29 States Get 'F' for Keeping Health Costs Hidden

By Russ Mitchell for Kaiser Health News

Wonder why you can't get a straight answer on how much a health care procedure will cost you? One big reason: State laws which allow hospitals and other providers to keep costs hidden until they send you the bill.

A report card on price transparency released today gives 29 states an "F" and seven states a "D" for policies that keep patients and their families in the dark on prices. The failing grade went to those with practically no transparency requirements.

Only two states, Massachusetts and New Hampshire, rate an "A," and even they could improve their laws, according to the report by the Catalyst for Payment Reform, a consortium of health care purchasers such as GE, Wal-Mart and The Boeing Company, and the Health Care Incentives Improvement Institute, a nonprofit group seeking to improve health care with evidence-based incentive programs.

The high prices that American health care providers charge, often with little connection to actual costs, have been in the national spotlight since Time magazine devoted its entire March 4 issue to an investigation by Steven Brill.

Most consumers are unaware of the tremendous variation in price. For instance, prices for knee replacement surgery in the same California market can range from $15,000 to more than $100,000, depending on the hospital, with no discernible difference in quality.

High deductible insurance plans are becoming more common, with employers hoping consumers with "skin in the game" will shop around to help keep prices down. But, the authors note, consumers cannot make informed decisions without being able to comparison shop on the basis of either price or quality.

"Consumers deserve to have as much information about the price of their health care as they do about restaurants, cars, and household appliances," the report says.

The grades reflect the quality and scope of the pricing data that states require and how well they disseminate it - public websites gain high points, for example. The grades also discriminate between 'charges,' the prices that hospitals say they charge for services, and what a consumer and her insurance company actually pay for them. There is often little connection between the two. States that require disclosure of actual prices earned higher grades.

The groups plan to update the state report cards annually.