Hospital Costs Go Public: What Changes In Health Care?

Guests

Jordan Rau, senior correspondent, Kaiser Health News
Renee Hsia, assistant professor, University of California San Francisco School of Medicine
Chas Roades, chief research officer, Advisory Board Company

The federal government launched a database Wednesday that shows how much hospitals charge for the 100 most common procedures. The data reveals extreme variances in hospital billing. One hospital in Dallas, Texas charges $38,000 for treating pneumonia, while another charges over $14,000.

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NEAL CONAN, HOST:

This is TALK OF THE NATION. I'm Neal Conan in Washington. One hospital outside Dallas charges a little over 14 grand for pneumonia treatment. Another hospital a few miles down the same street charges more than twice as much, over $38,000. Why? Why has it taken so long for those prices to be made public? And now that they're out, how is that going to change health care?

Today the Obama administration published the prices hospitals charge for the 100 most common procedures, and the discrepancies are staggering. Here in Washington, one hospital charges $69,000 for a joint replacement. You can pay less than half of that just across town.

These days we know a lot more about hospitals than we used to in terms of outcome and infection rates, for example. Now we know the prices. How is all this information going to change your decisions? Will you start to shop? 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.

Later in the program, freshly minted Rock and Roll Hall of Famer Randy Newman joins us, and we have an email challenge for you today. Nominate your favorite Randy Newman song. You can tell us why. We'll play the top vote-getter at the end of the show.

But first Jordan Rau joins us here in Studio 42, senior correspondent for Kaiser Health News. Good of you to be with us today.

JORDAN RAU: Glad to be here.

CONAN: And we knew that different hospitals in the same city would charge different prices for the same procedures. Were you surprised, though, to find out how big those differences were?

RAU: Not really. We've seen this in some states, have published this for a while, and a lot of research has been done on this. What's significant about it is this is the first time that the charges that hospitals list are all out there to be played around with and looked at for every hospital.

CONAN: And I guess we also knew that different hospitals in different parts of the country would have different price rates, but the same hospital a few blocks away can charge vastly different prices.

RAU: Yeah, and that's been one of the variants between different places is one of the many, many bizarro things in the world of the hospital and health care in general.

CONAN: Because there was no transparency, I guess hospitals didn't - saw no reason to make these things public, to publicize the fact that you can get it cheaper over here.

RAU: Hospitals have been incredibly secretive about their prices, as anyone who's ever tried to ever get a quote or an estimate has done. And in fact, now these are actually somewhat fictitious prices in that they are called chargemasters, and this is almost a list price of what a hospital says a knee replacement or procedure is. That's very different from what an insured customer will pay.

But hospitals have kept these close to the vest, and they've kept their private insured rates that they pay extremely confidential.

CONAN: So there is a difference between what the hospital will pay Medicare because Medicare sets that rate, and what they will pay if you have private health insurance.

RAU: That's right. Medicare sets their own rate, and it's almost always the lowest, and then at the very top end, there's the chargemaster rate. And if you've ever gotten a bill from your insurer, an explanation of benefits, it'll say, you know, you went into the hospital, and the hospital is billing you $150,000 for your toenail to be replaced.

And we are going to pay, you know, $3,000 for that, and you owe 20 percent of that.

CONAN: And do they normally collect it?

RAU: The hospitals for an insured patient never collect the actual charge rate, the numbers that are out here. Now if you're uninsured, and there are a lot of people, 49 million, roughly, in the country, sometimes those people are stuck with the bill or something close to that. And in that case people have been known over the last couple decades to go into bankruptcy because of these incredible inflated rates.

CONAN: And so there are different rates, and if you're with a big insurer, they negotiate discounts. They're not going to pay that top rate, either.

RAU: That's right. They will every year come in, and they'll negotiate their own rates, and they almost have no relation whatsoever to what this listed charge rate is.

CONAN: So, in a sense the customer, the patient, most of them don't pay the price.

RAU: That's right because people who are on public assistance - Medicare and Medicaid - they don't pay these prices. The insured population, that's over half of the country, they don't pay these prices. And then even among the uninsured, a lot of the people get a discounted rate, charity care if they don't have the money or they work out their own level, or they just don't end up paying anything, and the hospital eats the cost.

CONAN: And that's another issue for another day, and that's one of the reasons they're trying to get everybody signed up for health insurance. But anyway, as we look at that fact, that gives no incentive for the hospital to do anything but put the rates sky high.

