Kentucky, and the nation, are experiencing rapid changes in health care. The Foundation for a Healthy Kentucky works to improve the unmet health care needs of Kentuckians through work at the policy level. Through our work in health policy and the transformation of the health care system brought on by the Affordable Care Act, the foundation is delving into health care price transparency to better understand the various levers involved in controlling health care costs.

In Kentucky, more than half a million previously uninsured individuals and families are now covered by public or private insurance. The Foundation for a Healthy Kentucky believes that credible, objective information available to consumers and others is essential to transforming the health care system and improving the health of Kentuckians. Clear, factual information about the price and quality of health care is necessary for consumers to select value-driven care and be involved in decisions about their health and health care services.

Price transparency is defined by the Healthcare Financial Management Association as “readily available information on the price of healthcare services that, together with other information, helps define the value of those services and enables patients and other care purchasers to identify, compare, and choose providers that offer the desired level of value.” Increasingly, health policy changes are creating incentives for a movement toward value-based (in contrast to volume-based) health care, and in this changing environment, price transparency is a necessary tool to engage consumers in improving their health. An understanding of health care price and quality by consumers and health care providers, among others, is essential to the continued transformation of our system of care and ultimately for improvement in the health of all Kentuckians.

To shed some light on the issue of price transparency and possible strategies for Kentucky, the foundation convened more than sixty Kentucky leaders in government, business, policy, and health care on October 23, 2014, for a facilitated discussion about price transparency.

Speakers were from the National Academy for State Health Policy (NASHP), Consumers Union, Catalyst for Payment Reform, Castlight Health, Center for Improving Value in Health Care (CIVHC) (Colorado’s All-Payer Claims Database’s nonprofit administrator), and the Kentucky Cabinet for Health and Family Services. Their presentations can be accessed on the foundation’s website.

Substantial portions of the discussions focused on the use of an All-Payer Claims Database as a tool in achieving price transparency in health care. All-Payer Claims Databases are “databases, created by state mandate, that typically include data derived from medical claims, pharmacy claims, eligibility files, provider files, and dental claims from private and public payers. In states without a legislative mandate, there may be voluntary reporting of these data,” says a Commonwealth Fund issue brief.

Following the presentations, participants formed roundtables to discuss the feasibility of, barriers to, solutions to, and other factors in, implementing price transparency in Kentucky from the perspectives of consumers, providers, policy makers, and researchers. Following are some of the highlights from the day.

  • Speaking for Consumers Union, Lynn Quincy pointed out the wide variation in pricing across the health care market and the fact that physicians direct substantial portions of health care funds used.
  • Anne Gauthier, then at NASHP, shared the range of state roles in price transparency, including creating mandates for collection and sharing of data, publicly reporting data, and enabling consumers to make informed decisions.
  • Suzanne Delbanco from Catalyst for Payment Reform noted that the majority of states are not providing price and quality data that are useful to stakeholders. She called for price information, available through simple, useful tools, to encompass all factors that contribute to what consumers pay.
  • Todd Fruchey of Castlight Health defined the characteristics of an effective all-payer claims database as offering this information for consumers: (a) estimates for seeing different providers for the same condition, treatment, or service, including expected out-of-pocket costs; (b) quality measures, ratings, and reviews that can be compared across providers; (c) information on spending patterns over time for all enrolled family members; (d) individual-level data that are available only to the participant; and (e) cost-saving tips on ways to make decisions based on value.
  • From CIVHC (administrator of Colorado’s all-payer claims database), Tracey Campbell and Jonathan Mathieu shared their database’s characteristics. Mandated by state legislation in 2010, Colorado’s database includes claims data from all public and private payers and was initially funded by foundations. The database will use fees to sustain itself going forward. Data are encrypted and accessed through a public website and reports.
  • Kentucky Medicaid Commissioner Lawrence Kissner noted the value of price transparency and the great variation across Kentucky in provider and patient behavior and characteristics. Cabinet staff also shared that Kentucky is currently working to develop an all-payer claims database.

A Foundation for a Healthy Kentucky workgroup used information from the October convening presentations and discussions and a review of the current literature on price transparency to develop the following recommendations for Kentucky. The workgroup consisted of foundation board and community advisory committee members; Ty Borders, Foundation for a Healthy Kentucky Endowed Chair in Rural Health Policy at the University of Kentucky; a foundation graduate intern; and foundation staff.

Kentucky should develop and establish an all-payer claims database as a necessary tool in price transparency for consumers and other stakeholders. Specifically,

  1. Data available through such a database should allow consumers to make informed health care decisions.
  2. Regular and timely data reporting by all public and private payers should be mandated by the state.
  3. The database should be considered a public utility and should provide (make accessible) useful and actionable data to policy makers, consumers, providers, employers, payers, and researchers.
  4. Sustainability of the all-payer claims database should be assured through a combination of realistic financing, housing, and data management to make sure that data integrity and security are in place and mandated reporting is done.
  5. Ongoing, objective consumer education about the database and how to use its information to make value-driven health care decisions should be provided at literacy levels appropriate to Kentucky’s hardest-to-reach populations and through appropriate and credible sources to consumers throughout the state.
  6. Kentucky can and should lead the nation in the development of a model, accessible, all-payer claims database tool that incorporates best practices for price transparency to help consumers and other stakeholders.

This blog post is adapted from the Foundation for a Healthy Kentucky’s “Price Transparency in Health Care: Doing Care Differently: Executive Summary,” which was released in February 2015.

Related posts on the GrantWatch section of Health Affairs Blog:

“Building Cost Transparency from the Ground Up,” Tara Oakman of the Robert Wood Johnson Foundation, April 20.

“Americans Are Eager for Price Information, New Survey Finds,” by David Schleifer of Public Agenda and Andrea Ducas of the Robert Wood Johnson Foundation, March 26.