Health Care and Insurance and Health Care Costs and Health Care & Life Sciences

Clarian to put prices on its Web site

November 20, 2006

Clarian Health Partners will start posting prices for care on its Web site early next year, a move aimed at advancing the national movement toward greater transparency in health care costs.

The Indianapolis hospital network will unveil a Web portal that asks visitors to divulge their insurance and then tells them the price they would pay for a procedure, given that coverage.

It then plans to marry that information to quality data it already posts online. That means a patient researching kidney transplants, for instance, could learn--with the click of a mouse--how much one costs and Clarian's one-year survival rate for the procedure.

Hospital systems in Wisconsin, Oregon and New Hampshire already have started posting pricing information online. In South Dakota, the state government runs a Web site listing median charges for a few procedures at hospitals throughout the state.

But such charge information, sometimes referred to as the hospital's "sticker price" for a procedure, doesn't take into account a patient's insurance coverage.

Only a "handful of places" around the country are trying to develop a system similar to Clarian's, said Rick Wade, senior vice president for the Washington, D.C.-based American Hospital Association.

"You've got to assemble all that information and make it easy for consumers," Wade said, adding that he doesn't know whether any hospitals have found success. "Depending on the number of insurers a hospital deals with, it can be a formidable task."

Hospitals generally reveal prices to patients if they ask, but pure volume makes it difficult for them to let people see all prices, said Edmund Abel, director of health care services for Indianapolis-based Blue & Co.

He noted, for example, that Clarian may charge for as many as 40,000 items or services. Posting prices online will give people more information, but "whether or not patients know what to do with it is a whole different story," he added.

Clarian officials hope to start by posting information for up to 50 common procedures by the end of the first quarter, said CEO Daniel Evans. It wants to start matching the prices to quality data around then, too.

"This is an experiment for us, and we hope to continually improve it as we learn how our patients and our families wish to use this portal," Evans said.

Clarian won't guarantee the price the Web site spits out after consumers reveal their insurance information. Evans noted that variables like surgery complications or a person's health history can affect that.

But it will give patients a "pretty firm" number.

"We intend it to be a reliable price. We don't intend it to be so hedged it won't mean anything," said Evans, who served on a panel with President Bush that focused on improving health care transparency and quality.

The hospital network won't post all its procedures online, but intends to add as many of the common ones as possible, like appendectomies, MRI exams, knee surgeries or normal baby deliveries.

"We know a minority of the procedures are a majority of our business," Evans said.

The hospital won't post information for the uninsured at the outset, but he said that's something it eventually would like to do.

Abel knows of no other central Indiana provider that posts pricing information like this online.

Clarian is the largest hospital network in the state. It includes the suburban Clarian North and West medical centers as well as Riley Hospital for Children, and Methodist and IU hospitals in Indianapolis.

Two other Indianapolis hospital networks--St. Francis Hospital & Health Centers and Community Health Network--are considering variations of what Clarian aims to do.

Community Chief Financial Officer Tom Fischer said his system is studying how hospitals handle pricing information, but hasn't settled on a plan.

"There is a need--locally, statewide and nationally--to post this information," he said. "As consumers become more and more involved in paying for and choosing their health care providers, they simply need the information."

Experts say the need for greater transparency in hospital pricing has grown over the past year, as more employers adopt consumer-driven health plans. Such plans feature high deductibles and thus give patients an incentive to shop for the most cost-effective care.

The ever-changing insurance world plays a role, Wade said.

"What may have been covered last year may not be covered today," he said. "The fine print in insurance papers is sometimes hard to read and hard to understand.

"That stuff turns your brain to oatmeal."

The pricing schemes used by U.S. hospitals have become a contentious issue in recent years. Since 2002, patients have filed more than 60 class-action lawsuits alleging unfair pricing, with many of the cases targeting rates charged to the uninsured, said Jennifer Tolbert, a Washington, D.C.-based principal policy analyst with the Kaiser Family Foundation.

Insurance companies negotiate discounts off a hospital's charge price for their insured customers, but the uninsured have no such leverage, she said.

Last month, in fact, Bradley Burris, an uninsured Ladoga man, sued Clarian over a $70,944 bill, alleging he was overcharged and discriminated against. His lawyer, Ken Nunn of Bloomington, said the parties are discussing a settlement.

Clarian officials deny trying to bilk anyone. The system has an "aggressive financial assistance program" to help people make manageable payments on medical bills, spokesman Jon Mills said. That includes steep discounts and free care for uninsured patients, depending on their income levels.

The movement toward making more pricing and quality information available is gaining momentum partly because it's a Bush administration priority, Tolbert said.

She also thinks some view it as a way to mitigate pricing disputes.

But she and Abel note it's tough to give patients an exact price before a procedure. Many factors affect the final hospital bill.

For instance, a surgeon might need more sutures than he expected or the procedure might take longer than anticipated and ring up more operating room charges.

"It's extremely difficult, I think, to establish complete price transparency," Tolbert said.

Abel also noted that some medical terms can be technical and confusing, leading patients to select the wrong procedure on a Web site.

But even an imperfect system can help patients, experts say. Giving them the opportunity to comparison shop not only helps them save money. It could put downward pressure on health care costs.

"If you look at other industries, I think there's an argument to be made that this will drive down prices," Community's Fischer said.

"What it may very well do ... is cause more price competition and therefore cause [us] as providers to be more efficient in the way we deliver services."

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