RAU: Yeah, I mean, these are basically high rates that give the hospitals a little bit of leverage when they come in and negotiate with the insurers. And so the insurer comes in and, you know, obviously wants to pay less, and the hospital says whoa, you know, we - our original offer is, you know, $150 billion for this or - well that's a bit high, but, you know, $100,000.

And then they sort of go back and forth. And these are really artifacts of an older time when hospitals just actually kept what was called a chargemaster and a list of prices, and that was before, you know, the way that prices were negotiated by their Medicare or by private insurers came to be.

CONAN: And is there any correlation between high prices and good quality of treatment?

RAU: That's a great question, and the research is really still out there about that. I've seen studies that go either way. But what is definitely clear is that the difference in quality from one institution to another is not nearly as great as the difference in price.

CONAN: Let's bring another voice into the conversation. Joining us now is Dr. Renee Hsia, she's an assistant professor at the University of California San Francisco School of Medicine, also an emergency attending physician at San Francisco General, and joins us via Skype from her home in San Francisco. Thank you very much for being here with us, Doctor.

RENEE HSIA: Hi, Neal. Thanks for having me on.

CONAN: Well, again, why is it that there are, for example here in Washington I get a join replacement for $69,000 at one hospital and less than half of that across town. Why are these numbers so wildly different?

HSIA: Yeah, for those of us who study this issue of price variation, unfortunately it's not surprising to see this type of variation. And I think something that consumers are often surprised to find out is that there is no regulation of health care prices or hospital charges. So hospitals can actually charge whatever they want for their care based on what they think the costs are or what their quality is, and there's no regulation at all.

So what we see is the effect of basically lack of a system.

CONAN: How do hospitals figure out how much to charge? I mean, yeah, they have to pay the surgeon, there's so much time in the oper - how do they come up with these amounts?

HSIA: So actually if you look at how they've come up with these prices before, before hospitals were never required to actually know what their costs were. So if you look at, for example, other industries like the auto industry or any other industry, they actually usually know what their costs are. So an automaker will know what it costs to make a car, and they will use usually what's called a cost-plus system, so what does it cost plus the profit margin for, you know, different people along the chain. And that's how they come up with a price.

But hospitals and health care has never been required to have an idea of what the actual costs are. If you ask a hospital CEO what does it actually cost you to take care of a patient who has pneumonia, they actually won't know. And because health care has never been required to basically be accountable for their costs, they come up with these charges very arbitrarily, so based on what they think it should be and what other people say it should be. It's not a cost-plus system at all.

CONAN: You say they're not going to know how much it's going to cost to treat a pneumonia - they've treated hundreds, thousands of pneumonia patients. They're going to have a pretty good idea.

HSIA: Right, so they'll come up, for example, they'll have an itemized bill and say that you had antibiotics, you had a certain night stay. So a hospital night stay could range from $700 a night to $5,000 a night just for the bed, and that's based on what the hospital thinks that it might cost based on their bottom line, based on what they have to cover, but it's not based on what it costs, unfortunately.

CONAN: So how do you expect that this data, now that there is some transparency, is going to change things?

HSIA: Well, and this is where it becomes really complicated because consumers are used to seeing costs or charges related to quality. So if we look at Yelp, for example, we'll say OK, a four-dollar-sign restaurant is probably higher quality than a two-dollar-sign restaurant, and they might make that same assumption about health care, too.

And so just as Jordan said, there's not really great research out there showing that the difference in the quality is as vast as the difference in the charges. So what - while we do hope that price transparency is an initial first step, one concern is that people actually start flocking to higher-cost hospitals or higher-charge hospitals thinking that it offers better care, and that might not be the case at all.

CONAN: There might also, though - might not there be different decisions about different conditions? If I have cancer, I might want to go to the very-high-priced cancer specialty hospital, Memorial Sloan Kettering in New York, someplace like that. If I'm going to have my appendix out, well, the place down the street might be just as good.

HSIA: Right, and so that's where it becomes very difficult because consumers are patients when you're sick. First of all, I don't think most people are really wanting to shop for their health care in the sense that they're not on the Web trolling to see, you know, which hospital in their 10-mile radius offers the lowest-price care.

But this is - you know, when we think about consumer empowerment, this is the idea is that more transparency will allow consumers or patients to have some more say. But whether or not we're really able to do that without good quality metrics is a little tough.

(SOUNDBITE OF DOG BARKING)

CONAN: And the dog is demanding attention, so...

