California launches price transparency initiative

The California Department of Insurance tapped the University of California and the San Francisco-based Consumers Union to create a healthcare price transparency and quality database that will likely be ready to launch within a year.

The database will rely on existing data streams, such as claims data from the Centers for Medicare & Medicaid Services and from private payers.

Officials said that database would provide information to consumers on fairly commonplace procedures that take place at hospitals. "They will be things you would expect to be important to consumers," Adams Dudley, M.D., associate director for research at the Philip R. Lee Institute for Health Policy Studies at University of Carlifornia San Francisco (UCSF), told FierceHealthFinance. That would include maternity care and joint replacement surgeries, he added.

The money for the initiative comes from a $5.2 million federal grant for price transparency awarded to the Department of Insurance last year.

"Purchasing healthcare is like shopping in a department store with a bag over your head--you have no idea what the medical costs are before you get the bill," California Insurance Commissioner Dave Jones said in a statement. "Increased access to medical pricing and quality information is vital to help consumers make more informed decisions about their care, because the best quality care is not necessarily the most expensive care. Transparency in medical pricing should improve competition and result in lower medical costs, as patients will vote with their feet if medical provider prices exceed those of competitors."

A recent study suggested that price transparency could save the healthcare system $100 billion over a decade.

Several states have price data available, but getting consumers to consistently use it to pick providers has been an issue. Consumers Union, which is a subcontractor to UCSF, aims to make the resulting website user-friendly and focus on generating interest among consumers to use the available data, Jones told FierceHealthFinance.

"If anyone can do a patient-friendly website and outreach, it is the good people at Consumers Union," Jones said.

The resulting site will likely fall short of an all-claims database, which is available in about a half dozen states, with another dozen working on building them, Kaiser Health News reported. Maribeth Shannon, director of the market and policy monitor program at the California Health Care Foundation, told FierceHealthFinance she expects hospitals to resist releasing the information required to make such a database possible.

To learn more:
- read the Department of Insurance statement
- here's the Kaiser Health News article on all-claims databases