Majority of states fail price transparency evaluation

Only five states earned passable grades in the second annual Report Card on State Price Transparency Laws developed by Catalyst for Payment Reform (CPR) and Health Care Incentives Improvement Institute (H13). Three states (Colorado, Vermont and Virginia) received C grades and two states (Maine and Massachusetts) received B grades. All other states received F grades.

As the healthcare industry transitions to become more consumer-oriented, there is a greater need for price information.

“As consumers continue to take on a rising share of healthcare costs, and as variation in price and quality-with little correlation between the two-continues to be a huge issue in healthcare, price transparency is a critical solution,” says Suzanne Delbanco, executive director of CPR.

Evaluation upgrade

Grades were substantially lower than what was reported last year. In 2013, only 29 states received a failing grade. Two states (Massachusetts and New Hampshire) received A grades, five states received B grades, seven states received C grades and seven states
received D grades.

This year’s evaluation not only graded price transparency regulations, but also websites and all-payer claims databases-which are considered to be the best source of data for public websites. Payer databases typically contain more accurate and complete price information.

“In doing this year’s report card, we wanted to get a full picture of what consumers actually have access to when it comes to price information in each state,” says Delbanco. “For this reason, we expanded our inquiry to look at state regulations regarding transparency, as well as the price transparency websites mandated by state laws and regulations. Both have a significant impact on the success and effectiveness of a price transparency law.”

In order for states to receive a good grade, Delbanco says three building blocks must be in place:                                     

• Robust laws and regulations that require price information to be shared for a wide variety of providers and procedures online;

• An all-payer claims database; and

• An easy-to-use public website that provides consumers with price points.

States relying on all-payer claims databases as the source of price information for consumers received higher grades, as did states with adequate, fully-operational, consumer-friendly websites mandated by law.

Many states have price transparency laws and regulations that require a public website. However, often times the public cannot access these online price points due to poor web design or ­inadequate functionality.

For example, New Hampshire received an A grade in 2013 and an F grade in 2014 because its health cost website is inoperative and will remain so for an underdermined period of time. However, states in the process of building or enhancing their websites will likely receive improved grades in 2015, according to CPR.