HSIA: Sorry about that.

CONAN: That's quite all right. They're all hams; they want to be on the radio.

(LAUGHTER)

CONAN: As you look ahead, as we shift from a system that rewards per procedure to a system that rewards per outcome, how is this antiquated price structure likely to change in that regard?

HSIA: I think these things need to go hand in hand. I think it's a great idea that we start looking at outcomes rather than just fee for service and paying per service. And the issue of charges really need to be dealt with. This issue again isn't surprising for those of us who study it, but the fact that CMS has published it I think is a really good move because now consumers can - you can just go to the CMS and actually download the Excel file, and you might be able to find your hospital on there.

And so this provides more momentum for policymakers to start making decisions about how do we change the system to make it more rational. Right now it's completely arbitrary, and it's really not fair.

CONAN: And is that - it's not going to be long before somebody correlates this data along with the other data in terms of which hospitals do better with which procedures and infection rates, that sort of thing.

HSIA: Yeah, and that's the goal is that we hope that we start developing even better quality metrics because it might be that one hospital is good at cardiac surgery, but maybe they're really bad at something else. And so it doesn't mean if you're good in one area that you're good all across the board. So we hope that we're able to move the, you know, needle forward to provide better quality information to patients, too.

CONAN: Dr. Hsia, thank you very much for your time today, we appreciate it.

HSIA: Thank you.

CONAN: Dr. Renee Hsia is an assistant professor at the University of California San Francisco School of Medicine, also an emergency attending physician at San Francisco General Hospital. She joined us by Skype, she and her dog joined us by Skype from her home in San Francisco. Jordan Rau is still with us, senior correspondent for Kaiser Health News.

When we come back from a short break, we're going to be joined by Chas Roades, a chief research officer at the Advisory Board Company, a research and tech company that works with hospitals and health systems and with doctors to improve performance about how this is going to change marketing. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(SOUNDBITE OF MUSIC)

CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. In recent years, hospitals have begun to advertise to attract patients. Unlike most other businesses, though, they never mention price.

(SOUNDBITE OF ADVERTISEMENT)

UNIDENTIFIED WOMAN: We expect the best. That means leading-edge technology, expert care and comfort. And that's exactly what we're getting. Twenty-first-century medicine has a new hometown, and it's right here in Puyallup.

CONAN: Now that the Obama administration's made public what different hospitals charge for the 100 most common procedures, and because we know much more about success and infection rates, how does that change things? Give us a call, 800-989-8255. Email us, talk@npr.org. Jordan Rau is a senior correspondent for Kaiser Health News, joining us here in Studio 42. Also with us, Chas Roades, chief research officer at the Advisory Board Company. He works with hospitals, health systems and physicians on how to improve performance and researches trends in the health care industry, and welcome to TALK OF THE NATION.

CHAS ROADES: Well, thanks for having me.

CONAN: And as it stands now, how are patients choosing which hospital to go to?

ROADES: Well, I think you heard it in the ad that we just listened to. So it is some combination of reputation about the level of technology that the hospital has, the level of comfort or service that the patient can expect from the hospital. But the main way that patients get to hospitals is that their doctors direct them to those hospitals. About 70 to 75 percent of all care decisions are actually made by doctors, not by patients directly.

CONAN: So it may be whichever hospital the doctor has admitting privileges at.

ROADES: That's right, that's right.

CONAN: And so - and it some, do you think it's likely to change as we learn more about hospitals?

ROADES: I do. I mean, I think that this - what CMS published today, the Time magazine article that...

CONAN: The Steve Brill piece.

ROADES: That Steve Brill wrote that came out a couple of weeks ago, I think all of these push us in the right direction, which is more transparency around cost and quality in health care. But I think a really important thing to bear in mind about this whole discussion is that there really are no prices, at least in the hospital part of the health care industry.

Nobody pays these prices. These prices don't reflect the thing that prices usually reflect, which is the cost and quality and value and worth of the product that's being delivered on a marketplace. We get prices from markets. These aren't prices; these are just negotiating documents that hospitals use to begin to talk to their commercial insurance companies about how much they're actually going to get paid for the care they deliver.

CONAN: Well, in the end somebody pays the price, and it's usually the taxpayer.

ROADES: That's right. And so somebody ultimately pays a price, but that price has actually very little to do with what the chargemaster, as Jordan described it, says the price ought to be.

