dr. Ginsburg states that consumers are removed from cost.

Sen. Schumer points out that higher costs at teaching hospitals are justified because they typically treat more rare, last-resort patients.

Sen. Baucus proposes an entrepreneurial approach to itemizing costs at a hospital on any given procedure and making that data available to consumers. Ultimately, he asked “What data, if any, should be proprietary?”

Overall, the Senators prepared meaningful questions to ask the panelists and were provided well-thought-out responses that intimate the complex nature of this issue. Consumers do not want raw massive files of data to pore over – they want someone to provide it in a way that is personalized, comprehendible, trustworthy, and ultimately actionable. Doing this will require a complex system of cost to quality analysis coupled with personal health and insurance policy parameters.

In my opinion, any true consumer solution will offer an element of predictive capability on which to base insurance and provider choices. To the entity (or entities) that can provide this in the least-intimidating way go the spoils. Who knows whether it will be insurance companies themselves, a joint venture between them and employers, or an entrepreneurial one-size-fits-all solution? 

I’m giddy to see the day when I can not only predict my tax burden six months in advance and strategize how to minimize it for free online, but also chart out a course for my family’s healthcare and make informed decisions about how much coverage we need and where we should go to get care.