As the quality and cost transparency movements gain support within the healthcare industry, a more important question persists: what will actually work for consumers?
Though some startups targeting cost comparison for employers are enjoying success, few cost and quality transparency technologies are being used by consumers. While over 90 percent of insurers are offering members cost calculators of some kind, only about 2 percent of members are actually using them, according to research by Catalyst for Payment Reform.
That suggests many of the early generation transparency tools are inadequate -- perhaps in part because valuation of health services based on quality and cost remains difficult for payers and regulators, let alone paying patients given the information available to them.
Quality and costs are, of course, linked for buyers and sellers in industries across the economy, and at least on some level in healthcare. Yet payers, clinicians, patient advocates and researchers remain divided on the question of just how American healthcare can create a system for payers and patients to evaluate and compare providers, tests or treatments and determine what constitutes a fair price.
"We want to make sure we don't wind up in a world where we know the price of everything but the value of nothing," as Federal Trade Commission economist Thomas Iosso said at a recent FTC forum on the intersection of quality and costs.
The range of experts convened by the FTC to examine the problem disagreed on how to solve it -- whether reference pricing ala CalPERS is meaningful for patients, for instance -- but there is a consensus that the status quo of opacity needs to change.
"I see a real potential for marrying quality and price transparency," said Robert Berenson, MD, a fellow at the Urban Institute who also sits on Institute of Medicine panels and worked the Centers for Medicare & Medicaid Services during the Clinton Administration.
"But," Berenson said, "not necessarily based around measurement of quality," bringing up a huge source of frustration for many physicians: Medicare's measurements of processes, some questionable, many with significant administrative burdens.
"I'll call it the tyranny of measurement," Berenson said.
Information overload
Foisted largely on physicians and hospitals to collect, quality measures outside of Medicare also lead to informational overload for employers, one of the largest buyers of healthcare in the economy, argued Andrea Caballero, program director at the Catalyst for Payment Reform.
"They cede this expertise to their health plan or to other people and they get hundreds of metrics back that don't mean anything to them, or to their employees," Caballero said.
"I think there are some areas that measures are terrific," said the Urban Institute's Berenson. "We can improve diabetic care. But I think we are so measure-oriented we are fooling ourselves to think that something as complex as healthcare delivery is measurable."
The "best example," he said, is diagnostic error, which may be occurring at a rate as high as 15 percent for patients visiting doctors for new health problems, according to some estimates.
"A lot of people go to their grave with a diagnostic error," as Berenson put it.
For less complex but still significant problems, like the diabetes epidemic, Berenson is optimistic that more focused quality measurements can work in tandem with price transparency to help guide clinicians, payers and patients.
"We need to make a commitment to make the measurement that we are able to do, related concretely to the prices, in a reference pricing," he said. "I think payers have great opportunity, as well as medical groups, to set the quality standards that go along with the price transparency."
Others are a bit more skeptical on how soon that vision can be realized and if reference pricing, where employers or other payers give providers a maximum price they'll pay for certain procedures, can actually work for consumers.
If most quality measurement systems are still not relevant, some argue, pricing systems lag even further.
"A lot of the transparency initiatives is either a list price, which is what our state government in California is publishing, or some average price or average cost of care, which really doesn't pertain to any individual patient," said Patrick Romano, MD, a medical professor and policy researcher at the University of California, Davis.
Balancing quality and price
Both quality ratings and pricing need to be tailored for patients, based on their circumstances, Romano argued -- meaning that cost calculators really need to show consumers what exactly they have to pay, not just averages, like those shown by the Healthcare Bluebook.
The best place to test those hypotheses may be Massachusetts, which by some estimates is both the most expensive and best place on the planet to receive medical treatment.
So troublesome has the healthcare spending crisis become in Massachusetts that in 2012 the state legislature mandated that state healthcare spending grow a rate no faster than the state's economy, creating a host of new government initiatives to track cost and quality, along with requirements for insurers and soon providers to give consumers cost estimates of tests, procedures and office visits.
But just how beneficial cost and quality information will be for consumers remains a point of debate even among Massachusetts regulators and advocates.
"I think there's an underlying sentiment that we don't trust patients to evaluate quality," said Aron Boros, executive director of Massachusetts' new Center for Health Information and Analysis, which manages an all payer claims database, among other things.
Boros, an attorney and the former finance director at Massachusetts Medicaid, wanted to caveat that he was "trying to be provocative" and "probably" doesn't "believe what I'm trying to say."
His provocation, though, raises one of the most fundamental questions vexing American healthcare: Can consumers, empowered with enough information and given adequate choice, make treatment and spending decisions that lead to good outcomes and bring competitive controls to dysfunctional third-party payments?
"This is the part I'm not sure I believe," said Boros, "to say let's publish price, let's let the patients see the price and then make their own evaluation of quality. And if they want to go look at measures, and there's lots of measures out there, if they want to figure out if they want patient experience measures or outcome measures, whatever they care about, fine."
The problem that many warn of in this scenario, Boros, said is the "Neiman Marcus effect," where absent cogent quality information, high prices suggest high quality.
That, though, "is only true if the patient has no financial incentive to choose the lower-priced provider," Boros said.
"If the patient has a chance to figure out, 'Should I spend more to get more out of not only the premium dollar but my own money?' we could empower patients to say, 'Here's the price difference, you go figure out whether the brand name is giving you value for your dollar versus somebody else,' and maybe trust patients more," Boros said.
"I don't know what I believe, to be honest."