CONAN: And Jordan, as you - that's accurate. I mean, the price, unless you're one of those unfortunate uninsured, you're not going to be asked to pay these prices.

RAU: Yeah, that's right.

CONAN: And so is price going to start to play a part in the future, do you think?

RAU: I think in terms of people shopping around for prices, it'll probably play a little bit around the edge. You know, if you've got some time, as Chas mentioned, to really shop around for, you know, a knee replacement or something, and, you know, you want to be that type of consumer, yeah, a bit. But I think that this is part of a broader movement, which is to really put a focus on the fact that the pricing of these products has no relation to reality because what the government is really trying to do and what insurers have been trying to do for a long time is to bring these prices down.

And this - and the public is - in general doesn't understand this about providers. They understand this about insurers, that they know that their insurance premiums are higher than they'd like. And they understand this about pharmaceuticals, and that's why those things were really vilified during the Affordable Care Act. But they don't understand that about their doctors and their hospitals.

And this is the first step, and that's what transparency is about, that is to first explain to people that you know what? There's a crazy marketplace out there. This is driving your insurance premium, and it makes no sense.

ROADES: Yeah, I mean I think the real problem is that there is no marketplace in health care. So a marketplace takes supply and demand for some service, and the output of that balance between supply and demand is a price for that service. Our instinct is that we want to have health care act that way. We want health care providers, hospitals and doctors, to be trying to better and providing more value to patients.

But there is this weird third-party-payment, fee-for-service reimbursement model standing between providers and patients that's keeping that connection from happening. So you can solve that problem one of two ways. One way, which is I think a way that's favored by free marketeers and folks on the right politically, is to simply create a real market in health care, just give consumers information and direct exposure to price and let them make decisions about where to seek care.

CONAN: That was sort of the Bush model.

ROADES: That's right, and the challenge with doing that is that health care is so complicated to understand what are the differences really between modes of treatment and levels of quality and so forth. It's a credence good. It's very much like going to an auto mechanic and getting your car fixed. You don't really know what's going on under the hood, you're just trusting your mechanic to provide you good service.

So the other way to solve that problem is to use what the Affordable Care Act and sort of Obamacare is trying to do, which is to use managed care-type approaches, so we're going to put pressure on - we're going to link provider payment to quality and outcomes and level of cost and so forth, and hope that you can, by using those incentives, replicate the forces of the market and get folks to act as though there were a real marketplace going on in health care.

CONAN: A lot of people on the line with questions. Let's go to Mary. Mary's on the line with us from Santa Clara in California.

MARY: Yeah, I'm really excited about this news and about this transparency. We have such growth in health care costs, it's a hot story, but there's such ignorance of where those costs are coming from. And this feels like a moment where we're putting sticker prices on health care costs and at least revealing that, you know, there's an MSRP out there, or there's some kind of a base cost that I think consumers have been highly ignorant of.

CONAN: Is anybody, Jordan Rau, going to ask - the board of a hospital, is going to say, you know, now that I realize it, you know, it is twice as much across town, why aren't we charging more, or why aren't we charging less?

RAU: Yeah, I think - well, that's exactly right. It's a double-edged sword when you put these prices out because like for instance the state of Vermont has been publishing prices for - or New Hampshire has been publishing actual prices for a while, and a couple of years, and what they found was that even though it brought some pressure on the high-end hospitals, the low-end hospitals came back and said, hey, what's the deal, you know, you, Blue Cross and Blue Shield, are paying, you know, my competitor over here twice as much as I am.

So I think that in that sense it's - it may have a good impact, and it may not. And the other thing, which you referenced and is a really important point, is that right now hospitals and medical care are like colleges, in that people tend to equate the higher prices being better. And so that's going to be a very dangerous potential implication until people feel comfortable at some sort of rating system for the quality because otherwise they might say, you know, what Cedar Sinai in Los Angeles charges much more, they're better.

CONAN: Mary, thanks very much for the call.

MARY: Thank you.

CONAN: And as - Chas Roades, if there's no market, why are hospitals advertising?

ROADES: Well, because they need to fill their beds. I mean, a hospital is fixed-cost business that has beds that in order for the economic model of a hospital to work, those beds actually need to be full or nearly full for them to cover the costs of the hospital. But I think it's important to step back and realize what actually drives pricing in health care. What drives pricing in health care is scale.

