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Transparent Healthcare Costs: All-Payers Claims Databases

Don­na Mar­shall, CEO
August 24, 2018

Two recent arti­cles caught our eyes: the first, by Chris Skisak, Exec­u­tive Direc­tor of the Hous­ton Busi­ness Group on Health, is “Sim­ple, trans­par­ent & effi­cient – Fix­ing our bro­ken health care sys­tem”; and the sec­ond is a Wall Street Jour­nal arti­cle, “What does Knee Surgery Cost? Few Know, and That’s a Prob­lem. Mr. Skisak need­ed bilat­er­al cataract surgery but get­ting a clear answer to the ques­tion, “How much will it cost?” was any­thing but sim­ple. In the sec­ond arti­cle, the fea­tured hos­pi­tal spent 18 months just cal­cu­lat­ing the cost of a rou­tine knee replace­ment.

Employ­ers pay the bulk of health­care for work­ing Amer­i­cans and their fam­i­lies, to the tune of near­ly $1.2 tril­lion in 2017. So, how is it that we don’t ask how much we will be charged for ser­vices when those dol­lars might be used for wages or com­pa­ny infra­struc­ture instead?

In the WSJ arti­cle, employ­er Jeff Weis­er of Wieser Broth­ers con­tract­ing com­pa­ny says he is puz­zled why the health­care indus­try does not track costs and pri­or­i­tize effi­cien­cy in pro­cure­ment and ser­vice deliv­ery. Mr. Weiser’s com­pa­ny is a mem­ber of the non­prof­it employ­er coali­tion in Wis­con­sin, The Alliance, and wel­comes the new­ly nego­ti­at­ed 30% sav­ings for this surgery at Gun­der­son Health Care of LaCrosse.

What is Costs vs. What You Pay

chris skisak

Chris Skisak

Mr. Skisak want­ed to know how much he would pay. To his dis­may, his clin­i­cians and the sur­gi­cal cen­ter informed him they would bill far more than Medicare would allow. Medicare sets rates — much as The Alliance set a rate for knee replace­ment surgery in Wis­con­sin. Medicare rates are pub­lished online, just like prod­ucts at any online retail site. Mr. Skisak was final­ly informed that the physi­cian would bill more than three times what Medicare would pay for and that the sur­gi­cal cen­ter would bill more than 10 times the Medicare cost: more than $10,000 com­pared to the $979, even though the doc­tor and surgery would nev­er get paid that amount from Medicare. This is a com­mon, but not harm­less, prac­tice: com­mer­cial plans and peo­ple with­out insur­ance are stuck with these high charges that bear no rela­tion­ship to the real costs.

In fact, many com­mer­cial health plans nego­ti­ate a rate that is a “per­cent of charges” for inpa­tient ser­vices. So, employ­ers are false­ly reas­sured that they are get­ting a great dis­count, but that dis­count is cal­cu­lat­ed on a mys­te­ri­ous and ever-increas­ing price basis. The hos­pi­tal in Wis­con­sin admit­ted to rais­ing their rates 3% per year for the last decade, result­ing in aver­age charges of more than $50,000 for knee replace­ment. The real cost? Just over $10,000, accord­ing to their own study.

What will you be charged for com­mon tests and pro­ce­dures? Are you moti­vat­ed to save your­self and your employ­ees thou­sands of dol­lars?

All-Payer Claims Database (APCD)

Interactive State Report Map, APCD Council

Inter­ac­tive State Report Map, APCD Coun­cil

Most U.S. employ­ers and employ­ees can­not find out com­mon charges for com­mon pro­ce­dures. The health­care indus­try has not been will­ing to make these data avail­able, and there has been lit­tle con­sumer pres­sure to reverse this prac­tice. Enter the role of the All-Pay­er Claims Data­base (APCD). An APCD aggre­gates, ana­lyzes, and reports paid claims from health plans, Medicare, Med­ic­aid, and third-par­ty admin­is­tra­tors. It main­tains the pri­va­cy of indi­vid­u­als while iden­ti­fy­ing costs and uti­liza­tion by facil­i­ty, pro­ce­dures, loca­tion, pub­lic-vs-pri­vate pay­ers, and the qual­i­ty of ser­vices.

What states have APCD resources? At last count, accord­ing to the APCD Coun­cil, only 17 states have manda­to­ry APCDs in place, four have vol­un­tary efforts, three are in imple­men­ta­tion, and six have expressed inter­est.

Col­orado employ­ers and con­sumers have the good for­tune to have access to the Col­orado All-Pay­er Claims Data­base. On their free pub­lic web­site you can find the costs of the top 25 pro­ce­dures. Medi­an costs for knee replace­ment surgery, hip replace­ment surgery, obstet­ric ser­vices, and imag­ing ser­vices are dis­played by facil­i­ty. Check this out at www​.civhc​.org (see exam­ple below, show­ing costs for knee replace­ment at var­i­ous hos­pi­tals in the Den­ver metro area).

Knee surgery costs

The medi­an costs for knee surgery in Col­orado var­ied from $19,760 to over $58,000 per case. Sad­ly, expen­sive care is often more cost­ly because of laps­es in patient safe­ty, inef­fi­cien­cy, or price goug­ing.

Why APCDs Matter

As pur­chasers and con­sumers, we deserve to know how much health­care ser­vices will cost. Whether it is a true cost, a nego­ti­at­ed cost, or the medi­an cost, that infor­ma­tion should be read­i­ly avail­able. Mr. Skisak says “as an indi­vid­ual con­cerned about the future of health­care in this coun­try, I believe the entire process can be made more sim­ple, trans­par­ent, and effi­cient. But noth­ing will change if the gov­ern­ment, employ­ers, and con­sumers con­tin­ue to allow these charges and pay these fees with­out ques­tion.” If you’re inter­est­ed in learn­ing more about smart health­care pur­chas­ing and APCDs, con­tact the team at Knowl­edge Ben­e­fits.