The Secretive Business of Providing Health Care Coverage

As Massachusetts was considered a ground-breaking state in offering universal health care to its residents, so too, is it ground-breaking in health cost transparency. As of October 1, 2014, Massachusetts health insurers are now required to provide price information to consumers through online cost estimator tools that compare the price and out-of-pocket costs of certain health care services, procedures, or hospital admissions.

The Massachusetts Healthcare Cost Containment and Quality Improvement law, which was passed in 2012 (Chapter 224 under the Acts of 2012), allows beneficiaries the opportunity to choose providers and obtain information about medical procedure costs, giving patients advance planning capabilities. The online tools will specifically help consumers with high deductible plans or those who have to pay co-insurance.

This is great news for Massachusetts residents, but what about the rest of us? Cost transparency, or the lack of it, is a nationwide problem.

Case Study

The Miami-Dade school district is self-insured and bears the financial burden of covering its own employees. The district superintendent claimed to know what the district pays for health claims, but after school board meetings in 2013 and 2014 in which board members raised concerns over increasing health costs for teachers, it became clear that the superintendent was still in the dark about how much the district pays to any one hospital or provider for a given service. The district uses Cigna for its employee health benefits.

According to the Kaiser Family Foundation (KFF), the district absorbed an additional 4 percent in health care costs in 2014. Teachers’ salary increases have not been matching up to their premium costs, and their health contributions remain largely the same. The head of the district’s teachers’ union has asked the school district to investigate how the cost savings from consistent teacher pay rates were being applied and what other factors might be contributing to the increasing health premiums.

The union leader’s questions will most likely go unanswered. Although the Miami-Dade school district is subject to Florida’s open records laws, its insurance carrier, Cigna, has refused to share contracted prices. This keeps the district and its employees from making informed, financially wise choices and allows insurers to drive up premiums.

ACA Transparency Efforts

In April 2014, CMS sent letters to the American Medical Association and the Florida Medical Association announcing its intention to release Medicare data in the form of the number and type of health care services that providers delivered and the amounts Medicare paid for those services in 2012. CMS explained that the release of information was in response to recent Freedom of Information Act (FOIA) requests. Provisions under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) include ACA section 10331, which mandates that the Secretary of HHS create a physician-compare internet website to make information on physician performance available to the public. Another provision, ACA section 10332, allows certain entities to access Medicare claims data in order to review the data and issue performance reports about individual providers.

With an increased focus on transparency, the answer to why Miami-Dade school district employees, or the rest of the nation for that matter, must be kept in the dark about health care costs remains a secret.