So the whole strategy of running a successful hospital system for the last 20, 25 years has been I'm going to try to get as big as I can in my marketplace so that when I go into that price negotiation, based on this chargemaster that we've been talking about, when I got into the price negotiation with the insurance company, I have enough negotiating leverage that I can actually extract a price that I can live with and actually maintain operations.

And so until we uncouple that negotiating process from what prices actually paid in health care, we're always going to have this problem of prices not reflecting the actual value of the services that are being provided.

CONAN: Here's an email from Helene: Late last year I had a complete hysterectomy by da Vinci robot. Since I had already met my out-of-pocket maximum for the year on my plan due to my son's previous hospitalization, it was covered 100 percent. What I am shocked by is how little the health plan negotiated to pay.

Here how the charges and payments worked out: billed amount, $81,275; plan discount, $73,634; amount paid to hospital, $7,641. Frankly, I don't think $7,600 covered the hospital's expenses for my surgery, but I was back at work in only a week, so my employer benefited.

ROADES: So what's going on in that case is that the hospital didn't have enough negotiating leverage to extract the price that it needed from the payer to pay for using that expensive technology. Actually the da Vinci robot is a very interesting phenomenon in health care.

So you ask about how people choose where they're going to go and how do consumers make decisions. You see billboards on the side of every highway heading into town from the airport advertising robotic surgery and da Vinci robots and how the quality is so much better and so forth. And so you've got to have your surgery, you know, at a facility that has one of these da Vinci robots.

Well, the clinical literature on this is actually pretty mixed. It's not immediately clear that the da Vinci robot is better. But it certainly is more expensive, and it allows a hospital to drive foot traffic and thus get greater scale in a marketplace, that lets them get some of this negotiating scale that we've been talking about.

CONAN: Let's go next to - this is Ruth and Ruth us with us Tucson.

RUTH: Hello. Thanks so much for taking my call. I just had a question, something I've wondered about for a long time. If these costs or these charges are arbitrarily set, let's say something costs $100, but the hospital only ends up collecting $30, what happens to the other $70? Do they get to take it as a tax write-off or a business expense, and does it affect - thereby affect their tax bill at the end of the year? I'm just curious where that other money goes. Thank you.

CONAN: Chas Roades?

ROADES: No. So, I mean, the first thing, it's a great question. Where does the money go? It's the big question in health care. Where is all the money? Most hospitals are tax-exempt organizations. Most - something like 80 percent of hospitals in this country are charity businesses, so they don't pay taxes.

CONAN: Nonprofits, yeah.

ROADES: They're nonprofits. So they - when they don't collect that money, some portion of the money that they don't collect is - can be written down as charity care, so care that's provided to patients who can't afford to pay on their own. And so they get to count that charity care toward their qualification for nonprofit status on an ongoing basis, essentially.

But the vast majority of that money that is not - that's sort of the difference between what's charged and what's paid just disappears into thin air. There's - that isn't actually real money. So, again, these prices aren't real, and so they don't reflect money that's actually expected to come into the hospital at the end of a unit of service.

CONAN: Jordan Rau, we do read, though, of a cat and mouse game between private insurers and hospitals where if hospitals are going to bill $100,000 and the insurer says, well, we're going to knock that down to 30 percent, they then inflate the costs of the bill again. So that 30 percent, they're going to get some more money on.

RAU: Yeah. There are a couple of ways that insurers and hospitals negotiate, and one is the discounted rate off of charges. Now, that's, I don't think, the majority of hospitals, by any means. But there are - that does sometimes happen. And so the hospitals do have an incentive to mark up their charges to some crazy amount. So they'll say, well, you know, you're getting 20 - you know, just paying 25 cents on the dollar.

But most of the time, that's not what happens. Insurers have gotten a bit more sophisticated than that, and they sort of take a look at what they're paying everyone else, and they work off of that level. And so the charge - and, again, it's an accounting fiction. It's not a real thing out there. There's no actual dollars being lost. It's just numbers on a ledger that don't ever see - that actually appear, for the most part, to be anywhere, and so it doesn't play a role.

CONAN: But there are plenty of patients who say - hear from their insurers that, well, the normal amount we pay in this area is $75,000. They're charging $100,000. We're only going to pay for $75,000.

RAU: You know, that's an excellent point, and it is true. I - when I look at my explanation of benefits, they say, we saved you, you know, 35 percent. Isn't it great for us? And you're like, well, I'm still paying, you know, $5,000 for this. And, you know, to some extent, it's true.

The insurer is negotiating a better rate than you could negotiate on your own because a lot of the times when you're - you have no insurance and you go into it and negotiate on your own, you don't get any discount at all. But, again, you're taking this random number that you've - to some extent, it's fair to say it's just been plucked out of air, and you say, well, you know, here's - we got this discount. It's like, well, yeah, you did, but...

CONAN: Off of what?

RAU: ...off of what, yeah.

ROADES: Right. I mean, let me just - just one point on this random number. We've talked a lot about how arbitrary the chargemaster is. It is actually, on some level, based on reality. So it's based on how much it costs the hospital to run its total operation, and then they add on top of that whatever margin they need to make in order to keep things going, keep the lights on and the doors open and keep investing in new technologies and services and so forth.

So there is some connection between what things actually cost and what the chargemaster says, but the connection is now so vague as to be almost meaningless. Uninsured people actually - we went through this all - in sort of 2005, 2006, there was a very similar episode where chargemasters became public, and there was a big pushback on hospital pricing.

And as a result of that episode, most hospitals have put in place much tougher charity care guidelines so that they're giving deep, deep discounts to the uninsured who can't afford to pay, somewhere on the order of 50 to 90 percent discounts off of the chargemaster.

CONAN: That's Chas Roades. Also with us, Jordan Rau. You're listening to TALK OF THE NATION from NPR News.

Steve(ph) is on the line calling from Charleston.

STEVE: Yes. Good afternoon. I was just wondering: If insurance companies know what the charges are that the hospitals are charging, why don't they direct patients to those hospitals that charge less?

CONAN: That's a good question. Jordan Rau?

RAU: That's a fabulous question, and that's exactly what a lot of them are trying to do. It's called tiered pricing. And what they're now doing is they're giving - you sign up for an insurer, and they give you a range of choices, and they say, OK, here is our bottom level or, you know, C level of the cheapest people, and you can go there. Or you can go to the B level, which charges more, but you're going to have to pay more out of pocket. Or you can go to the A, the most expensive places, and you're going to have to pay the most. And that's where the whole system, both on the Medicare side and on the private insurance side, is trying to move.

It's called value-based, and the idea is that if you can give some sort of financial incentive to the consumers and the patients so that they can see that there's a differential on prices, they'll start driving themselves to the cheaper place.

ROADES: But - and - but the only reason that that's a new phenomenon, because that seems like a pretty obvious thing for insurance companies to do...

CONAN: Pretty obvious, yeah.

ROADES: ...is that it's only recently that employers have been pushing back on the insurance companies about the 10 to 15 and maybe even 20 percent premium increases that they've been paying for employer-sponsored insurance over the years.

But the combination of the Affordable Care Act coming into play and just all of the pressure in the economy has now got employers pushing hard on insurers to say, hey, guys, you actually have to provide a little more value here and do more than just pass along the costs to me. And so the insurance companies have begun to pursue some of these more aggressive tiering strategies that Jordan is talking about.

CONAN: And, Jordan Rau, is this a one-off phenomenon, a list of these prices for 100 most common procedures, or is this going to be a regular feature that we're going to know these prices every year?

RAU: Oh, I think they'll be putting out the prices every year. And, you know, there's a lot also movement to crack open that black hole of the negotiated prices. There's starting to be some researchers that are getting it, and there are some states that are starting to acquire that insurance and I think that that'll be the next level until you can actually go and then you can say oh, aha, this is, you know, Washington Hospital. This is the average rate that the insured people actually pay and then you've got a much better idea of what you're actually likely to face. And that brings a whole better level of reality into a very opaque marketplace.

CONAN: And will transparency go to the point of saying ah, the Acme Insurance Company got a much better discount that the Smith Insurance Company?

RAU: Well, that's a great question. So it's - we need transparency not just about the providers, hospitals and doctors but also about the insurance companies and how much value they're creating on behalf of employers and individuals. I think that's a great point. There's a ton of money chasing this opportunity right now to provide more transparency in health care and we're already starting to see things like iPhone apps where the individual can sit there in the doctor's office and see what am I going to pay out of pocket if my doctor sends me to get an MRI here versus there and things like that.

CONAN: Chas Roades, chief research officer at the Advisory Board Company. Thanks very much for your time today, and Jordan Rau, a senior correspondent for Kaiser Health News. Appreciate you coming in. Up next, Randy Newman will join us and there's still time for you to send us your favorite of his many songs. Send us an email: talk@npr.org. He'll join us after a short break. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

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